ConnectWise Quietly Patches Flaw That Helps Phishers

ConnectWise, which offers a self-hosted, remote desktop software application that is widely used by Managed Service Providers (MSPs), is warning about an unusually sophisticated phishing attack that can let attackers take remote control over user systems when recipients click the included link. The warning comes just weeks after the company quietly patched a vulnerability that makes it easier for phishers to launch these attacks.

ConnectWise Control is extremely popular among MSPs that manage, protect and service large numbers of computers remotely for client organizations. Their product provides a dynamic software client and hosted server that connects two or more computers together, and provides temporary or persistent remote access to those client systems.

When a support technician wants to use it to remotely administer a computer, the ConnectWise website generates an executable file that is digitally signed by ConnectWise and downloadable by the client via a hyperlink.

When the remote user in need of assistance clicks the link, their computer is then directly connected to the computer of the remote administrator, who can then control the client’s computer as if they were seated in front of it.

While modern Microsoft Windows operating systems by default will ask users whether they want to run a downloaded executable file, many systems set up for remote administration by MSPs disable that user account control feature for this particular application.

In October, security researcher Ken Pyle alerted ConnectWise that their client executable file gets generated based on client-controlled parameters. Meaning, an attacker could craft a ConnectWise Control client download link that would bounce or proxy the remote connection from the MSP’s servers to a server that the attacker controls.

This is dangerous because many organizations that rely on MSPs to manage their computers often set up their networks so that only remote assistance connections coming from their MSP’s networks are allowed.

Using a free ConnectWise trial account, Pyle showed the company how easy it was to create a client executable that is cryptographically signed by ConnectWise and can bypass those network restrictions by bouncing the connection through an attacker’s ConnectWise Control server.

“You as the attacker have full control over the link’s parameters, and that link gets injected into an executable file that is downloaded by the client through an unauthenticated Web interface,” said Pyle, a partner and exploit developer at the security firm Cybir. “I can send this link to a victim, they will click this link, and their workstation will connect back to my instance via a link on your site.”

On Nov. 29, roughly the same time Pyle published a blog post about his findings, ConnectWise issued an advisory warning users to be on guard against a new round email phishing attempts that mimic legitimate email alerts the company sends when it detects unusual activity on a customer account.

“We are aware of a phishing campaign that mimics ConnectWise Control New Login Alert emails and has the potential to lead to unauthorized access to legitimate Control instances,” the company said.

ConnectWise said it released software updates last month that included new protections against the misdirection vulnerability that Pyle reported.  But the company said there is no reason to believe the phishers they warned about are exploiting any of the issues reported by Pyle.

“Our team quickly triaged the report and determined the risk to partners to be minimal,” said Patrick Beggs, ConnectWise’s chief information security officer. “Nevertheless, the mitigation was simple and presented no risk to partner experience, so we put it into the then-stable 22.8 build and the then-canary 22.9 build, which were released as part of our normal release processes. Due to the low severity of the issue, we didn’t (and don’t plan to) issue a security advisory or alert, since we reserve those notifications for serious security issues.”

Beggs said the phishing attacks that sparked their advisory stemmed from an instance that was not hosted by ConnectWise.

“So we can confirm they are unrelated,” he said. “Unfortunately, phishing attacks happen far too regularly across a variety of industries and products. The timing of our advisory and Mr. Pyle’s blog were coincidental. That said, we’re all for raising more awareness of the seriousness of phishing attacks and the general importance of staying alert and aware of potentially dangerous content.”

The ConnectWise advisory warned users that before clicking any link that appears to come from their service, users should validate the content includes “domains owned by trusted sources,” and “links to go to places you recognize.”

But Pyle said this advice is not terribly useful for customers targeted in his attack scenario because the phishers can send emails directly from ConnectWise, and the short link that gets presented to the user is a wildcard domain that ends in ConnectWise Control’s own domain name — screenconnect.com. What’s more, examining the exceedingly long link generated by ConnectWise’s systems offers few insights to the average user.

“It’s signed by ConnectWise and comes from them, and if you sign up for a free trial instance, you can email people invites directly from them,” Pyle said.

ConnectWise’s warnings come amid breach reports from another major provider of remote support technologies: GoTo disclosed on Nov. 30 that it is investigating a security incident involving “unusual activity within our development environment and third-party cloud storage services. The third-party cloud storage service is currently shared by both GoTo and its affiliate, the password manager service LastPass.

In its own advisory on the incident, LastPass said they believe the intruders leveraged information stolen during a previous intrusion in August 2022 to gain access to “certain elements of our customers’ information.”  However, LastPass maintains that its “customer passwords remain safely encrypted due to LastPass’s Zero Knowledge architecture.”

In short, that architecture means if you lose or forget your all-important master LastPass password — the one needed to unlock access to all of your other passwords stored with them — LastPass can’t help you with that, because they don’t store it. But that same architecture theoretically means that hackers who might break into LastPass’s networks can’t access that information either.

Update, 7:25 p.m. ET: Included statement from ConnectWise CISO.

Researchers Quietly Cracked Zeppelin Ransomware Keys

Peter is an IT manager for a technology manufacturer that got hit with a Russian ransomware strain called “Zeppelin” in May 2020. He’d been on the job less than six months, and because of the way his predecessor architected things, the company’s data backups also were encrypted by Zeppelin. After two weeks of stalling their extortionists, Peter’s bosses were ready to capitulate and pay the ransom demand. Then came the unlikely call from an FBI agent. “Don’t pay,” the agent said. “We’ve found someone who can crack the encryption.”

Peter, who spoke candidly about the attack on condition of anonymity, said the FBI told him to contact a cybersecurity consulting firm in New Jersey called Unit 221B, and specifically its founder — Lance James. Zeppelin sprang onto the crimeware scene in December 2019, but it wasn’t long before James discovered multiple vulnerabilities in the malware’s encryption routines that allowed him to brute-force the decryption keys in a matter of hours, using nearly 100 cloud computer servers.

In an interview with KrebsOnSecurity, James said Unit 221B was wary of advertising its ability to crack Zeppelin ransomware keys because it didn’t want to tip its hand to Zeppelin’s creators, who were likely to modify their file encryption approach if they detected it was somehow being bypassed.

This is not an idle concern. There are multiple examples of ransomware groups doing just that after security researchers crowed about finding vulnerabilities in their ransomware code.

“The minute you announce you’ve got a decryptor for some ransomware, they change up the code,” James said.

But he said the Zeppelin group appears to have stopped spreading their ransomware code gradually over the past year, possibly because Unit 221B’s referrals from the FBI let them quietly help nearly two dozen victim organizations recover without paying their extortionists.

In a blog post published today to coincide with a Black Hat talk on their discoveries, James and co-author Joel Lathrop said they were motivated to crack Zeppelin after the ransomware gang started attacking nonprofit and charity organizations.

“What motivated us the most during the leadup to our action was the targeting of homeless shelters, nonprofits and charity organizations,” the two wrote. “These senseless acts of targeting those who are unable to respond are the motivation for this research, analysis, tools, and blog post. A general Unit 221B rule of thumb around our offices is: Don’t [REDACTED] with the homeless or sick! It will simply trigger our ADHD and we will get into that hyper-focus mode that is good if you’re a good guy, but not so great if you are an ***hole.”

The researchers said their break came when they understood that while Zeppelin used three different types of encryption keys to encrypt files, they could undo the whole scheme by factoring or computing just one of them: An ephemeral RSA-512 public key that is randomly generated on each machine it infects.

“If we can recover the RSA-512 Public Key from the registry, we can crack it and get the 256-bit AES Key that encrypts the files!” they wrote. “The challenge was that they delete the [public key] once the files are fully encrypted. Memory analysis gave us about a 5-minute window after files were encrypted to retrieve this public key.”

Unit 221B ultimately built a “Live CD” version of Linux that victims could run on infected systems to extract that RSA-512 key. From there, they would load the keys into a cluster of 800 CPUs donated by hosting giant Digital Ocean that would then start cracking them. The company also used that same donated infrastructure to help victims decrypt their data using the recovered keys.

Jon is another grateful Zeppelin ransomware victim who was aided by Unit 221B’s decryption efforts. Like Peter, Jon asked that his last name and that of his employer be omitted from the story, but he’s in charge of IT for a mid-sized managed service provider that got hit with Zeppelin in July 2020.

The attackers that savaged Jon’s company managed to phish credentials and a multi-factor authentication token for some tools the company used to support customers, and in short order they’d seized control over the servers and backups for a healthcare provider customer.

Jon said his company was reluctant to pay a ransom in part because it wasn’t clear from the hackers’ demands whether the ransom amount they demanded would provide a key to unlock all systems, and that it would do so safely.

“They want you to unlock your data with their software, but you can’t trust that,” Jon said. “You want to use your own software or someone else who’s trusted to do it.”

In August 2022, the FBI and the Cybersecurity & Infrastructure Security Agency (CISA) issued a joint warning on Zeppelin, saying the FBI had “observed instances where Zeppelin actors executed their malware multiple times within a victim’s network, resulting in the creation of different IDs or file extensions, for each instance of an attack; this results in the victim needing several unique decryption keys.”

The advisory says Zeppelin has attacked “a range of businesses and critical infrastructure organizations, including defense contractors, educational institutions, manufacturers, technology companies, and especially organizations in the healthcare and medical industries. Zeppelin actors have been known to request ransom payments in Bitcoin, with initial amounts ranging from several thousand dollars to over a million dollars.”

The FBI and CISA say the Zeppelin actors gain access to victim networks by exploiting weak Remote Desktop Protocol (RDP) credentials, exploiting SonicWall firewall vulnerabilities, and phishing campaigns. Prior to deploying Zeppelin ransomware, actors spend one to two weeks mapping or enumerating the victim network to identify data enclaves, including cloud storage and network backups, the alert notes.

Jon said he felt so lucky after connecting with James and hearing about their decryption work, that he toyed with the idea of buying a lottery ticket that day.

“This just doesn’t usually happen,” Jon said. “It’s 100 percent like winning the lottery.”

By the time Jon’s company got around to decrypting their data, they were forced by regulators to prove that no patient data had been exfiltrated from their systems. All told, it took his employer two months to fully recover from the attack.

“I definitely feel like I was ill-prepared for this attack,” Jon said. “One of the things I’ve learned from this is the importance of forming your core team and having those people who know what their roles and responsibilities are ahead of time. Also, trying to vet new vendors you’ve never met before and build trust relationships with them is very difficult to do when you have customers down hard now and they’re waiting on you to help them get back up.”

A more technical writeup on Unit 221B’s discoveries (cheekily titled “0XDEAD ZEPPELIN”) is available here.

Lawsuit Seeks Food Benefits Stolen By Skimmers

A nonprofit organization is suing the state of Massachusetts on behalf of thousands of low-income families who were collectively robbed of more than a $1 million in food assistance benefits by card skimming devices secretly installed at cash machines and grocery store checkout lanes across the state. Federal law bars states from replacing these benefits using federal funds, and a recent rash of skimming incidents nationwide has disproportionately affected those receiving food assistance via state-issued prepaid debit cards.

On Nov. 4, The Massachusetts Law Reform Institute (MLRI) filed a class action lawsuit on behalf of low-income families whose Supplemental Nutrition and Assistance Program (SNAP) benefits were stolen from their accounts. The SNAP program serves over a million people in Massachusetts, and 41 million people nationally.

“Over the past few months, thieves have stolen over a million SNAP dollars from thousands of Massachusetts families – putting their nutrition and economic stability at risk,” the MLRI said in a statement on the lawsuit. “The criminals attach a skimming device on a POS (point of sale) terminal to capture the household’s account information and PIN. The criminals then use that information to make a fake card and steal the SNAP benefits.”

In announcing the lawsuit, the MRLI linked to a story KrebsOnSecurity published last month that examined how skimming thieves increasingly are targeting SNAP payment card holders nationwide. The story looked at how the vast majority of SNAP benefit cards issued by the states do not include the latest chip technology that makes it more difficult and expensive for thieves to clone them.

The story also highlighted how SNAP cardholders usually have little recourse to recover any stolen funds — even in unlikely cases where the victim has gathered mountains of proof to show state and federal officials that the fraudulent withdrawals were not theirs.

Deborah Harris is a staff attorney at the MLRI. Harris said the goal of the lawsuit is to force Massachusetts to reimburse SNAP skimming victims using state funds, and to convince The U.S. Department of Agriculture (USDA) — which funds the program that states draw from — to change its policies and allow states to replace stolen benefits with federal funds.

“Ultimately we think it’s the USDA that needs to step up and tell states they have a duty to restore the stolen benefits, and that USDA will cover the cost at least until there is better security in place, such as chip cards,” Harris told KrebsOnSecurity.

“The losses we’re talking about are relatively small in the scheme of total SNAP expenditures which are billions,” she said. “But if you are a family that can’t pay for food because you suddenly don’t have money in your account, it’s devastating for the family.”

The USDA has not said it will help states restore the stolen funds. But on Oct. 31, 2022, the agency released guidance (PDF) whose primary instructions were included in an appendix titled, Card Security Options Available to Households. Notably, the USDA did not mention the idea of shifting to chip-based SNAP benefits cards.

“The guidance generally continues to make households responsible for preventing the theft of their benefits as well as for suffering the loss when benefits are stolen through no fault of the household,” Harris said. “Many of the recommendations are not practical for households who don’t have a smartphone to receive text messages and aren’t able to change their PIN after each transaction and keep track of the new PIN.”

Harris said three of the four recommendations are not currently available in Massachusetts, and they are very likely not currently available in other states. For example, she said, Massachusetts households do not have the option of freezing or locking their cards between transactions. Nor do they receive alerts about transactions. And they most certainly don’t have any way to block out-of-state transactions.

“Perhaps these are options that [card] processors and states could provide, but they are not available now as far as we know,” Harris said. “Most likely they would take time to implement.”

Patch Tuesday, November 2022 Election Edition

Let’s face it: Having “2022 election” in the headline above is probably the only reason anyone might read this story today. Still, while most of us here in the United States are anxiously awaiting the results of how well we’ve patched our Democracy, it seems fitting that Microsoft Corp. today released gobs of security patches for its ubiquitous Windows operating systems. November’s patch batch includes fixes for a whopping six zero-day security vulnerabilities that miscreants and malware are already exploiting in the wild.

Probably the scariest of the zero-day flaws is CVE-2022-41128, a “critical” weakness in the Windows scripting languages that could be used to foist malicious software on vulnerable users who do nothing more than browse to a hacked or malicious site that exploits the weakness. Microsoft credits Google with reporting the vulnerability, which earned a CVSS score of 8.8.

