November 22, 2013 - A US police force has admitted to falling prey to the notorious bitcoin ransomware Cryptolocker, forking over around $750 in the virtual currency to crooks to get its files decrypted.

Cryptolocker - usually distributed through old fashioned e-mail phishing - works by encrypting the user's files on the infected machine and the local network it is attached to. Once encrypted, the computer displays a splash screen with a countdown timer and a demand for the payment of two bitcoins in ransom for the decryption key.

The ransomware has been sweeping the US and UK over the last month, counting the Swansea police department in Massachusetts among its victims. Swansea Police Lieutenant Gregory Ryan admitted to the Herald News that his department paid $750 for two bitcoins to decrypt images and word documents in its computer system.

The virus "is so complicated and successful that you have to buy these Bitcoins, which we had never heard of," Ryan told the paper.

Meanwhile, Cryptolocker has been tweaked to take into account the soaring value of bitcoin. When the ransomware first appeared on the scene in September, a bitcoin could be bought for less than $200 but the currency is currently hovering around the $750 mark. Taking this into account, crooks have decided to give victims a break, deploying a new version of CryptoLocker which asks for just 0.5 bitcoins.

Separately, Rabobank has been accused of blocking the vast majority of its customers from buying bitcoins on the BTCNext exchange. According to a local press report, 99% of attempted transactions on Tuesday and Wednesday were blocked, with customers presented with a generic error code.

A bank spokesman told Nutech that the problem has been fixed. Although there is no indication that the bank has cut off access to the virtual currency, BTCNext's Pieterjan Goppel says that it is common for transactions to fail because they are often flagged over fraud concerns.