| Welcome to OVERNIGHT CYBERSECURITY, your daily rundown of the biggest news in the world of hacking and data privacy. We're here to connect the dots as leaders in government, policy and industry try to counter the rise in cyber threats. What lies ahead for Congress, the administration and the latest company under siege? Whether you're a consumer, a techie or a D.C. lifer, we're here to give you ... THE BIG STORIES: --STATE DEPT LAUNCHES $40M OFFENSIVE AGAINST FOREIGN PROPAGANDA: The State Department is launching a $40 million initiative to crack down on foreign propaganda and disinformation amid widespread concerns about future Russian efforts to interfere in elections. The department announced Monday that it signed a deal with the Pentagon to transfer $40 million from the Defense Department's coffers to bolster the Global Engagement Center, an office set up at State during the Obama years to expose and counter foreign propaganda and disinformation. The new influx of funds will bolster the center's operations in the current fiscal year. "This funding is critical to ensuring that we continue an aggressive response to malign influence and disinformation and that we can leverage deeper partnerships with our allies, Silicon Valley, and other partners in this fight," Steve Goldstein, the department's undersecretary for public diplomacy and public affairs, said in a statement. "It is not merely a defensive posture that we should take, we also need to be on the offensive." The announcement comes less than two weeks after special counsel Robert Mueller indicted 13 Russians for allegedly participating in an elaborate scheme to meddle in the 2016 presidential election by creating false U.S. personas and spreading divisive content on social media platforms. There are widespread concerns in Washington that Russia will look to repeat its 2016 behavior in future elections. Earlier this month, top U.S. intelligence officials said they expect Moscow to interfere in the 2018 midterms, citing evidence of Russia already using "information warfare." Secretary of State Rex Tillerson approved the request for Pentagon funds for the program last year under pressure from lawmakers in Congress to strengthen the center's efforts to counter propaganda from Moscow and the Islamic State in Iraq and Syria (ISIS). The funds were officially transferred after the State Department recently signed a memorandum of agreement with the Pentagon. To read the rest of our piece, click here. --FORMER TRUMP CAMPAIGN AIDE MAKES PLEA DEAL WITH MUELLER: Former Trump campaign adviser Richard Gates pleaded guilty Friday afternoon as part of a deal with special counsel Robert Mueller in his investigation into Russian interference in the election. Gates pleaded guilty to two charges brought against him by Mueller's team in federal court in Washington, D.C.: one count of conspiracy against the United States and one count of making a false statement to the FBI agents investigating Russian interference. As part of the plea deal, Gates has agreed to cooperate "fully, truthfully, completely, and forthrightly" with the special counsel's office as well as other law enforcement officials, according to court documents. According to the criminal information filed by Mueller on Friday shortly before Gates pleaded guilty, Gates lied to federal investigators about a March 2013 meeting during which former Trump campaign chairman Paul Manafort, an unnamed member of Congress, reported by the Los Angeles Times to be Rep. Dana Rohrabacher (R-Calif.), and an unnamed lobbyist discussed Ukraine. Mueller filed the criminal information one day after he unveiled a new superseding indictment charging Gates and Manafort with a slew of financial-related crimes stemming from their work for pro-Russian political forces in Ukraine over the past decade. The alleged crimes are unrelated to the work Manafort and Gates did for the Trump campaign. Mueller accused the two longtime business associates of laundering more than $30 million dollars in income that they hid from the U.S. government. Speculation has mounted over the past week that Gates would plead guilty and cooperate in Mueller's probe, making him a key witness who could testify in the criminal case against Manafort. The development is expected to ratchet up pressure on Manafort to cooperate in Mueller's probe now that his longtime ally is cooperating. Gates is expected to provide the special counsel's office with a slew of information about Manafort as well as his direct knowledge of events that unfolded during the Trump campaign. To read the rest of our piece, click here. --THE DEMOCRATIC COUNTER-MEMO DROPPED: House Intelligence Committee Democrats on Saturday released their memo defending the Justice Department (DOJ) and FBI against allegations of surveillance abuses made in a memo by committee Republicans. The 10-page Democratic memo charges that the Republican memo was wrong to assert that the FBI's investigation of Russian election meddling resulted from the creation of the so-called Steele dossier -- an unverified private intelligence document detailing Trump's ties to Russia. The Democratic memo claims that the FBI had been investigating Trump associates for seven weeks before the dossier, authored by former British spy Christopher Steele, was handed over to them. This, according to the memo, means that the FBI did not rely on the dossier to obtain a Foreign Intelligence Surveillance Act (FISA) warrant to spy on Trump campaign foreign policy adviser Carter Page. The GOP memo -- which was assembled by House Intelligence Committee chairman Rep. Devin Nunes (R-Calif.) and his staff -- depicted a Justice Department fractured by bias against Trump while he was a candidate, but did not specify any particular criminal statutes that may have been violated. According to the GOP document, information from the Steele dossier was "essential" to the acquisition of surveillance warrants on Trump campaign aide Carter Page. It claims that then-Deputy FBI Director Andrew McCabe told the committee in December that without the information from the Steele dossier, no surveillance warrant for Page would have been sought. Aside from rebutting these claims, the new Democrat memo reveals that the FISA warrant and its three subsequent renewals were approved by judges who were appointed by Republican presidents. The memo also shows that FBI fact-finding contradicted Page's sworn testimony before the House Intelligence Committee, and corroborated parts of the Steele dossier relating to Page. To read more of our coverage of Schiff's memo, click here. A DOJ UPDATE: The Justice Department has made deterring malicious actors in cyber space a "top priority" during the Trump administration, Deputy Attorney General Rod Rosenstein said Monday. Rosenstein, who has mainly captured headlines for his role overseeing the ongoing investigation into