CVE-2022-41073 is a zero-day flaw in the Windows Print Spooler, a Windows component that Microsoft has patched mightily over the past year. Kevin Breen, director of cyber threat research at Immersive Labs, noted that the print spooler has been a popular target for vulnerabilities in the last 12 months, with this marking the 9th patch.

The third zero-day Microsoft patched this month is CVE-2022-41125, which is an “elevation of privilege” vulnerability in the Windows Cryptography API: Next Generation (CNG) Key Isolation Service, a service for isolating private keys. Satnam Narang, senior staff research engineer at Tenable, said exploitation of this vulnerability could grant an attacker SYSTEM privileges.

The fourth zero-day, CVE-2022-41091, was previously disclosed and widely reported on in October. It is a Security Feature Bypass of “Windows Mark of the Web” – a mechanism meant to flag files that have come from an untrusted source.

The other two zero-day bugs Microsoft patched this month were for vulnerabilities being exploited in Exchange Server. News that these two Exchange flaws were being exploited in the wild surfaced in late September 2022, and many were surprised when Microsoft let October’s Patch Tuesday sail by without issuing official patches for them (the company instead issued mitigation instructions that it was forced to revise multiple times). Today’s patch batch addresses both issues.

Greg Wiseman, product manager at Rapid7, said the Exchange flaw CVE-2022-41040 is a “critical” elevation of privilege vulnerability, and CVE-2022-41082 is considered Important, allowing Remote Code Execution (RCE) when PowerShell is accessible to the attacker.

“Both vulnerabilities have been exploited in the wild,” Wiseman said. “Four other CVEs affecting Exchange Server have also been addressed this month. Three are rated as Important, and CVE-2022-41080 is another privilege escalation vulnerability considered Critical. Customers are advised to update their Exchange Server systems immediately, regardless of whether any previously recommended mitigation steps have been applied. The mitigation rules are no longer recommended once systems have been patched.”

Adobe usually issues security updates for its products on Patch Tuesday, but it did not this month. For a closer look at the patches released by Microsoft today and indexed by severity and other metrics, check out the always-useful Patch Tuesday roundup from the SANS Internet Storm Center. And it’s not a bad idea to hold off updating for a few days until Microsoft works out any kinks in the updates: AskWoody.com usually has the lowdown on any patches that may be causing problems for Windows users.

As always, please consider backing up your system or at least your important documents and data before applying system updates. And if you run into any problems with these updates, please drop a note about it here in the comments.

Hacker Charged With Extorting Online Psychotherapy Service

A 25-year-old Finnish man has been charged with extorting a once popular and now-bankrupt online psychotherapy company and its patients. Finnish authorities rarely name suspects in an investigation, but they were willing to make an exception for Julius “Zeekill” Kivimaki, a notorious hacker who — at the tender age of 17 — had been convicted of more than 50,000 cybercrimes, including data breaches, payment fraud, operating botnets, and calling in bomb threats.

In late October 2022, Kivimaki was charged (and arrested in absentia, according to the Finns) with attempting to extort money from the Vastaamo Psychotherapy Center.  On October 21, 2020, Vastaamo became the target of blackmail when a tormentor identified as “ransom_man” demanded payment of 40 bitcoins (~450,000 euros at the time) in return for a promise not to publish highly sensitive therapy session notes Vastaamo had exposed online.

In a series of posts over the ensuing days on a Finnish-language dark net discussion board, ransom_man said Vastaamo appeared unwilling to negotiate a payment, and that he would start publishing 100 patient profiles every 24 hours “to provide further incentive for the company to continue communicating with us.”

“We’re not asking for much, approximately 450,000 euros which is less than 10 euros per patient and only a small fraction of the around 20 million yearly revenues of this company,” ransom_man wrote.

When Vastaamo declined to pay, ransom_man shifted to extorting individual patients. According to Finnish police, some 22,000 victims reported extortion attempts targeting them personally, targeted emails that threatened to publish their therapy notes online unless paid a 500 euro ransom.

On Oct. 23, 2020, ransom_man uploaded to the dark web a large compressed file that included all of the stolen Vastaamo patient records. But investigators found the file also contained an entire copy of ransom_man’s home folder, a likely mistake that exposed a number of clues that they say point to Kivimaki.

Ransom_man quickly deleted the large file (accompanied by a “whoops” notation), but not before it had been downloaded a number of times. The entire archive has since been made into a searchable website on the Dark Web.

Among those who grabbed a copy of the database was Antti Kurittu, a team lead at Nixu Corporation and a former criminal investigator. In 2013, Kurittu worked on investigation involving Kivimaki’s use of the Zbot botnet, among other activities Kivimaki engaged in as a member of the hacker group Hack the Planet.

“It was a huge opsec [operational security] fail, because they had a lot of stuff in there — including the user’s private SSH folder, and a lot of known hosts that we could take a very good look at,” Kurittu told KrebsOnSecurity, declining to discuss specifics of the evidence investigators seized. “There were also other projects and databases.”

Kurittu said he and others he and others who were familiar with illegal activities attributed to Kivimäki couldn’t shake suspicion that the infamous cybercriminal was also behind the Vastaamo extortion.

“I couldn’t find anything that would link that data directly to one individual, but there were enough indicators in there that put the name in my head and I couldn’t shake it,” Kurittu said. “When they named him as the prime suspect I was not surprised.”

A handful of individually extorted victims paid a ransom, but when news broke that the entire Vastaamo database had been leaked online, the extortion threats no longer held their sting. However, someone would soon set up a site on the dark web where anyone could search this sensitive data.

Kivimaki stopped using his middle name Julius in favor of his given first name Aleksanteri when he moved abroad several years ago. A Twitter account by that name was verified by Kivimaki’s attorney as his, and through that account he denied being involved in the Vastaamo extortion.

“I believe [the Finnish authorities] brought this to the public in order to influence the decision-making of my old case from my teenage years, which was just processed in the Court of Appeal, both cases are investigated by the same persons,” Kivimaki tweeted on Oct. 28.

Kivimaki is appealing a 2020 district court decision sentencing him to “one year of conditional imprisonment for two counts of fraud committed as a young person, and one of gross fraud, interference with telecommunications as a young person, aggravated data breach as a young person and incitement to fraud as a young person,” according to the Finnish tabloid Ilta-Sanomat.

“Now in the Court of Appeal, the prosecutor is demanding a harsher punishment for the man, i.e. unconditional imprisonment,” reads the Ilta-Sanomat story. “The prosecutor notes in his complaint that the young man has been committing cybercrimes from Espoo since he was 15 years old, and the actions have had to be painstakingly investigated through international legal aid.”

As described in this Wired story last year, Vastaamo filled an urgent demand for psychological counseling, and it won accolades from Finnish health authorities and others for its services.

“Vastaamo was a private company, but it seemed to operate in the same spirit of tech-enabled ease and accessibility: You booked a therapist with a few clicks, wait times were tolerable, and Finland’s Social Insurance Institution reimbursed a big chunk of the session fee (provided you had a diagnosed mental disorder),” William Ralston wrote for Wired. “The company was run by Ville Tapio, a 39-year-old coder and entrepreneur with sharp eyebrows, slicked-back brown hair, and a heavy jawline. He’d cofounded the company with his parents. They pitched ­Vastaamo as a humble family-run enterprise committed to improving the mental health of all Finns.”

But for all the good it brought, the healthcare records management system that Vastaamo used relied on little more than a MySQL database that was left dangerously exposed to the web for 16 months, guarded by nothing more than an administrator account with a blank password.

The Finnish daily Iltalehti said Tapio was relieved of his duties as CEO of Vastaamo in October 2020, and that in September, prosecutors brought charges against Tapio for a data protection offense in connection with Vastaamo’s information leak.

“According to Vastaamo, the data breach in Vastaamo’s customer databases took place in November 2018,” Iltalehti reported last month. “According to Vastaamo, Tapio concealed information about the data breach for more than a year and a half.”

Battle with Bots Prompts Mass Purge of Amazon, Apple Employee Accounts on LinkedIn

On October 10, 2022, there were 576,562 LinkedIn accounts that listed their current employer as Apple Inc. The next day, half of those profiles no longer existed. A similarly dramatic drop in the number of LinkedIn profiles claiming employment at Amazon comes as LinkedIn is struggling to combat a significant uptick in the creation of fake employee accounts that pair AI-generated profile photos with text lifted from legitimate users.

Jay Pinho is a developer who is working on a product that tracks company data, including hiring. Pinho has been using LinkedIn to monitor daily employee headcounts at several dozen large organizations, and last week he noticed that two of them had far fewer people claiming to work for them than they did just 24 hours previously.

Pinho’s screenshot below shows the daily count of employees as displayed on Amazon’s LinkedIn homepage. Pinho said his scraper shows that the number of LinkedIn profiles claiming current roles at Amazon fell from roughly 1.25 million to 838,601 in just one day, a 33 percent drop:

As stated above, the number of LinkedIn profiles that claimed to work at Apple fell by approximately 50 percent on Oct. 10, according to Pinho’s analysis:

Neither Amazon or Apple responded to requests for comment. LinkedIn declined to answer questions about the account purges, saying only that the company is constantly working to keep the platform free of fake accounts. In June, LinkedIn acknowledged it was seeing a rise in fraudulent activity happening on the platform.

KrebsOnSecurity hired Menlo Park, Calif.-based SignalHire to check Pinho’s numbers. SignalHire keeps track of active and former profiles on LinkedIn, and during the Oct 9-11 timeframe SignalHire said it saw somewhat smaller but still unprecedented drops in active profiles tied to Amazon and Apple.

“The drop in the percentage of 7-10 percent [of all profiles], as it happened [during] this time, is not something that happened before,” SignalHire’s Anastacia Brown told KrebsOnSecurity.

Brown said the normal daily variation in profile numbers for these companies is plus or minus one percent.

“That’s definitely the first huge drop that happened throughout the time we’ve collected the profiles,” she said.

In late September 2022, KrebsOnSecurity warned about the proliferation of fake LinkedIn profiles for Chief Information Security Officer (CISO) roles at some of the world’s largest corporations. A follow-up story on Oct. 5 showed how the phony profile problem has affected virtually all executive roles at corporations, and how these fake profiles are creating an identity crisis for the businesses networking site and the companies that rely on it to hire and screen prospective employees.

A day after that second story ran, KrebsOnSecurity heard from a recruiter who noticed the number of LinkedIn profiles that claimed virtually any role in network security had dropped seven percent overnight. LinkedIn declined to comment about that earlier account purge, saying only that, “We’re constantly working at taking down fake accounts.”

It’s unclear whether LinkedIn is responsible for this latest account purge, or if individually affected companies are starting to take action on their own. The timing, however, argues for the former, as the account purges for Apple and Amazon employees tracked by Pinho appeared to happen within the same 24 hour period.

It’s also unclear who or what is behind the recent proliferation of fake executive profiles on LinkedIn. Cybersecurity firm Mandiant (recently acquired by Google) told Bloomberg that hackers working for the North Korean government have been copying resumes and profiles from leading job listing platforms LinkedIn and Indeed, as part of an elaborate scheme to land jobs at cryptocurrency firms.

On this point, Pinho said he noticed an account purge in early September that targeted fake profiles tied to jobs at cryptocurrency exchange Binance. Up until Sept. 3, there were 7,846 profiles claiming current executive roles at Binance. The next day, that number stood at 6,102, a 23 percent drop (by some accounts that 6,102 head count is still wildly inflated).

Fake profiles also may be tied to so-called “pig butchering” scams, wherein people are lured by flirtatious strangers online into investing in cryptocurrency trading platforms that eventually seize any funds when victims try to cash out.

In addition, identity thieves have been known to masquerade on LinkedIn as job recruiters, collecting personal and financial information from people who fall for employment scams.

Nicholas Weaver, a researcher for the International Computer Science Institute at University of California, Berkeley, suggested another explanation for the recent glut of phony LinkedIn profiles: Someone may be setting up a mass network of accounts in order to more fully scrape profile information from the entire platform.

“Even with just a standard LinkedIn account, there’s a pretty good amount of profile information just in the default two-hop networks,” Weaver said. “We don’t know the purpose of these bots, but we know creating bots isn’t free and creating hundreds of thousands of bots would require a lot of resources.”

In response to last week’s story about the explosion of phony accounts on LinkedIn, the company said it was exploring new ways to protect members, such as expanding email domain verification. Under such a scheme, LinkedIn users would be able to publicly attest that their profile is accurate by verifying that they can respond to email at the domain associated with their current employer.

LinkedIn claims that its security systems detect and block approximately 96 percent of fake accounts. And despite the recent purges, LinkedIn may be telling the truth, Weaver said.

“There’s no way you can test for that,” he said. “Because technically, it may be that there were actually 100 million bots trying to sign up at LinkedIn as employees at Amazon.”

Weaver said the apparent mass account purge at LinkedIn underscores the size of the bot problem, and could present a “real and material change” for LinkedIn.

“It may mean the statistics they’ve been reporting about usage and active accounts are off by quite a bit,” Weaver said.

Report: Big U.S. Banks Are Stiffing Account Takeover Victims

When U.S. consumers have their online bank accounts hijacked and plundered by hackers, U.S. financial institutions are legally obligated to reverse any unauthorized transactions as long as the victim reports the fraud in a timely manner. But new data released this week suggests that for some of the nation’s largest banks, reimbursing account takeover victims has become more the exception than the rule.

The findings came in a report released by Sen. Elizabeth Warren (D-Mass.), who in April 2022 opened an investigation into fraud tied to Zelle, the “peer-to-peer” digital payment service used by many financial institutions that allows customers to quickly send cash to friends and family.

Zelle is run by Early Warning Services LLC (EWS), a private financial services company which is jointly owned by Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo. Zelle is enabled by default for customers at over 1,000 different financial institutions, even if a great many customers still don’t know it’s there.

Sen. Warren said several of the EWS owner banks — including Capital One, JPMorgan and Wells Fargo — failed to provide all of the requested data. But Warren did get the requested information from PNC, Truist and U.S. Bank.

“Overall, the three banks that provided complete data sets reported 35,848 cases of scams, involving over $25.9 million of payments in 2021 and the first half of 2022,” the report summarized. “In the vast majority of these cases, the banks did not repay the customers that reported being scammed. Overall these three banks reported repaying customers in only 3,473 cases (representing nearly 10% of scam claims) and repaid only $2.9 million.”

Importantly, the report distinguishes between cases that involve straight up bank account takeovers and unauthorized transfers (fraud), and those losses that stem from “fraudulently induced payments,” where the victim is tricked into authorizing the transfer of funds to scammers (scams).

A common example of the latter is the Zelle Fraud Scam, which uses an ever-shifting set of come-ons to trick people into transferring money to fraudsters. The Zelle Fraud Scam often employs text messages and phone calls spoofed to look like they came from your bank, and the scam usually relates to fooling the customer into thinking they’re sending money to themselves when they’re really sending it to the crooks.

Here’s the rub: When a customer issues a payment order to their bank, the bank is obligated to honor that order so long as it passes a two-stage test. The first question asks, Did the request actually come from an authorized owner or signer on the account? In the case of Zelle scams, the answer is yes.

Trace Fooshee, a strategic advisor in the anti money laundering practice at Aite-Novarica, said the second stage requires banks to give the customer’s transfer order a kind of “sniff test” using “commercially reasonable” fraud controls that generally are not designed to detect patterns involving social engineering.

Fooshee said the legal phrase “commercially reasonable” is the primary reason why no bank has much — if anything — in the way of controlling for scam detection.

“In order for them to deploy something that would detect a good chunk of fraud on something so hard to detect they would generate egregiously high rates of false positives which would also make consumers (and, then, regulators) very unhappy,” Fooshee said. “This would tank the business case for the service as a whole rendering it something that the bank can claim to NOT be commercially reasonable.”

Sen. Warren’s report makes clear that banks generally do not pay consumers back if they are fraudulently induced into making Zelle payments.

“In simple terms, Zelle indicated that it would provide redress for users in cases of unauthorized transfers in which a user’s account is accessed by a bad actor and used to transfer a payment,” the report continued. “However, EWS’ response also indicated that neither Zelle nor its parent bank owners would reimburse users fraudulently induced by a bad actor into making a payment on the platform.”

Still, the data suggest banks did repay at least some of the funds stolen from scam victims about 10 percent of the time. Fooshee said he’s surprised that number is so high.

“That banks are paying victims of authorized payment fraud scams anything at all is noteworthy,” he said. “That’s money that they’re paying for out of pocket almost entirely for goodwill. You could argue that repaying all victims is a sound strategy especially in the climate we’re in but to say that it should be what all banks do remains an opinion until Congress changes the law.”

UNAUTHORIZED FRAUD

However, when it comes to reimbursing victims of fraud and account takeovers, the report suggests banks are stiffing their customers whenever they can get away with it. “Overall, the four banks that provided complete data sets indicated that they reimbursed only 47% of the dollar amount of fraud claims they received,” the report notes.

How did the banks behave individually? From the report:

-In 2021 and the first six months of 2022, PNC Bank indicated that its customers reported 10,683 cases of unauthorized payments totaling over $10.6 million, of which only 1,495 cases totaling $1.46 were refunded to consumers. PNC Bank left 86% of its customers that reported cases of fraud without recourse for fraudulent activity that occurred on Zelle.

-Over this same time period, U.S. Bank customers reported a total of 28,642 cases of unauthorized transactions totaling over $16.2 million, while only refunding 8,242 cases totaling less than $4.7 million.

-In the period between January 2021 and September 2022, Bank of America customers reported 81,797 cases of unauthorized transactions, totaling $125 million. Bank of America refunded only $56.1 million in fraud claims – less than 45% of the overall dollar value of claims made in that time.

–Truist indicated that the bank had a much better record of reimbursing defrauded customers over this same time period. During 2021 and the first half of 2022, Truist customers filed 24,752 unauthorized transaction claims amounting to $24.4 million. Truist reimbursed 20,349 of those claims, totaling $20.8 million – 82% of Truist claims were reimbursed over this period. Overall, however, the four banks that provided complete data sets indicated that they reimbursed only 47% of the dollar amount of fraud claims they received.

Fooshee said there has long been a great deal of inconsistency in how banks reimburse unauthorized fraud claims — even after the Consumer Financial Protection Bureau (CPFB) came out with guidance on what qualifies as an unauthorized fraud claim.

“Many banks reported that they were still not living up to those standards,” he said. “As a result, I imagine that the CFPB will come down hard on those with fines and we’ll see a correction.”

Fooshee said many banks have recently adjusted their reimbursement policies to bring them more into line with the CFPB’s guidance from last year.

“So this is heading in the right direction but not with sufficient vigor and speed to satisfy critics,” he said.

Seth Ruden is a payments fraud expert who serves as director of global advisory for digital identity company BioCatch. Ruden said Zelle has recently made “significant changes to its fraud program oversight because of consumer influence.”

“It is clear to me that despite sensational headlines, progress has been made to improve outcomes,” Ruden said. “Presently, losses in the network on a volume-adjusted basis are lower than those typical of credit cards.”

But he said any failure to reimburse victims of fraud and account takeovers only adds to pressure on Congress to do more to help victims of those scammed into authorizing Zelle payments.

“The bottom line is that regulations have not kept up with the speed of payment technology in the United States, and we’re not alone,” Ruden said. “For the first time in the UK, authorized payment scam losses have outpaced credit card losses and a regulatory response is now on the table. Banks have the choice right now to take action and increase controls or await regulators to impose a new regulatory environment.”

Sen. Warren’s report is available here (PDF).

There are, of course, some versions of the Zelle fraud scam that may be confusing financial institutions as to what constitutes “authorized” payment instructions. For example, the variant I wrote about earlier this year began with a text message that spoofed the target’s bank and warned of a pending suspicious transfer.

Those who responded at all received a call from a number spoofed to make it look like the victim’s bank calling, and were asked to validate their identities by reading back a one-time password sent via SMS. In reality, the thieves had simply asked the bank’s website to reset the victim’s password, and that one-time code sent via text by the bank’s site was the only thing the crooks needed to reset the target’s password and drain the account using Zelle.

None of the above discussion involves the risks affecting businesses that bank online. Businesses in the United States do not enjoy the same fraud liability protection afforded to consumers, and if a banking trojan or clever phishing site results in a business account getting drained, most banks will not reimburse that loss.

This is why I have always and will continue to urge small business owners to conduct their online banking affairs only from a dedicated, access restricted and security-hardened device — and preferably a non-Windows machine.

For consumers, the same old advice remains the best: Watch your bank statements like a hawk, and immediately report and contest any charges that appear fraudulent or unauthorized.

Glut of Fake LinkedIn Profiles Pits HR Against the Bots

A recent proliferation of phony executive profiles on LinkedIn is creating something of an identity crisis for the business networking site, and for companies that rely on it to hire and screen prospective employees. The fabricated LinkedIn identities — which pair AI-generated profile photos with text lifted from legitimate accounts — are creating major headaches for corporate HR departments and for those managing invite-only LinkedIn groups.

Last week, KrebsOnSecurity examined a flood of inauthentic LinkedIn profiles all claiming Chief Information Security Officer (CISO) roles at various Fortune 500 companies, including Biogen, Chevron, ExxonMobil, and Hewlett Packard.

Since then, the response from LinkedIn users and readers has made clear that these phony profiles are showing up en masse for virtually all executive roles — but particularly for jobs and industries that are adjacent to recent global events and news trends.

Hamish Taylor runs the Sustainability Professionals group on LinkedIn, which has more than 300,000 members. Together with the group’s co-owner, Taylor said they’ve blocked more than 12,700 suspected fake profiles so far this year, including dozens of recent accounts that Taylor describes as “cynical attempts to exploit Humanitarian Relief and Crisis Relief experts.”

“We receive over 500 fake profile requests to join on a weekly basis,” Taylor said. “It’s hit like hell since about January of this year. Prior to that we did not get the swarms of fakes that we now experience.”

Taylor recently posted an entry on LinkedIn titled, “The Fake ID Crisis on LinkedIn,” which lampooned the “60 Least Wanted ‘Crisis Relief Experts’ — fake profiles that claimed to be experts in disaster recovery efforts in the wake of recent hurricanes. The images above and below show just one such swarm of profiles the group flagged as inauthentic. Virtually all of these profiles were removed from LinkedIn after KrebsOnSecurity tweeted about them last week.

Mark Miller is the owner of the DevOps group on LinkedIn, and says he deals with fake profiles on a daily basis — often hundreds per day. What Taylor called “swarms” of fake accounts Miller described instead as “waves” of incoming requests from phony accounts.

“When a bot tries to infiltrate the group, it does so in waves,” Miller said. “We’ll see 20-30 requests come in with the same type of information in the profiles.”

After screenshotting the waves of suspected fake profile requests, Miller started sending the images to LinkedIn’s abuse teams, which told him they would review his request but that he may never be notified of any action taken.

Miller said that after months of complaining and sharing fake profile information with LinkedIn, the social media network appeared to do something which caused the volume of group membership requests from phony accounts to drop precipitously.

“I wrote our LinkedIn rep and said we were considering closing the group down the bots were so bad,” Miller said. “I said, ‘You guys should be doing something on the backend to block this.”

Jason Lathrop is vice president of technology and operations at ISOutsource, a Seattle-based consulting firm with roughly 100 employees. Like Miller, Lathrop’s experience in fighting bot profiles on LinkedIn suggests the social networking giant will eventually respond to complaints about inauthentic accounts. That is, if affected users complain loudly enough (posting about it publicly on LinkedIn seems to help).

Lathrop said that about two months ago his employer noticed waves of new followers, and identified more than 3,000 followers that all shared various elements, such as profile photos or text descriptions.

“Then I noticed that they all claim to work for us at some random title within the organization,” Lathrop said in an interview with KrebsOnSecurity. “When we complained to LinkedIn, they’d tell us these profiles didn’t violate their community guidelines. But like heck they don’t! These people don’t exist, and they’re claiming they work for us!”

Lathrop said that after his company’s third complaint, a LinkedIn representative responded by asking ISOutsource to send a spreadsheet listing every legitimate employee in the company, and their corresponding profile links.

Not long after that, the phony profiles that were not on the company’s list were deleted from LinkedIn. Lathrop said he’s still not sure how they’re going to handle getting new employees allowed into their company on LinkedIn going forward.

It remains unclear why LinkedIn has been flooded with so many fake profiles lately, or how the phony profile photos are sourced. Random testing of the profile photos shows they resemble but do not match other photos posted online. Several readers pointed out one likely source — the website thispersondoesnotexist.com, which makes using artificial intelligence to create unique headshots a point-and-click exercise.

Cybersecurity firm Mandiant (recently acquired by Google) told Bloomberg that hackers working for the North Korean government have been copying resumes and profiles from leading job listing platforms LinkedIn and Indeed, as part of an elaborate scheme to land jobs at cryptocurrency firms.

Fake profiles also may be tied to so-called “pig butchering” scams, wherein people are lured by flirtatious strangers online into investing in cryptocurrency trading platforms that eventually seize any funds when victims try to cash out.

In addition, identity thieves have been known to masquerade on LinkedIn as job recruiters, collecting personal and financial information from people who fall for employment scams.

But the Sustainability Group administrator Taylor said the bots he’s tracked strangely don’t respond to messages, nor do they appear to try to post content.

“Clearly they are not monitored,” Taylor assessed. “Or they’re just created and then left to fester.”

This experience was shared by the DevOp group admin Miller, who said he’s also tried baiting the phony profiles with messages referencing their fakeness. Miller says he’s worried someone is creating a massive social network of bots for some future attack in which the automated accounts may be used to amplify false information online, or at least muddle the truth.

“It’s almost like someone is setting up a huge bot network so that when there’s a big message that needs to go out they can just mass post with all these fake profiles,” Miller said.

In last week’s story on this topic, I suggested LinkedIn could take one simple step that would make it far easier for people to make informed decisions about whether to trust a given profile: Add a “created on” date for every profile. Twitter does this, and it’s enormously helpful for filtering out a great deal of noise and unwanted communications.

Many of our readers on Twitter said LinkedIn needs to give employers more tools — perhaps some kind of application programming interface (API) — that would allow them to quickly remove profiles that falsely claim to be employed at their organizations.

Another reader suggested LinkedIn also could experiment with offering something akin to Twitter’s verified mark to users who chose to validate that they can respond to email at the domain associated with their stated current employer.

In response to questions from KrebsOnSecurity, LinkedIn said it was considering the domain verification idea.

“This is an ongoing challenge and we’re constantly improving our systems to stop fakes before they come online,” LinkedIn said in a written statement. “We do stop the vast majority of fraudulent activity we detect in our community – around 96% of fake accounts and around 99.1% of spam and scams. We’re also exploring new ways to protect our members such as expanding email domain verification. Our community is all about authentic people having meaningful conversations and to always increase the legitimacy and quality of our community.”

In a story published Wednesday, Bloomberg noted that LinkedIn has largely so far avoided the scandals about bots that have plagued networks like Facebook and Twitter. But that shine is starting to come off, as more users are forced to waste more of their time fighting off inauthentic accounts.

“What’s clear is that LinkedIn’s cachet as being the social network for serious professionals makes it the perfect platform for lulling members into a false sense of security,” Bloomberg’s Tim Cuplan wrote. “Exacerbating the security risk is the vast amount of data that LinkedIn collates and publishes, and which underpins its whole business model but which lacks any robust verification mechanisms.”

Fake CISO Profiles on LinkedIn Target Fortune 500s

Someone has recently created a large number of fake LinkedIn profiles for Chief Information Security Officer (CISO) roles at some of the world’s largest corporations. It’s not clear who’s behind this network of fake CISOs or what their intentions may be. But the fabricated LinkedIn identities are confusing search engine results for CISO roles at major companies, and they are being indexed as gospel by various downstream data-scraping sources.

If one searches LinkedIn for the CISO of the energy giant Chevron, one might find the profile for a Victor Sites, who says he’s from Westerville, Ohio and is a graduate of Texas A&M University.

Of course, Sites is not the real CISO of Chevron. That role is currently occupied by Christopher Lukas of Danville, Calif. If you were confused at this point, you might ask Google who it thinks is the current Chief Information Security Officer of Chevron. When KrebsOnSecurity did that earlier this morning, the fake CISO profile was the very first search result returned (followed by the LinkedIn profile for the real Chevron CISO).

Helpfully, LinkedIn seems to be able to detect something in common about all these fake CISO profiles, because it suggested I view a number of them in the “People Also Viewed” column seen in the image above. There are two fake CISO profiles suggested there, including one for a Maryann Robles, who claims to be the CISO of another energy giant — ExxonMobil.

Maryann’s profile says she’s from Tupelo, Miss., and includes this detail about how she became a self-described “old-school geek.”

“Since playing Tradewars on my Tandy 1000 with a 300 baud modem in the early ’90s, I’ve had a lifelong passion for technology, which I’ve carried with me as Deputy CISO of the world’s largest health plan,” her profile reads.