Russian election interference, spoke at an annual financial services conference in Washington about the need for the federal government and private sector -- particularly financial services firms -- to better cooperate on cracking down on cybercrime. He highlighted Attorney General Jeff Sessions recent decision to create a cyber-digital task force at the department to focus on preventing and responding to cyber intrusions and countering threats in botnets and ransomware. "It has to be a comprehensive approach," Rosenstein said. "Not just fending off, but strenghtening our defenses is also important." The official said financial services firms can help out the government by spotting potentially illegal financial activity linked to cyber criminals. Rosenstein also said that cryptocurrency -- a favorite of hackers because it is not regulated and helps them cash in on their crimes anonymously -- poses a "new challenge" that the government is working to address. The growing popularity of bitcoin and other cryptocurrencies has spurred discussions in Washington about whether they should be regulated. Rosenstein faced a slew of cyber-related questions during the brief event Monday afternoon. He was also asked whether the federal government favors phasing out the use of Social Security numbers as a personal identifier, an idea that generated discussion following the massive breach of credit reporting firm Equifax last year. Rosenstein would not take a position on the idea, leaving it largely up to the private sector to confront the challenge of finding a means of identifying people that would be more secure. "Move on to what, is the question," he said. "I don't have any position from the government perspective but we do recognize that the more identifiers you use ... the more secure you are." "It does require continued strategizing by the private sector," he said. Rosenstein was not, however, asked about Mueller's Russia investigation, which has yielded several bombshell developments in recent weeks. A REPORT IN FOCUS: Cybersecurity firm CrowdStrike on Monday released its annual Global Threat report, which contains a number of notable findings about emerging threats in cyberspace. For instance, the report observes that run-of-the-mill cyber criminals are catching up to the more sophisticated and well-funded nation-state hackers. Experts attribute this development to the so-called "trickle-down" effect of criminal hackers increasingly getting ahold of sophisticated hacking tools developed by governments that are inadvertently leaked out into the wild. The report cites the massive "Wanna Cry" malware attack that broke out last year as evidence of this phenomenon. The malware is based on a hacking tool widely believed to have been developed by the NSA that leveraged a vulnerability in Microsoft Windows. The hacking tool was leaked by the Shadow Brokers group last year. According to CrowdStrike's latest annual analysis, the hospitality sector has emerged as an increasingly popular target for criminal and nation-state hackers. "International hotel chains, in particular, offer ripe picking for financial crimes, from stealing identities to pilfering credit card numbers via point-of-sale transaction," the report states. "State-affiliated adversaries have also developed a deep interest in the lodging sector, whether for tracking persons of interest while they are traveling, or to enable access to these potential victims when they use electronic devices outside the confines of protected networks." Still, government organizations, followed by healthcare and financial institutions, remain the most popular hacking target, according to CrowdStrike. To read more takeaways from the report, click here. A LIGHTER CLICK: E.T. phone hacks? Some researchers seem to think so. (Motherboard) WHAT'S IN THE SPOTLIGHT: DIGITAL PRIVACY: The Supreme Court is set to hear oral arguments in a landmark case concerning global digital privacy. The case, U.S. vs. Microsoft, centers on whether the U.S. government can compel the tech companies to hand over data stored on servers overseas. The Justice Department sought emails from Microsoft stored on servers in Ireland in connection with a narcotics investigation dating back to 2013. The technology giant has fought the warrant for the data, arguing that a domestic U.S. warrant does not cover electronic communications stored overseas. Meanwhile, the U.S. government says that it does, because the case involves a U.S. provider that can access the data domestically. Justice Department officials have argued that a ruling in favor of Microsoft would hamper future investigations, thereby threatening national security. A lower court sided with Microsoft in 2016, spurring the Justice Department to petition the Supreme Court to take up the case last June. In October, the high court agreed to hear arguments in the case. The case has caught tremendous attention from the tech community and is a major flashpoint in the debate over privacy and the government's access to electronic data, an increasingly hot topic in the wake of Edward Snowden's disclosures about the NSA surveillance program. "If U.S. law enforcement can obtain the emails of foreigners stored outside the United States, what's to stop the government of another country from getting your emails even though they are located in the United States?" Brad Smith, Microsoft's president and chief legal officer, wrote last year. "We believe that people's privacy rights should be protected by the laws of their own countries and we believe that information stored in the cloud should have the same protections as paper stored in your desk." The justices will hear arguments in the case on Tuesday. IN CASE YOU MISSED IT: Links from our blog, The Hill, and around the Web. Net neutrality activists rally to overturn FCC repeal. (The Hill) FCC chairman wants new spectrum auctions. (The Hill) Symantec ends NRA discount program amid Florida shooting backlash. (The Hill) OP-ED: Is the Supreme Court set to establish major precedent in email privacy? (The Hill) Women in cryptocurrencies challenge gender divide set forth by "blockchain bros." (The New York Times) Russian spies hacked the Winter Games, tried to pin the blame on North Korea. (The Washington Post) An update on the federal government's case against a former contractor accused of stealing NSA files. (Politico) NYC quietly begins to take steps in effort to prevent cyber attack on US financial system. (Business Insider) New head of Election Assistance Commission plans to continue focus on election security. (Cyberscoop) State leaders examining their role in handling the economy of cryptocurrency. (NextGov) Can U.S. government unlock your iPhone with the help of this company? (Forbes) If you'd like to receive our newsletter in your inbox, please sign up here. | 
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