However, this description appears to have been lifted from the profile for the real CISO at the Centers for Medicare & Medicaid Services in Baltimore, Md.

Interestingly, Maryann’s LinkedIn profile was accepted as truth by Cybercrime Magazine’s CISO 500 listing, which claims to maintain a list of the current CISOs at America’s largest companies:

Rich Mason, the former CISO at Fortune 500 firm Honeywell, began warning his colleagues on LinkedIn about the phony profiles earlier this week.

“It’s interesting the downstream sources that repeat LinkedIn bogus content as truth,” Mason said. “This is dangerous, Apollo.io, Signalhire, and Cybersecurity Ventures.”

Google wasn’t fooled by the phony LinkedIn profile for Jennie Biller, who claims to be CISO at biotechnology giant Biogen (the real Biogen CISO is Russell Koste). But Biller’s profile is worth mentioning because it shows how some of these phony profiles appear to be quite hastily assembled. Case in point: Biller’s name and profile photo suggest she is female, however the “About” description of her accomplishments uses male pronouns. Also, it might help that Jennie only has 18 connections on LinkedIn.

Again, we don’t know much about who or what is behind these profiles, but in August the security firm Mandiant (recently acquired by Google) told Bloomberg that hackers working for the North Korean government have been copying resumes and profiles from leading job listing platforms LinkedIn and Indeed, as part of an elaborate scheme to land jobs at cryptocurrency firms.

None of the profiles listed here responded to requests for comment (or to become a connection).

In a statement provided to KrebsOnSecurity, LinkedIn said its teams were actively working to take these fake accounts down.

“We do have strong human and automated systems in place, and we’re continually improving, as fake account activity becomes more sophisticated,” the statement reads. “In our transparency report we share how our teams plus automated systems are stopping the vast majority of fraudulent activity we detect in our community – around 96% of fake accounts and around 99.1% of spam and scam.”

LinkedIn could take one simple step that would make it far easier for people to make informed decisions about whether to trust a given profile: Add a “created on” date for every profile. Twitter does this, and it’s enormously helpful for filtering out a great deal of noise and unwanted communications.

The former CISO Mason said LinkedIn also could experiment with offering something akin to Twitter’s verified mark to users who chose to validate that they can respond to email at the domain associated with their stated current employer.

“If I saw that a LinkedIn profile had been domain-validated, then my confidence in that profile would go way up,” Mason said, noting that many of the fake profiles had hundreds of followers, including dozens of real CISOs. Maryann’s profile grew by a hundred connections in just the past few days, he said.

“If we have CISOs that are falling for this, what hopes do the masses have?” Mason said.

Mason said LinkedIn also needs a more streamlined process for allowing employers to remove phony employee accounts. He recently tried to get a phony profile removed from LinkedIn for someone who falsely claimed to have worked for his company.

“I shot a note to LinkedIn and said please remove this, and they said, well, we have to contact that person and arbitrate this,” he said. “They gave the guy two weeks and he didn’t respond, so they took it down. But that doesn’t scale, and there needs to be a mechanism where an employer can contact LinkedIn and have these fake profiles taken down in less than two weeks.”

Accused Russian RSOCKS Botmaster Arrested, Requests Extradition to U.S.

A 36-year-old Russian man recently identified by KrebsOnSecurity as the likely proprietor of the massive RSOCKS botnet has been arrested in Bulgaria at the request of U.S. authorities. At a court hearing in Bulgaria this month, the accused hacker requested and was granted extradition to the United States, reportedly telling the judge, “America is looking for me because I have enormous information and they need it.”

On June 22, KrebsOnSecurity published Meet the Administrators of the RSOCKS Proxy Botnet, which identified Denis Kloster, a.k.a. Denis Emelyantsev, as the apparent owner of RSOCKS, a collection of millions of hacked devices that were sold as “proxies” to cybercriminals looking for ways to route their malicious traffic through someone else’s computer.

A native of Omsk, Russia, Kloster came into focus after KrebsOnSecurity followed clues from the RSOCKS botnet master’s identity on the cybercrime forums to Kloster’s personal blog, which featured musings on the challenges of running a company that sells “security and anonymity services to customers around the world.” Kloster’s blog even included a group photo of RSOCKS employees.

“Thanks to you, we are now developing in the field of information security and anonymity!,” Kloster’s blog enthused. “We make products that are used by thousands of people around the world, and this is very cool! And this is just the beginning!!! We don’t just work together and we’re not just friends, we’re Family.”

The Bulgarian news outlet 24Chasa.bg reports that Kloster was arrested in June at a co-working space in the southwestern ski resort town of Bansko, and that the accused asked to be handed over to the American authorities.

“I have hired a lawyer there and I want you to send me as quickly as possible to clear these baseless charges,” Kloster reportedly told the Bulgarian court this week. “I am not a criminal and I will prove it in an American court.”

Launched in 2013, RSOCKS was shut down in June 2022 as part of an international investigation into the cybercrime service. According to the Justice Department, the RSOCKS botnet initially targeted Internet of Things (IoT) devices, including industrial control systems, time clocks, routers, audio/video streaming devices, and smart garage door openers; later in its existence, the RSOCKS botnet expanded into compromising additional types of devices, including Android devices and conventional computers, the DOJ said.

The Justice Department’s June 2022 statement about that takedown cited a search warrant from the U.S. Attorney’s Office for the Southern District of California, which also was named by Bulgarian news outlets this month as the source of Kloster’s arrest warrant.

When asked about the existence of an arrest warrant or criminal charges against Kloster, a spokesperson for the Southern District said, “no comment.”

Update, Sept. 24, 9:00 a.m. ET: Kloster was named in a 2019 indictment (PDF) unsealed Sept. 23 by the Southern District court.

24Chasa said the defendant’s surname is Emelyantsev and that he only recently adopted the last name Kloster, which is his mother’s maiden name.

As KrebsOnSecurity reported in June, Kloster also appears to be a major player in the Russian email spam industry. In several private exchanges on cybercrime forums, the RSOCKS administrator claimed ownership of the RUSdot spam forum. RUSdot is the successor forum to Spamdot, a far more secretive and restricted forum where most of the world’s top spammers, virus writers and cybercriminals collaborated for years before the community’s implosion in 2010.

Email spam — and in particular malicious email sent via compromised computers — is still one of the biggest sources of malware infections that lead to data breaches and ransomware attacks. So it stands to reason that as administrator of Russia’s most well-known forum for spammers, the defendant in this case probably knows quite a bit about other top players in the botnet spam and malware community.

Despite maintaining his innocence, Kloster reportedly told the Bulgarian judge that he could be useful to American investigators.

“America is looking for me because I have enormous information and they need it,” Kloster told the court, according to 24Chasa. “That’s why they want me.”

The Bulgarian court agreed, and granted his extradition. Kloster’s fiancee also attended the extradition hearing, and reportedly wept in the hall outside the entire time.

Kloster turned 36 while awaiting his extradition hearing, and may soon be facing charges that carry punishments of up to 20 years in prison.

SIM Swapper Abducted, Beaten, Held for $200k Ransom

A Florida teenager who served as a lackey for a cybercriminal group that specializes in cryptocurrency thefts was beaten and kidnapped last week by a rival cybercrime gang. The teen’s captives held guns to his head while forcing him to record a video message pleading with his crew to fork over a $200,000 ransom in exchange for his life. The youth is now reportedly cooperating with U.S. federal investigators, who are responding to an alarming number of reports of physical violence tied to certain online crime communities.

The grisly kidnapping video has been circulating on a number of Telegram chat channels dedicated to SIM-swapping — the practice of tricking or bribing mobile phone store employees into diverting a target’s phone number, text messages and calls to a device the attackers control.

The teen, known to the SIM-swapping community by the handle “Foreshadow,” appears to have served as a “holder” — a term used to describe a low-level member of any SIM-swapping group who agrees to carry out the riskiest and least rewarding role of the crime: Physically keeping and managing the various mobile devices and SIM cards that are used in SIM-swapping scams.

“Yo, Dan, please bro send the 200k,” Foreshadow said in the video, which was shot on Sept. 15 in the backseat of a moving car. Bleeding from a swollen mouth with two handguns pointed at his head, Foreshadow pleaded for his life. A still shot from that video is available here [Warning: the image is quite graphic].

“They’re going to kill me if you don’t,” Foreshadow continued, offering to get a job as a complicit mobile store employee or “plug” to help with future SIM-swaps. “I’ll pay you back. Just let me know what you need. I got you, for real. Any work for free. Whatever. However long you need me, too. I’ll apply to any store you need me to apply to. I can be a plug. I don’t care if I get caught by the cops or anything. I’ll get that money back for you. I used to do that work.”

It’s not clear where in the world the hostage video was recorded. But at one point in the video, the vehicle’s radio can be heard in the background mentioning WMIB, which is a hip-hop station in South Florida that serves both Ft. Lauderdale and Miami.

As Foreshadow’s hostage video began making the rounds on SIM-swapping Telegram channels, a rumor surfaced that Foreshadow had died after being shot in the leg. It soon emerged that Foreshadow had not died, and that he was cooperating with the Federal Bureau of Investigation (FBI). Members of the SIM-swapping community were then warned to delete any messages to or from Foreshadow. One of those messages read:

JUST IN: FORESHADOW IS NOT DEAD!!!!

HES CURRENTLY CO-OPERATING WITH THE FBI DUE TO HIM BEING KIDNAPPED AND AN ATTEMPT TO EXTORT HIM FOR 200K

IF YOU HAVE CHATS WITH HIM CLEAR THEM

Foreshadow appears to be a teenager from Florida whose first name is Justin. Foreshadow’s main Telegram account was converted from a user profile into a channel on Sept. 15 — the same day he was assaulted and kidnapped — and it is not currently responding to messages.

Foreshadow’s erstwhile boss Jarik told KrebsOnSecurity that the youth was indeed shot by his captors, and blamed the kidnapping on a rival SIM-swapper from Australia who was angry over getting shortchanged of the profits from a previous SIM-swapping escapade.

The FBI did not immediately respond to requests for comment.

Reached via Telegram, the alleged mastermind of the kidnapping — a SIM-swapper who uses the handle “Gus” — confirmed that he ordered the attack on Foreshadow because the holder had held back some of his stolen funds. In the same breath, Gus said Jarik was “gonna get done in next” for sharing Gus’ real name and address with KrebsOnSecurity.

“No1 cared about that nigga anyway, he snaked targs [targets] and flaunted it everywhere,” Gus said of Foreshadow. “I’ve been fucked over so many times I’ve lost millions. I am just a guy trying to make more money.”

Foreshadow’s experience is the latest example of a rapidly escalating cycle of physical violence that is taking hold of criminal SIM-swapping communities online. Earlier this month, KrebsOnSecurity detailed how multiple SIM-swapping Telegram channels are now replete with “violence-as-a-service” offerings, wherein denizens of the underground hire themselves out to perform various forms of physical violence — from slashing tires and throwing a brick through someone’s window, to conducting drive-by shootings, firebombings and home invasions.

On Aug. 12, 2022, 21-year-old Patrick McGovern-Allen of Egg Harbor Township, N.J. was arrested by the FBI and charged with stalking in connection with several of these violence-as-a-service jobs. Prosecutors say the defendant fired a handgun into a Pennsylvania home, and helped to torch another residence in the state with a Molotov Cocktail — all allegedly in service of a beef over stolen cryptocurrency.

Earlier this month, three men in the United Kingdom were arrested for attempting to assault a local man and steal his virtual currencies. The local man’s neighbor called the cops and said the three men were acting suspiciously and that one of them was wearing a police uniform. U.K. police stopped the three men allegedly fleeing the scene, and found a police uniform and weapons in the trunk of the car. All three defendants in that case were charged with “intent to cause loss to another to make an unwarranted demand of Crypto Currency from a person.”

Dina Temple-Raston and Sean Powers over at The Record recently interviewed several members of the SIM-swapping community about this escalation in violence. That story is also available on the Click Here podcast — Throwing Bricks for $$$: Violence-as-a-Service Comes of Age.

Botched Crypto Mugging Lands Three U.K. Men in Jail

Three men in the United Kingdom were arrested this month for attempting to assault a local man and steal his virtual currencies. The incident is the latest example of how certain cybercriminal communities are increasingly turning to physical violence to settle scores and disputes.

Shortly after 11 p.m. on September 6, a resident in the Spalding Common area in the district of Lincolnshire, U.K. phoned police to say three men were acting suspiciously, and had jumped a nearby fence.

“The three men made off in a VW Golf and were shortly stopped nearby,” reads a statement by the Lincolnshire Police. “The car was searched by officers who found an imitation firearm, taser, a baseball bat and police uniform in the boot.”

Thomas Green, 23, Rayhan Miah, 23, and Leonardo Sapiano, 24 were all charged with possession of the weapons, and “with intent to cause loss to another to make an unwarranted demand of Crypto Currency from a person.”

KrebsOnSecurity has learned that the defendants were in Spalding Common to pay a surprise visit to a 19-year-old hacker known by the handles “Discoli,” “Disco Dog,” and “Chinese.” In December 2020, Discoli took credit for hacking and leaking the user database for OGUsers, a forum overrun with people looking to buy, sell and trade access to compromised social media accounts.

Reached via Telegram, Discoli confirmed that police believe the trio was trying to force their way into his home in Spalding Common, and that one of them was wearing a police uniform when they approached his residence.

“They were obvious about being fake police, so much so that one of our neighbours called,” Discoli said in an instant message chat. “That call led to the arrests. Their intent was for robbery/blackmail of crypto, I just happened to not be home at the time.”

The Lincolnshire Police declined to comment for this story, citing an ongoing investigation.

Discoli said he didn’t know any of the men charged, but believes they were hired by one of his enemies. And he said his would-be assailants didn’t just target him specifically.

“They had a list of people they wanted to hit consecutively as far as I know,” he said.

The foiled robbery is the latest drama tied to members of certain criminal hacking communities who are targeting one another with physical violence, by making a standing offer to pay thousands of dollars to anyone in the target’s region who agrees to carry out the assaults.

Last month, a 21-year-old New Jersey man was arrested and charged with stalking in connection with a federal investigation into groups of cybercriminals who are settling scores by hiring people to carry out physical attacks on their rivals.

Prosecutors say Patrick McGovern-Allen recently participated in several of these schemes — including firing a handgun into a Pennsylvania home and torching a residence in another part of the state with a Molotov Cocktail.

McGovern-Allen and the three U.K. defendants are part of an online community that is at the forefront of a dangerous escalation in coercion and intimidation tactics increasingly used by competing cybercriminal groups to steal cryptocurrency from one another and to keep their rivals in check.

The Telegram chat channels where these young men transact have hundreds to thousands of members each, and some of the more interesting solicitations on these communities are job offers for in-person assignments and tasks that can be found if one searches for posts titled, “If you live near,” or “IRL job” — short for “in real life” job.

A number of these classified ads are in service of performing “brickings,” where someone is hired to visit a specific address and toss a brick through the target’s window. Indeed, prior to McGovern-Allen’s arrest, his alleged Telegram persona bragged that he’d carried out several brickings for hire.

Many of the individuals involved in paying others to commit these physical attacks are also frequent participants in Telegram chat channels focused singularly on SIM swapping, a crime in which identity thieves hijack a target’s mobile phone number and use that to wrest control over the victim’s various online accounts and identities.

Unsurprisingly, the vast majority of people currently being targeted for brickings and other real-life physical assaults via Telegram tend to be other cybercriminals involved in SIM swapping crimes (or individuals on the periphery of that scene).

The United Kingdom is home to a number of young men accused of stealing millions of dollars worth of cryptocurrencies via SIM swapping. Joseph James O’Connor, a.k.a. “Plugwalk Joe”, was arrested in Spain in July 2021 under an FBI warrant on 10 counts of offenses related to unauthorized computer access and cyber bullying. U.S. investigators say O’Connor also played a central role in the 2020 intrusion at Twitter, wherein Twitter accounts for top celebrities and public figures were forced to tweet out links to cryptocurrency scams. O’Connor is currently fighting extradition to the United States.

Robert Lewis Barr, a 25-year-old Scottish man who allegedly stole more than $8 million worth of crypto, was arrested on an FBI warrant last year and is also fighting his extradition. U.S. investigators say Barr SIM swapped a U.S. bitcoin broker in 2017, and that he spent much of the stolen funds throwing lavish parties at rented luxury apartments in central Glasgow.

In many ways, these violence-as-a-service incidents are a natural extension of “swatting,” wherein fake bomb threats, hostage situations and other violent scenarios are phoned in to police as part of a scheme to trick them into visiting potentially deadly force on a target’s address. According to prosecutors, both Barr and O’Connor have a history of swatting their enemies and their SIM swapping victims.

Wormable Flaw, 0days Lead Sept. 2022 Patch Tuesday

This month’s Patch Tuesday offers a little something for everyone, including security updates for a zero-day flaw in Microsoft Windows that is under active attack, and another Windows weakness experts say could be used to power a fast-spreading computer worm. Also, Apple has also quashed a pair of zero-day bugs affecting certain macOS and iOS users, and released iOS 16, which offers a new privacy and security feature called “Lockdown Mode.” And Adobe axed 63 vulnerabilities in a range of products.

Microsoft today released software patches to plug at least 64 security holes in Windows and related products. Worst in terms of outright scariness is CVE-2022-37969, which is a “privilege escalation” weakness in the Windows Common Log File System Driver that allows attackers to gain SYSTEM-level privileges on a vulnerable host. Microsoft says this flaw is already being exploited in the wild.

Kevin Breen, director of cyber threat research at Immersive Labs, said any vulnerability that is actively targeted by attackers in the wild must be put to the top of any patching list.

“Not to be fooled by its relatively low CVSS score of 7.8, privilege escalation vulnerabilities are often highly sought after by cyber attackers,” Breen said. “Once an attacker has managed to gain a foothold on a victim’s system, one of their first actions will be to gain a higher level of permissions, allowing the attacker to disable security applications and any device monitoring. There is no known workaround to date, so patching is the only effective mitigation.”

Satnam Narang at Tenable said CVE-2022-24521 — a similar vulnerability in the same Windows log file component — was patched earlier this year as part of Microsoft’s April Patch Tuesday release and was also exploited in the wild.

“CVE-2022-37969 was disclosed by several groups, though it’s unclear if CVE-2022-37969 is a patch-bypass for CVE-2022-24521 at this point,” Narang said.

Another vulnerability Microsoft patched this month — CVE-2022-35803 — also seems to be related to the same Windows log file component. While there are no indications CVE-2022-35803 is being actively exploited, Microsoft suggests that exploitation of this flaw is more likely than not.

Trend Micro’s Dustin Childs called attention to CVE-2022-34718, a remote code execution flaw in the Windows TCP/IP service that could allow an unauthenticated attacker to execute code with elevated privileges on affected systems without user interaction.

“That officially puts it into the ‘wormable’ category and earns it a CVSS rating of 9.8,” Childs said. “However, only systems with IPv6 enabled and IPSec configured are vulnerable. While good news for some, if you’re using IPv6 (as many are), you’re probably running IPSec as well. Definitely test and deploy this update quickly.”

Cisco Talos warns about four critical vulnerabilities fixed this month — CVE-2022-34721 and CVE-2022-34722 — which have severity scores of 9.8, though they are “less likely” to be exploited, according to Microsoft.

“These are remote code execution vulnerabilities in the Windows Internet Key Exchange protocol that could be triggered if an attacker sends a specially crafted IP packet,” wrote Jon Munshaw and Asheer Malhotra. “Two other critical vulnerabilities, CVE-2022-35805 and CVE-2022-34700 exist in on-premises instances of Microsoft Dynamics 365. An authenticated attacker could exploit these vulnerabilities to run a specially crafted trusted solution package and execute arbitrary SQL commands. The attacker could escalate their privileges further and execute commands as the database owner.”

Not to be outdone, Apple fixed at least two zero-day vulnerabilities when it released updates for iOS, iPadOS, macOS and Safari. CVE-2022-32984 is a problem in the deepest recesses of the operating system (the kernel). Apple pushed an emergency update for a related zero-day last month in CVE-2022-32983, which could be used to foist malware on iPhones, iPads and Macs that visited a booby-trapped website.

Also listed under active attack is CVE-2022-32817, which has been fixed on macOS 12.6 (Monterey), macOS 11.7 (Big Sur), iOS 15.7 and iPadOS 15.7, and iOS 16. The same vulnerability was fixed in Apple Watch in July 2022, and credits Xinru Chi of Japanese cybersecurity firm Pangu Lab.

“Interestingly, this CVE is also listed in the advisory for iOS 16, but it is not called out as being under active exploit for that flavor of the OS,” Trend Micro’s Childs noted. “Apple does state in its iOS 16 advisory that ‘Additional CVE entries to be added soon.’ It’s possible other bugs could also impact this version of the OS. Either way, it’s time to update your Apple devices.”

Apple’s iOS 16 includes two new security and privacy features — Lockdown Mode and Safety Check. Wired.com describes Safety Check as a feature for users who are at risk for, or currently experiencing, domestic abuse.

“The tool centralizes a number of controls in one place to make it easier for users to manage and revoke access to their location data and reset privacy-related permissions,” wrote Lily Hay Newman.

“Lockdown Mode, on the other hand, is meant for users who potentially face targeted spyware attacks and aggressive state-backed hacking. The feature comprehensively restricts any nonessential iOS features so there are as few potential points of entry to a device as possible. As more governments and repressive entities around the world have begun purchasing powerful commodity spyware to target individuals of particular importance or interest, iOS’s general security defenses haven’t been able to keep pace with these specialized threats.”

To turn on Lockdown Mode in iOS 16, go to Settings, then Privacy and Security, then Lockdown Mode. Safety Check is located in the same area.

Finally, Adobe released seven patches addressing 63 security holes in Adobe Experience Manager, Bridge, InDesign, Photoshop, InCopy, Animate, and Illustrator. More on those updates is here.

Don’t forget to back up your data and/or system before applying any security updates. If you experience glitches or problems installing any of these patches this month, please consider leaving a comment about it below; there’s a decent chance other readers have experienced the same and may chime in here with useful tips.

Transacting in Person with Strangers from the Internet

Communities like Craigslist, OfferUp, Facebook Marketplace and others are great for finding low- or no-cost stuff that one can pick up directly from a nearby seller, and for getting rid of useful things that don’t deserve to end up in a landfill. But when dealing with strangers from the Internet, there is always a risk that the person you’ve agreed to meet has other intentions.

Nearly all U.S. states now have designated safe trading stations — mostly at local police departments — which ensure that all transactions are handled in plain view of both the authorities and security cameras.

These safe trading places exist because sometimes in-person transactions from the Internet don’t end well for one or more parties involved. The website Craigslistkillers has catalogued news links for at least 132 murders linked to Craigslist transactions since 2015. Many of these killings involved high-priced items like automobiles and consumer electronics, where the prospective buyer apparently intended all along to kill the owner and steal the item offered for sale. Others were motivated simply by a desire to hurt people.

This is not to say that using Craigslist is uniquely risky or dangerous; I’m sure the vast majority of transactions generated by the site end amicably and without physical violence. And that probably holds true for all of Craigslist’s competitors.

Still, the risk of a deal going badly when one meets total strangers from the Internet is not zero, and so it’s only sensible to take a few simple precautions. For example, choosing to transact at a designated safe place such as a police station dramatically reduces the likelihood that anyone wishing you harm would even show up.

I recently stumbled upon one of these designated exchange places by accident, hence my interest in learning more about them. The one I encountered was at a Virginia county sheriff’s office, and it has two parking spots reserved with a sign that reads, “Internet Purchase & Exchange Location: This Area is Under 24 Hour Video Surveillance” [image above].

According to the list maintained at Safetradestations.com, there are four other such designated locations in Northern Virginia. And it appears most states now have them in at least some major cities. Safeexchangepoint.com also has a searchable index of safe trading locations in the United States and Canada.

Granted, not everyone is going to live close to one of these designated trading stations. Or maybe what you want to buy, sell or trade you’d rather not have recorded in front of police cameras. Either way, here are a few tips on staying safe while transacting in real life with strangers from the Internet (compliments of the aforementioned safe trading websites).

The safest exchange points are easily accessible and in a well-lit, public place where transactions are visible to others nearby. Try to arrange a meeting time that is during daylight hours, and consider bringing a friend along — especially when dealing with high-value items like laptops and smart phones.

Safeexchangepoint.com also advises that police or merchants that host their own exchange locations generally won’t get involved in the details of your transaction unless specified otherwise, and that many police departments (but not all) are willing to check the serial number of an item for sale to make sure it’s not known to be stolen property.

Of course, it’s not always practical or possible to haul that old sofa to the local police department, or a used car that isn’t working. In those situations, safetradestations.com has some decent suggestions:

• Meet at a police station where you can exchange and photocopy each others’ identification papers, such as a driver’s license. Do NOT carry cash to this location.
• Photocopy the license or identification paper, or use your phone to photograph it.
• Email the ID information to a friend, or to someone trusted (not to yourself).
• If you’re selling at home, or going to someone’s home, never be outnumbered. If you’re at home, make sure you have two or three people there — and tell the person who is coming that you will have others with you.
• At home or an apartment, NEVER let someone go anywhere unaccompanied. Always make sure they are escorted.
• Never let more than one group come to your home at one time to buy or sell.
• Beware of common scams, like checks for an amount higher than the amount of the deal; “cashier’s checks” that are forged and presented when the bank is closed.
• If you are given a cashier’s check, money order or other equivalent, call the bank — at the number listed online, not a number the buyer gives you — to verify the validity of the check.

How 1-Time Passcodes Became a Corporate Liability

Phishers are enjoying remarkable success using text messages to steal remote access credentials and one-time passcodes from employees at some of the world’s largest technology companies and customer support firms. A recent spate of SMS phishing attacks from one cybercriminal group has spawned a flurry of breach disclosures from affected companies, which are all struggling to combat the same lingering security threat: The ability of scammers to interact directly with employees through their mobile devices.

In mid-June 2022, a flood of SMS phishing messages began targeting employees at commercial staffing firms that provide customer support and outsourcing to thousands of companies. The missives asked users to click a link and log in at a phishing page that mimicked their employer’s Okta authentication page. Those who submitted credentials were then prompted to provide the one-time password needed for multi-factor authentication.

The phishers behind this scheme used newly-registered domains that often included the name of the target company, and sent text messages urging employees to click on links to these domains to view information about a pending change in their work schedule.

The phishing sites leveraged a Telegram instant message bot to forward any submitted credentials in real-time, allowing the attackers to use the phished username, password and one-time code to log in as that employee at the real employer website. But because of the way the bot was configured, it was possible for security researchers to capture the information being sent by victims to the public Telegram server.

This data trove was first reported by security researchers at Singapore-based Group-IB, which dubbed the campaign “0ktapus” for the attackers targeting organizations using identity management tools from Okta.com.

“This case is of interest because despite using low-skill methods it was able to compromise a large number of well-known organizations,” Group-IB wrote. “Furthermore, once the attackers compromised an organization they were quickly able to pivot and launch subsequent supply chain attacks, indicating that the attack was planned carefully in advance.”

It’s not clear how many of these phishing text messages were sent out, but the Telegram bot data reviewed by KrebsOnSecurity shows they generated nearly 10,000 replies over approximately two months of sporadic SMS phishing attacks targeting more than a hundred companies.

A great many responses came from those who were apparently wise to the scheme, as evidenced by the hundreds of hostile replies that included profanity or insults aimed at the phishers: The very first reply recorded in the Telegram bot data came from one such employee, who responded with the username “havefuninjail.”

Still, thousands replied with what appear to be legitimate credentials — many of them including one-time codes needed for multi-factor authentication. On July 20, the attackers turned their sights on internet infrastructure giant Cloudflare.com, and the intercepted credentials show at least three employees fell for the scam.

In a blog post earlier this month, Cloudflare said it detected the account takeovers and that no Cloudflare systems were compromised. Cloudflare said it does not rely on one-time passcodes as a second factor, so there was nothing to provide to the attackers. But Cloudflare said it wanted to call attention to the phishing attacks because they would probably work against most other companies.

“This was a sophisticated attack targeting employees and systems in such a way that we believe most organizations would be likely to be breached,” Cloudflare CEO Matthew Prince wrote. “On July 20, 2022, the Cloudflare Security team received reports of employees receiving legitimate-looking text messages pointing to what appeared to be a Cloudflare Okta login page. The messages began at 2022-07-20 22:50 UTC. Over the course of less than 1 minute, at least 76 employees received text messages on their personal and work phones. Some messages were also sent to the employees family members.”

On three separate occasions, the phishers targeted employees at Twilio.com, a San Francisco based company that provides services for making and receiving text messages and phone calls. It’s unclear how many Twilio employees received the SMS phishes, but the data suggest at least four Twilio employees responded to a spate of SMS phishing attempts on July 27, Aug. 2, and Aug. 7.

On that last date, Twilio disclosed that on Aug. 4 it became aware of unauthorized access to information related to a limited number of Twilio customer accounts through a sophisticated social engineering attack designed to steal employee credentials.

“This broad based attack against our employee base succeeded in fooling some employees into providing their credentials,” Twilio said. “The attackers then used the stolen credentials to gain access to some of our internal systems, where they were able to access certain customer data.”

That “certain customer data” included information on roughly 1,900 users of the secure messaging app Signal, which relied on Twilio to provide phone number verification services. In its disclosure on the incident, Signal said that with their access to Twilio’s internal tools the attackers were able to re-register those users’ phone numbers to another device.

On Aug. 25, food delivery service DoorDash disclosed that a “sophisticated phishing attack” on a third-party vendor allowed attackers to gain access to some of DoorDash’s internal company tools. DoorDash said intruders stole information on a “small percentage” of users that have since been notified. TechCrunch reported last week that the incident was linked to the same phishing campaign that targeted Twilio.

This phishing gang apparently had great success targeting employees of all the major mobile wireless providers, but most especially T-Mobile. Between July 10 and July 16, dozens of T-Mobile employees fell for the phishing messages and provided their remote access credentials.

“Credential theft continues to be an ongoing issue in our industry as wireless providers are constantly battling bad actors that are focused on finding new ways to pursue illegal activities like this,” T-Mobile said in a statement. “Our tools and teams worked as designed to quickly identify and respond to this large-scale smishing attack earlier this year that targeted many companies. We continue to work to prevent these types of attacks and will continue to evolve and improve our approach.”

This same group saw hundreds of responses from employees at some of the largest customer support and staffing firms, including Teleperformanceusa.com, Sitel.com and Sykes.com. Teleperformance did not respond to requests for comment. KrebsOnSecurity did hear from Christopher Knauer, global chief security officer at Sitel Group, the customer support giant that recently acquired Sykes. Knauer said the attacks leveraged newly-registered domains and asked employees to approve upcoming changes to their work schedules.

Knauer said the attackers set up the phishing domains just minutes in advance of spamming links to those domains in phony SMS alerts to targeted employees. He said such tactics largely sidestep automated alerts generated by companies that monitor brand names for signs of new phishing domains being registered.

“They were using the domains as soon as they became available,” Knauer said. “The alerting services don’t often let you know until 24 hours after a domain has been registered.”

On July 28 and again on Aug. 7, several employees at email delivery firm Mailchimp provided their remote access credentials to this phishing group. According to an Aug. 12 blog post, the attackers used their access to Mailchimp employee accounts to steal data from 214 customers involved in cryptocurrency and finance.

On Aug. 15, the hosting company DigitalOcean published a blog post saying it had severed ties with MailChimp after its Mailchimp account was compromised. DigitalOcean said the MailChimp incident resulted in a “very small number” of DigitalOcean customers experiencing attempted compromises of their accounts through password resets.

According to interviews with multiple companies hit by the group, the attackers are mostly interested in stealing access to cryptocurrency, and to companies that manage communications with people interested in cryptocurrency investing. In an Aug. 3 blog post from email and SMS marketing firm Klaviyo.com, the company’s CEO recounted how the phishers gained access to the company’s internal tools, and used that to download information on 38 crypto-related accounts.

The ubiquity of mobile phones became a lifeline for many companies trying to manage their remote employees throughout the Coronavirus pandemic. But these same mobile devices are fast becoming a liability for organizations that use them for phishable forms of multi-factor authentication, such as one-time codes generated by a mobile app or delivered via SMS.

Because as we can see from the success of this phishing group, this type of data extraction is now being massively automated, and employee authentication compromises can quickly lead to security and privacy risks for the employer’s partners or for anyone in their supply chain.

Unfortunately, a great many companies still rely on SMS for employee multi-factor authentication. According to a report this year from Okta, 47 percent of workforce customers deploy SMS and voice factors for multi-factor authentication. That’s down from 53 percent that did so in 2018, Okta found.

Some companies (like Knauer’s Sitel) have taken to requiring that all remote access to internal networks be managed through work-issued laptops and/or mobile devices, which are loaded with custom profiles that can’t be accessed through other devices.

Others are moving away from SMS and one-time code apps and toward requiring employees to use physical FIDO multi-factor authentication devices such as security keys, which can neutralize phishing attacks because any stolen credentials can’t be used unless the phishers also have physical access to the user’s security key or mobile device.

This came in handy for Twitter, which announced last year that it was moving all of its employees to using security keys, and/or biometric authentication via their mobile device. The phishers’ Telegram bot reported that on June 16, 2022, five employees at Twitter gave away their work credentials. In response to questions from KrebsOnSecurity, Twitter confirmed several employees were relieved of their employee usernames and passwords, but that its security key requirement prevented the phishers from abusing that information.

Twitter accelerated its plans to improve employee authentication following the July 2020 security incident, wherein several employees were phished and relieved of credentials for Twitter’s internal tools. In that intrusion, the attackers used Twitter’s tools to hijack accounts for some of the world’s most recognizable public figures, executives and celebrities — forcing those accounts to tweet out links to bitcoin scams.

“Security keys can differentiate legitimate sites from malicious ones and block phishing attempts that SMS 2FA or one-time password (OTP) verification codes would not,” Twitter said in an Oct. 2021 post about the change. “To deploy security keys internally at Twitter, we migrated from a variety of phishable 2FA methods to using security keys as our only supported 2FA method on internal systems.”

Update, 6:02 p.m. ET: Clarified that Cloudflare does not rely on TOTP (one-time multi-factor authentication codes) as a second factor for employee authentication.

Sounding the Alarm on Emergency Alert System Flaws

The Department of Homeland Security (DHS) is urging states and localities to beef up security around proprietary devices that connect to the Emergency Alert System — a national public warning system used to deliver important emergency information, such as severe weather and AMBER alerts. The DHS warning came in advance of a workshop to be held this weekend at the DEFCON security conference in Las Vegas, where a security researcher is slated to demonstrate multiple weaknesses in the nationwide alert system.

The DHS warning was prompted by security researcher Ken Pyle, a partner at security firm Cybir. Pyle said he started acquiring old EAS equipment off of eBay in 2019, and that he quickly identified a number of serious security vulnerabilities in a device that is broadly used by states and localities to encode and decode EAS alert signals.

“I found all kinds of problems back then, and reported it to the DHS, FBI and the manufacturer,” Pyle said in an interview with KrebsOnSecurity. “But nothing ever happened. I decided I wasn’t going to tell anyone about it yet because I wanted to give people time to fix it.”

Pyle said he took up the research again in earnest after an angry mob stormed the U.S. Capitol on Jan. 6, 2021.

“I was sitting there thinking, ‘Holy shit, someone could start a civil war with this thing,”’ Pyle recalled. “I went back to see if this was still a problem, and it turns out it’s still a very big problem. So I decided that unless someone actually makes this public and talks about it, clearly nothing is going to be done about it.”

The EAS encoder/decoder devices Pyle acquired were made by Lyndonville, NY-based Digital Alert Systems (formerly Monroe Electronics, Inc.), which issued a security advisory this month saying it released patches in 2019 to fix the flaws reported by Pyle, but that some customers are still running outdated versions of the device’s firmware. That may be because the patches were included in version 4 of the firmware for the EAS devices, and many older models apparently do not support the new software.

“The vulnerabilities identified present a potentially serious risk, and we believe both were addressed in software updates issued beginning Oct 2019,” EAS said in a written statement. “We also provided attribution for the researcher’s responsible disclosure, allowing us to rectify the matters before making any public statements. We are aware that some users have not taken corrective actions and updated their software and should immediately take action to update the latest software version to ensure they are not at risk. Anything lower than version 4.1 should be updated immediately. On July 20, 2022, the researcher referred to other potential issues, and we trust the researcher will provide more detail. We will evaluate and work to issue any necessary mitigations as quickly as possible.”

But Pyle said a great many EAS stakeholders are still ignoring basic advice from the manufacturer, such as changing default passwords and placing the devices behind a firewall, not directly exposing them to the Internet, and restricting access only to trusted hosts and networks.

Pyle said the biggest threat to the security of the EAS is that an attacker would only need to compromise a single EAS station to send out alerts locally that can be picked up by other EAS systems and retransmitted across the nation.

“The process for alerts is automated in most cases, hence, obtaining access to a device will allow you to pivot around,” he said. “There’s no centralized control of the EAS because these devices are designed such that someone locally can issue an alert, but there’s no central control over whether I am the one person who can send or whatever. If you are a local operator, you can send out nationwide alerts. That’s how easy it is to do this.”

One of the Digital Alert Systems devices Pyle sourced from an electronics recycler earlier this year was non-functioning, but whoever discarded it neglected to wipe the hard drive embedded in the machine. Pyle soon discovered the device contained the private cryptographic keys and other credentials needed to send alerts through Comcast, the nation’s third-largest cable company.

“I can issue and create my own alert here, which has all the valid checks or whatever for being a real alert station,” Pyle said in an interview earlier this month. “I can create a message that will start propagating through the EAS.”

Comcast told KrebsOnSecurity that “a third-party device used to deliver EAS alerts was lost in transit by a trusted shipping provider between two Comcast locations and subsequently obtained by a cybersecurity researcher.

“We’ve conducted a thorough investigation of this matter and have determined that no customer data, and no sensitive Comcast data, were compromised,” Comcast spokesperson David McGuire said.

The company said it also confirmed that the information included on the device can no longer be used to send false messages to Comcast customers or used to compromise devices within Comcast’s network, including EAS devices.

“We are taking steps to further ensure secure transfer of such devices going forward,” McGuire said. “Separately, we have conducted a thorough audit of all EAS devices on our network and confirmed that they are updated with currently available patches and are therefore not vulnerable to recently reported security issues. We’re grateful for the responsible disclosure and to the security research community for continuing to engage and share information with our teams to make our products and technologies ever more secure. Mr. Pyle informed us promptly of his research and worked with us as we took steps to validate his findings and ensure the security of our systems.”

Unauthorized EAS broadcast alerts have happened enough that there is a chronicle of EAS compromises over at fandom.com. Thankfully, most of these incidents have involved fairly obvious hoaxes.

According to the EAS wiki, in February 2013, hackers broke into the EAS networks in Great Falls, Mt. and Marquette, Mich. to broadcast an alert that zombies had risen from their graves in several counties. In Feb. 2017, an EAS station in Indiana also was hacked, with the intruders playing the same “zombies and dead bodies” audio from the 2013 incidents.

“On February 20 and February 21, 2020, Wave Broadband’s EASyCAP equipment was hacked due to the equipment’s default password not being changed,” the Wiki states. “Four alerts were broadcasted, two of which consisted of a Radiological Hazard Warning and a Required Monthly Test playing parts of the Hip Hop song Hot by artist Young Thug.”

In January 2018, Hawaii sent out an alert to cell phones, televisions and radios, warning everyone in the state that a missile was headed their way. It took 38 minutes for Hawaii to let people know the alert was a misfire, and that a draft alert was inadvertently sent. The news video clip below about the 2018 event in Hawaii does a good job of walking through how the EAS works.

The Security Pros and Cons of Using Email Aliases

One way to tame your email inbox is to get in the habit of using unique email aliases when signing up for new accounts online. Adding a “+” character after the username portion of your email address — followed by a notation specific to the site you’re signing up at — lets you create an infinite number of unique email addresses tied to the same account. Aliases can help users detect breaches and fight spam. But not all websites allow aliases, and they can complicate account recovery. Here’s a look at the pros and cons of adopting a unique alias for each website.

What is an email alias? When you sign up at a site that requires an email address, think of a word or phrase that represents that site for you, and then add that prefaced by a “+” sign just to the left of the “@” sign in your email address. For instance, if I were signing up at example.com, I might give my email address as krebsonsecurity+example@gmail.com. Then, I simply go back to my inbox and create a corresponding folder called “Example,” along with a new filter that sends any email addressed to that alias to the Example folder.

Importantly, you don’t ever use this alias anywhere else. That way, if anyone other than example.com starts sending email to it, it is reasonable to assume that example.com either shared your address with others or that it got hacked and relieved of that information. Indeed, security-minded readers have often alerted KrebsOnSecurity about spam to specific aliases that suggested a breach at some website, and usually they were right, even if the company that got hacked didn’t realize it at the time.

Alex Holden, founder of the Milwaukee-based cybersecurity consultancy Hold Security, said many threat actors will scrub their distribution lists of any aliases because there is a perception that these users are more security- and privacy-focused than normal users, and are thus more likely to report spam to their aliased addresses.

Holden said freshly-hacked databases also are often scrubbed of aliases before being sold in the underground, meaning the hackers will simply remove the aliased portion of the email address.

“I can tell you that certain threat groups have rules on ‘+*@’ email address deletion,” Holden said. “We just got the largest credentials cache ever — 1 billion new credentials to us — and most of that data is altered, with aliases removed. Modifying credential data for some threat groups is normal. They spend time trying to understand the database structure and removing any red flags.”

According to the breach tracking site HaveIBeenPwned.com, only about .03 percent of the breached records in circulation today include an alias.

Email aliases are rare enough that seeing just a few email addresses with the same alias in a breached database can make it trivial to identify which company likely got hacked and leaked said database. That’s because the most common aliases are simply the name of the website where the signup takes place, or some abbreviation or shorthand for it.

Hence, for a given database, if there are more than a handful of email addresses that have the same alias, the chances are good that whatever company or website corresponds to that alias has been hacked.

That might explain the actions of Allekabels, a large Dutch electronics web shop that suffered a data breach in 2021. Allekabels said a former employee had stolen data on 5,000 customers, and that those customers were then informed about the data breach by Allekabels.

But Dutch publication RTL Nieuws said it obtained a copy of the Allekabels user database from a hacker who was selling information on 3.6 million customers at the time, and found that the 5,000 number cited by the retailer corresponded to the number of customers who’d signed up using an alias. In essence, RTL argued, the company had notified only those most likely to notice and complain that their aliased addresses were suddenly receiving spam.

“RTL Nieuws has called more than thirty people from the database to check the leaked data,” the publication explained. “The customers with such a unique email address have all received a message from Allekabels that their data has been leaked – according to Allekabels they all happened to be among the 5000 data that this ex-employee had stolen.”

HaveIBeenPwned’s Hunt arrived at the conclusion that aliases account for about .03 percent of registered email addresses by studying the data leaked in the 2013 breach at Adobe, which affected at least 38 million users. Allekabels’s ratio of aliased users was considerably higher than Adobe’s — .14 percent — but then again European Internet users tend to be more privacy-conscious.

While overall adoption of email aliases is still quite low, that may be changing. Apple customers who use iCloud to sign up for new accounts online automatically are prompted to use Apple’s Hide My Email feature, which creates the account using a unique email address that automatically forwards to a personal inbox.

What are the downsides to using email aliases, apart from the hassle of setting them up? The biggest downer is that many sites won’t let you use a “+” sign in your email address, even though this functionality is clearly spelled out in the email standard.

Also, if you use aliases, it helps to have a reliable mnemonic to remember the alias used for each account (this is a non-issue if you create a new folder or rule for each alias). That’s because knowing the email address for an account is generally a prerequisite for resetting the account’s password, and if you can’t remember the alias you added way back when you signed up, you may have limited options for recovering access to that account if you at some point forget your password.

What about you, Dear Reader? Do you rely on email aliases? If so, have they been useful? Did I neglect to mention any pros or cons? Feel free to sound off in the comments below.

A Retrospective on the 2015 Ashley Madison Breach

It’s been seven years since the online cheating site AshleyMadison.com was hacked and highly sensitive data about its users posted online. The leak led to the public shaming and extortion of many Ashley Madison users, and to at least two suicides. To date, little is publicly known about the perpetrators or the true motivation for the attack. But a recent review of Ashley Madison mentions across Russian cybercrime forums and far-right websites in the months leading up to the hack revealed some previously unreported details that may deserve further scrutiny.

As first reported by KrebsOnSecurity on July 19, 2015, a group calling itself the “Impact Team” released data sampled from millions of users, as well as maps of internal company servers, employee network account information, company bank details and salary information.

The Impact Team said it decided to publish the information because ALM “profits on the pain of others,” and in response to a paid “full delete” service Ashley Madison parent firm Avid Life Media offered that allowed members to completely erase their profile information for a $19 fee.

According to the hackers, although the delete feature promised “removal of site usage history and personally identifiable information from the site,” users’ purchase details — including real name and address — weren’t actually scrubbed.

“Full Delete netted ALM $1.7mm in revenue in 2014. It’s also a complete lie,” the hacking group wrote. “Users almost always pay with credit card; their purchase details are not removed as promised, and include real name and address, which is of course the most important information the users want removed.”

The Impact Team said ALM had one month to take Ashley Madison offline, along with a sister property called Established Men. The hackers promised that if a month passed and the company did not capitulate, it would release “all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails.”

Exactly 30 days later, on Aug. 18, 2015, the Impact Team posted a “Time’s up!” message online, along with links to 60 gigabytes of Ashley Madison user data.

AN URGE TO DESTROY ALM

One aspect of the Ashley Madison breach that’s always bothered me is how the perpetrators largely cast themselves as fighting a crooked company that broke their privacy promises, and how this narrative was sustained at least until the Impact Team decided to leak all of the stolen user account data in August 2015.

Granted, ALM had a lot to answer for. For starters, after the breach it became clear that a great many of the female Ashley Madison profiles were either bots or created once and never used again. Experts combing through the leaked user data determined that fewer than one percent of the female profiles on Ashley Madison had been used on a regular basis, and the rest were used just once — on the day they were created. On top of that, researchers found 84 percent of the profiles were male.

But the Impact Team had to know that ALM would never comply with their demands to dismantle Ashley Madison and Established Men. In 2014, ALM reported revenues of $115 million. There was little chance the company was going to shut down some of its biggest money machines.

Hence, it appears the Impact Team’s goal all along was to create prodigious amounts of drama and tension by announcing the hack of a major cheating website, and then letting that drama play out over the next few months as millions of exposed Ashley Madison users freaked out and became the targets of extortion attacks and public shaming.

Robert Graham, CEO of Errata Security, penned a blog post in 2015 concluding that the moral outrage professed by the Impact Team was pure posturing.

“They appear to be motivated by the immorality of adultery, but in all probability, their motivation is that #1 it’s fun and #2 because they can,” Graham wrote.

Per Thorsheim, a security researcher in Norway, told Wired at the time that he believed the Impact Team was motivated by an urge to destroy ALM with as much aggression as they could muster.

“It’s not just for the fun and ‘because we can,’ nor is it just what I would call ‘moralistic fundamentalism,'” Thorsheim told Wired. “Given that the company had been moving toward an IPO right before the hack went public, the timing of the data leaks was likely no coincidence.”

NEO-NAZIS TARGET ASHLEY MADISON CEO

As the seventh anniversary of the Ashley Madison hack rolled around, KrebsOnSecurity went back and looked for any mentions of Ashley Madison or ALM on cybercrime forums in the months leading up to the Impact Team’s initial announcement of the breach on July 19, 2015. There wasn’t much, except a Russian guy offering to sell payment and contact information on 32 million AshleyMadison users, and a bunch of Nazis upset about a successful Jewish CEO promoting adultery.

Cyber intelligence firm Intel 471 recorded a series of posts by a user with the handle “Brutium” on the Russian-language cybercrime forum Antichat between 2014 and 2016. Brutium routinely advertised the sale of large, hacked databases, and on Jan. 24, 2015, this user posted a thread offering to sell data on 32 million Ashley Madison users:

“Data from July 2015
Total ~32 Million contacts:
full name; email; phone numbers; payment, etc.”

It’s unclear whether the postdated “July 2015” statement was a typo, or if Brutium updated that sales thread at some point. There is also no indication whether anyone purchased the information. Brutium’s profile has since been removed from the Antichat forum.

Flashpoint is a threat intelligence company in New York City that keeps tabs on hundreds of cybercrime forums, as well as extremist and hate websites. A search in Flashpoint for mentions of Ashley Madison or ALM prior to July 19, 2015 shows that in the six months leading up to the hack, Ashley Madison and its then-CEO Noel Biderman became a frequent subject of derision across multiple neo-Nazi websites.

On Jan. 14, 2015, a member of the neo-Nazi forum Stormfront posted a lively thread about Ashley Madison in the general discussion area titled, “Jewish owned dating website promoting adultery.”

On July 3, 2015, Andrew Anglin, the editor of the alt-right publication Daily Stormer, posted excerpts about Biderman from a story titled, “Jewish Hyper-Sexualization of Western Culture,” which referred to Biderman as the “Jewish King of Infidelity.”

On July 10, a mocking montage of Biderman photos with racist captions was posted to the extremist website Vanguard News Network, as part of a thread called “Jews normalize sexual perversion.”

“Biderman himself says he’s a happily married father of two and does not cheat,” reads the story posted by Anglin on the Daily Stormer. “In an interview with the ‘Current Affair’ program in Australia, he admitted that if he found out his own wife was accessing his cheater’s site, ‘I would be devastated.'”

The leaked AshleyMadison data included more than three years’ worth of emails stolen from Biderman. The hackers told Motherboard in 2015 they had 300 GB worth of employee emails, but that they saw no need to dump the inboxes of other company employees.

Several media outlets pounced on salacious exchanges in Biderman’s emails as proof he had carried on multiple affairs. Biderman resigned as CEO on Aug. 28, 2015. The last message in the archive of Biderman’s stolen emails was dated July 7, 2015 — almost two weeks before the Impact Team would announce their hack.

Biderman told KrebsOnSecurity on July 19, 2015 that the company believed the hacker was some type of insider.

“We’re on the doorstep of [confirming] who we believe is the culprit, and unfortunately that may have triggered this mass publication,” Biderman said. “I’ve got their profile right in front of me, all their work credentials. It was definitely a person here that was not an employee but certainly had touched our technical services.”

Certain language in the Impact Team’s manifesto seemed to support this theory, such as the line: “For a company whose main promise is secrecy, it’s like you didn’t even try, like you thought you had never pissed anyone off.”

But despite ALM offering a belated $500,000 reward for information leading to the arrest and conviction of those responsible, to this day no one has been charged in connection with the hack.

Massive Losses Define Epidemic of ‘Pig Butchering’

U.S. state and federal investigators are being inundated with reports from people who’ve lost hundreds of thousands or millions of dollars in connection with a complex investment scam known as “pig butchering,” wherein people are lured by flirtatious strangers online into investing in cryptocurrency trading platforms that eventually seize any funds when victims try to cash out.

The term “pig butchering” refers to a time-tested, heavily scripted, and human-intensive process of using fake profiles on dating apps and social media to lure people into investing in elaborate scams. In a more visceral sense, pig butchering means fattening up a prey before the slaughter.

“The fraud is named for the way scammers feed their victims with promises of romance and riches before cutting them off and taking all their money,” the Federal Bureau of Investigation (FBI) warned in April 2022. “It’s run by a fraud ring of cryptocurrency scammers who mine dating apps and other social media for victims and the scam is becoming alarmingly popular.”

As documented in a series of investigative reports published over the past year across Asia, the people creating these phony profiles are largely men and women from China and neighboring countries who have been kidnapped and trafficked to places like Cambodia, where they are forced to scam complete strangers over the Internet — day after day.

The most prevalent pig butchering scam today involves sophisticated cryptocurrency investment platforms, where investors invariably see fantastic returns on their deposits — until they try to withdraw the funds. At that point, investors are told they owe huge tax bills. But even those who pay the phony levies never see their money again.

The come-ons for these scams are prevalent on dating sites and apps, but they also frequently start with what appears to be a wayward SMS — such as an instant message about an Uber ride that never showed. Or a reminder from a complete stranger about a planned meetup for coffee. In many ways, the content of the message is irrelevant; the initial goal to simply to get the recipient curious enough to respond in some way.

Those who respond are asked to continue the conversation via WhatsApp, where an attractive, friendly profile of the opposite gender will work through a pre-set script that is tailored to their prey’s apparent socioeconomic situation. For example, a divorced, professional female who responds to these scams will be handled with one profile type and script, while other scripts are available to groom a widower, a young professional, or a single mom.

‘LIKE NOTHING I’VE SEEN BEFORE’

That’s according to Erin West, deputy district attorney for Santa Clara County in Northern California. West said her office has been fielding a large number of pig butchering inquiries from her state, but also from law enforcement entities around the country that are ill-equipped to investigate such fraud.

“The people forced to perpetrate these scams have a guide and a script, where if your victim is divorced say this, or a single mom say this,” West said. “The scale of this is so massive. It’s a major problem with no easy answers, but also with victim volumes I’ve never seen before. With victims who are really losing their minds and in some cases are suicidal.”

West is a key member of REACT, a task force set up to tackle especially complex forms of cyber theft involving virtual currencies. West said the initial complaints from pig butchering victims came early this year.

“I first thought they were one-off cases, and then I realized we were getting these daily,” West said. “A lot of them are being reported to local agencies that don’t know what to do with them, so the cases languish.”

West said pig butchering victims are often quite sophisticated and educated people.

“One woman was a university professor who lost her husband to COVID, got lonely and was chatting online, and eventually ended up giving away her retirement,” West recalled of a recent case. “There are just horrifying stories that run the gamut in terms of victims, from young women early in their careers, to senior citizens and even to people working in the financial services industry.”

In some cases reported to REACT, the victims said they spent days or weeks corresponding with the phony WhatsApp persona before the conversation shifted to investing.

“They’ll say ‘Hey, this is the food I’m eating tonight’ and the picture they share will show a pretty setting with a glass of wine, where they’re showcasing an enviable lifestyle but not really mentioning anything about how they achieved that,” West said. “And then later, maybe a few hours or days into the conversation, they’ll say, ‘You know I made some money recently investing in crypto,’ kind of sliding into the topic as if this wasn’t what they were doing the whole time.”

Curious investors are directed toward elaborate and official-looking online crypto platforms that appear to have thousands of active investors. Many of these platforms include extensive study materials and tutorials on cryptocurrency investing. New users are strongly encouraged to team up with more seasoned investors on the platform, and to make only small investments that they can afford to lose.

“They’re able to see some value increase, and maybe even be allowed to take out that value increase so that they feel comfortable about the situation,” West said. Some investors then need little encouragement to deposit additional funds, which usually generate increasingly higher “returns.”

West said many crypto trading platforms associated with pig butchering scams appear to have been designed much like a video game, where investor hype is built around upcoming “trading opportunities” that hint at even more fantastic earnings.

“There are bonus levels and VIP levels, and they’ll build hype and a sense of frenzy into the trading,” West said. “There are definitely some psychological mechanisms at work to encourage people to invest more.”

“What’s so devastating about many of the victims is they lose that sense of who they are,” she continued. “They thought they were a savvy, sophisticated person, someone who’s sort of immune to scams. I think the large scale of the trickery and psychological manipulation being used here can’t be understated. It’s like nothing I’ve seen before.”

A $5,000,000 LOSS

Courtney Nolan, a divorced mother of three daughters, says she lost more than $5 million to a pig butchering scam. Nolan lives in St. Louis and has a background in investment finance, but only started investing in cryptocurrencies in the past year.

Nolan’s case may be especially bad because she was already interested in crypto investing when the scammer reached out. At the time, Bitcoin was trading at or near all-time highs of nearly $68,000 per coin.

Nolan said her nightmare began in late 2021 with a Twitter direct message from someone who was following many of the same cryptocurrency influencers she followed. Her fellow crypto enthusiast then suggested they continue their discussion on WhatsApp. After much back and forth about his trading strategies, her new friend agreed to mentor her on how to make reliable profits using the crypto trading platform xtb.com.

“I had dabbled in leveraged trading before, but his mentor program gave me over 100 pages of study materials and agreed to walk me through their investment strategies over the course of a year,” Nolan told KrebsOnSecurity.

Nolan’s mentor had her create an account website xtb-market[.]com, which was made to be confusingly similar to XTB’s official platform. The site promoted several different investment packages, including a “starter plan” that involves a $5,250 up-front investment and promises more than 15 percent return across four separate trading bursts.

Platinum plans on xtb-market promised a whopping 45 percent ROI, with a minimum investment of $265,000. The site also offered a generous seven percent commission for referrals, which encouraged new investors to recruit others.

While chatting via WhatsApp, Nolan and her mentor would trade side by side in xtb-market, initially with small investments ranging from $500 to $5,000. When those generated hefty returns, Nolan made bigger deposits. On several occasions she was able to withdraw amounts ranging from $10,000 to $30,000.

But after investing more than $4.5 million of her own money over nearly four months, Nolan found her account was suddenly frozen. She was then issued a tax statement saying she owed nearly $500,000 in taxes before she could reactivate her account or access her funds.

Nolan said it seems obvious in hindsight that she should never have paid the tax bill. Because xtb-market and her mentor cut all communications with her after that, and the entire website disappeared just a few weeks later.

Justin Maile, an investigation partner manager at Chainalysis, told Vice News that the tax portion of the pig butchering scam relies on the “sunk costs fallacy,” when people are reluctant to abandon a failing strategy or course of action because they have already invested heavily in it.

“Once the victim starts getting skeptical or tries to withdraw their funds, they are often told that they have to pay tax on the gains before funds can be unlocked,” Maile told Vice News. “The scammers will try to get any last payments out of the victims by exploiting the sunk cost fallacy and dangling huge profits in front of them.”

Vice recently published an in-depth report on pig butchering’s link to organized crime gangs in Asia that lure young job seekers with the promise of customer service jobs in call centers. Instead, those who show up at the appointed place and time are taken on long car rides and/or forced hikes across the borders into Cambodia, where they are pressed into indentured servitude.

Vice found many of the people forced to work in pig-butchering scams are being held in Chinese-owned casinos operating in Cambodia. Many of those casinos were newly built when the Covid pandemic hit. As the new casinos and hotels sat empty, organized crime groups saw an opportunity to use these facilities to generate huge income streams, and many foreign travelers stranded in neighboring countries were eventually trafficked to these scam centers.

Vice reports:

“While figures on the number of people in scam centers in Cambodia is unknown, best estimates pieced together from various sources point to the tens of thousands across scam centers in Sihanoukville, Phnom Penh, and sites in border regions Poipet and Bavet. In April, Thailand’s assistant national police commissioner said 800 Thai citizens had been rescued from scam centers in Cambodia in recent months, with a further 1,000 citizens still trapped across the country. One Vietnamese worker estimated 300 of his compatriots were held on just one floor in a tall office block hosting scam operations.”

“…within Victory Paradise Resort alone there were 7,000 people, the majority from mainland China, but also Indonesians, Singaporeans and Filipinos. According to the Khmer Times, one 10-building complex of high-rises in Sihanoukville, known as The China Project, holds between 8,000 to 10,000 people participating in various scams—a workforce that would generate profits around the $1 billion mark each year at $300 per worker per day.”

THE KILLING FLOOR

REACTs’ West said while there are a large number of pig butchering victims reporting their victimization to the FBI, very few are receiving anything more than instructions about filing a complaint with the FBI’s Internet Crime Complaint Center (IC3), which keeps track of cybercrime losses and victims.

“There’s a huge gap in victims that are seeing any kind of service at all, where they’re reporting to the FBI but not being able to talk to anyone,” she said. “They’re filling out the IC3 form and never hearing back. It sort of feels like the federal government is ignoring this, so people are going to local agencies, which are sending these victims our way.”

For many younger victims of pig butchering, even losses of a few thousand dollars can be financially devastating. KrebsOnSecurity recently heard from two different readers who said they were in their 20s and lost more than $40,000 each when the investment platforms they were trading on vanished with their money.

The FBI can often bundle numerous IC3 complaints involving the same assailants and victims into a single case for federal prosecutors to pursue the guilty, and/or try to recapture what was stolen. In general, however, victims of crypto crimes rarely see that money again, or if they do it can take many years.

“The next piece is what can we actually do with these cases,” West said. “We used to frame success as getting bad people behind bars, but these cases leave us as law enforcement with not a lot of opportunity there.”

West said the good news is U.S. authorities are seeing some success in freezing cryptocurrency wallets suspected of being tied to large-scale cybercriminal operations. Indeed, Nolan told KrebsOnSecurity that her losses were substantial enough to warrant an official investigation by the FBI, which she says has since taken steps to freeze at least some of the assets tied to xtb-market[.]com.

Likewise, West said she was recently able to freeze cryptocurrency funds stolen from some pig butchering victims, and now REACT is focusing on helping state and local authorities learn how to do the same.

“It’s important to be able to mobilize quickly and know how to freeze and seize crypto and get it back to its rightful owner,” West said. “We definitely have made seizures in cases involving pig butchering, but we haven’t gotten that back to the rightful owners yet.”

In April, the FBI warned Internet users to be on guard against pig butchering scams, which it said attracts victims with “promises of romance and riches” before duping them out of their money. The IC3 said it received more than 4,300 complaints related to crypto-romance scams, resulting in losses of more than $429 million.

Here are some common elements of a pig butchering scam:

–Dating apps: Pig-butchering attempts are common on dating apps, but they can begin with almost any type of communication, including SMS text messages.
–WhatsApp: In virtually all documented cases of pig butchering, the target is moved fairly quickly into chatting with the scammer via WhatsApp.
–No video: The scammers will come up with all kinds of excuses not to do a video call. But they will always refuse.
–Investment chit-chat: Your contact (eventually) claims to have inside knowledge about the cryptocurrency market and can help you make money.

The FBI’s tips on avoiding crypto scams:

-Never send money, trade, or invest based on the advice of someone you have only met online.
-Don’t talk about your current financial status to unknown and untrusted people.
-Don’t provide your banking information, Social Security Number, copies of your identification or passport, or any other sensitive information to anyone online or to a site you do not know is legitimate.
-If an online investment or trading site is promoting unbelievable profits, it is most likely that—unbelievable.
-Be cautious of individuals who claim to have exclusive investment opportunities and urge you to act fast.

Experian, You Have Some Explaining to Do

Twice in the past month KrebsOnSecurity has heard from readers who had their accounts at big-three credit bureau Experian hacked and updated with a new email address that wasn’t theirs. In both cases the readers used password managers to select strong, unique passwords for their Experian accounts. Research suggests identity thieves were able to hijack the accounts simply by signing up for new accounts at Experian using the victim’s personal information and a different email address.

John Turner is a software engineer based in Salt Lake City. Turner said he created the account at Experian in 2020 to place a security freeze on his credit file, and that he used a password manager to select and store a strong, unique password for his Experian account.

Turner said that in early June 2022 he received an email from Experian saying the email address on his account had been changed. Experian’s password reset process was useless at that point because any password reset links would be sent to the new (impostor’s) email address.

An Experian support person Turner reached via phone after a lengthy hold time asked for his Social Security Number (SSN) and date of birth, as well as his account PIN and answers to his secret questions. But the PIN and secret questions had already been changed by whoever re-signed up as him at Experian.

“I was able to answer the credit report questions successfully, which authenticated me to their system,” Turner said. “At that point, the representative read me the current stored security questions and PIN, and they were definitely not things I would have used.”

Turner said he was able to regain control over his Experian account by creating a new account. But now he’s wondering what else he could do to prevent another account compromise.

“The most frustrating part of this whole thing is that I received multiple ‘here’s your login information’ emails later that I attributed to the original attackers coming back and attempting to use the ‘forgot email/username’ flow, likely using my SSN and DOB, but it didn’t go to their email that they were expecting,” Turner said. “Given that Experian doesn’t support two-factor authentication of any kind — and that I don’t know how they were able to get access to my account in the first place — I’ve felt very helpless ever since.”

Arthur Rishi is a musician and co-executive director of the Boston Landmarks Orchestra. Rishi said he recently discovered his Experian account had been hijacked after receiving an alert from his credit monitoring service (not Experian’s) that someone had tried to open an account in his name at JPMorgan Chase.

Rishi said the alert surprised him because his credit file at Experian was frozen at the time, and Experian did not notify him about any activity on his account. Rishi said Chase agreed to cancel the unauthorized account application, and even rescinded its credit inquiry (each credit pull can ding your credit score slightly).

But he never could get anyone from Experian’s support to answer the phone, despite spending what seemed like eternity trying to progress through the company’s phone-based system. That’s when Rishi decided to see if he could create a new account for himself at Experian.

“I was able to open a new account at Experian starting from scratch, using my SSN, date of birth and answering some really basic questions, like what kind of car did you take out a loan for, or what city did you used to live in,’ Rishi said.

Upon completing the sign-up, Rishi noticed that his credit was unfrozen.

Like Turner, Rishi is now worried that identity thieves will just hijack his Experian account once more, and that there is nothing he can do to prevent such a scenario. For now, Rishi has decided to pay Experian $25.99 a month to more closely monitor his account for suspicious activity. Even using the paid Experian service, there were no additional multi-factor authentication options available, although he said Experian did send a one-time code to his phone via SMS recently when he logged on.

“Experian now sometimes does require MFA for me if I use a new browser or have my VPN on,” Rishi said, but he’s not sure if Experian’s free service would have operated differently.

“I get so angry when I think about all this,” he said. “I have no confidence this won’t happen again.”

In a written statement, Experian suggested that what happened to Rishi and Turner was not a normal occurrence, and that its security and identity verification practices extend beyond what is visible to the user.

“We believe these are isolated incidents of fraud using stolen consumer information,” Experian’s statement reads. “Specific to your question, once an Experian account is created, if someone attempts to create a second Experian account, our systems will notify the original email on file.”

“We go beyond reliance on personally identifiable information (PII) or a consumer’s ability to answer knowledge-based authentication questions to access our systems,” the statement continues. “We do not disclose additional processes for obvious security reasons; however, our data and analytical capabilities verify identity elements across multiple data sources and are not visible to the consumer. This is designed to create a more positive experience for our consumers and to provide additional layers of protection. We take consumer privacy and security seriously, and we continually review our security processes to guard against constant and evolving threats posed by fraudsters.”

ANALYSIS

KrebsOnSecurity sought to replicate Turner and Rishi’s experience — to see if Experian would allow me to re-create my account using my personal information but a different email address. The experiment was done from a different computer and Internet address than the one that created the original account years ago.

After providing my Social Security Number (SSN), date of birth, and answering several multiple choice questions whose answers are derived almost entirely from public records, Experian promptly changed the email address associated with my credit file. It did so without first confirming that new email address could respond to messages, or that the previous email address approved the change.

Experian’s system then sent an automated message to the original email address on file, saying the account’s email address had been changed. The only recourse Experian offered in the alert was to sign in, or send an email to an Experian inbox that replies with the message, “this email address is no longer monitored.”

After that, Experian prompted me to select new secret questions and answers, as well as a new account PIN — effectively erasing the account’s previously chosen PIN and recovery questions. Once I’d changed the PIN and security questions, Experian’s site helpfully reminded me that I have a security freeze on file, and would I like to remove or temporarily lift the security freeze?

To be clear, Experian does have a business unit that sells one-time password services to businesses. While Experian’s system did ask for a mobile number when I signed up a second time, at no time did that number receive a notification from Experian. Also, I could see no option in my account to enable multi-factor authentication for all logins.

How does Experian differ from the practices of Equifax and TransUnion, the other two big consumer credit reporting bureaus? When KrebsOnSecurity tried to re-create an existing account at TransUnion using my Social Security number, TransUnion rejected the application, noting that I already had an account and prompting me to proceed through its lost password flow. The company also appears to send an email to the address on file asking to validate account changes.

Likewise, trying to recreate an existing account at Equifax using personal information tied to my existing account prompts Equifax’s systems to report that I already have an account, and to use their password reset process (which involves sending a verification email to the address on file).

KrebsOnSecurity has long urged readers in the United States to place a security freeze on their files with the three major credit bureaus. With a freeze in place, potential creditors can’t pull your credit file, which makes it very unlikely anyone will be granted new lines of credit in your name. I’ve also advised readers to plant their flag at the three major bureaus, to prevent identity thieves from creating an account for you and assuming control over your identity.

The experiences of Rishi, Turner and this author suggest Experian’s practices currently undermine both of those proactive security measures. Even so, having an active account at Experian may be the only way you find out when crooks have assumed your identity. Because at least then you should receive an email from Experian saying they gave your identity to someone else.

In April 2021, KrebsOnSecurity revealed how identity thieves were exploiting lax authentication on Experian’s PIN retrieval page to unfreeze consumer credit files. In those cases, Experian failed to send any notice via email when a freeze PIN was retrieved, nor did it require the PIN to be sent to an email address already associated with the consumer’s account.

A few days after that April 2021 story, KrebsOnSecurity broke the news that an Experian API was exposing the credit scores of most Americans.

Emory Roan, policy counsel for the Privacy Rights Clearinghouse, said Experian not offering multi-factor authentication for consumer accounts is inexcusable in 2022.

“They compound the problem by gating the recovery process with information that’s likely available or inferable from third party data brokers, or that could have been exposed in previous data breaches,” Roan said. “Experian is one of the largest Consumer Reporting Agencies in the country, trusted as one of the few essential players in a credit system Americans are forced to be part of. For them to not offer consumers some form of (free) MFA is baffling and reflects extremely poorly on Experian.”

Nicholas Weaver, a researcher for the International Computer Science Institute at University of California, Berkeley, said Experian has no real incentive to do things right on the consumer side of its business. That is, he said, unless Experian’s customers — banks and other lenders — choose to vote with their feet because too many people with frozen credit files are having to deal with unauthorized applications for new credit.

“The actual customers of the credit service don’t realize how much worse Experian is, and this isn’t the first time Experian has screwed up horribly,” Weaver said. “Experian is part of a triopoly, and I’m sure this is costing their actual customers money, because if you have a credit freeze that gets lifted and somebody loans against it, it’s the lender who eats that fraud cost.”

And unlike consumers, he said, lenders do have a choice in which of the triopoly handles their credit checks.

“I do think it’s important to point out that their real customers do have a choice, and they should switch to TransUnion and Equifax,” he added.

More greatest hits from Experian:

2017: Experian Site Can Give Anyone Your Credit Freeze PIN
2015: Experian Breach Affects 15 Million Customers
2015: Experian Breach Tied to NY-NJ ID Theft Ring
2015: At Experian, Security Attrition Amid Acquisitions
2015: Experian Hit With Class Action Over ID Theft Service
2014: Experian Lapse Allowed ID Theft Service Access to 200 Million Consumer Records
2013: Experian Sold Consumer Data to ID Theft Service

Update, 10:32 a.m.: Updated the story to clarify that while Experian does sometimes ask users to enter a one-time code sent via SMS to the number on file, there does not appear to be any option to enable this on all logins.

The Link Between AWM Proxy & the Glupteba Botnet

On December 7, 2021, Google announced it was suing two Russian men allegedly responsible for operating the Glupteba botnet, a global malware menace that has infected millions of computers over the past decade. That same day, AWM Proxy — a 14-year-old anonymity service that rents hacked PCs to cybercriminals — suddenly went offline. Security experts had long seen a link between Glupteba and AWM Proxy, but new research shows AWM Proxy’s founder is one of the men being sued by Google.

Launched in March 2008, AWM Proxy quickly became the largest service for crooks seeking to route their malicious Web traffic through compromised devices. In 2011, researchers at Kaspersky Lab showed that virtually all of the hacked systems for rent at AWM Proxy had been compromised by TDSS (a.k.a TDL-4 and Alureon), a stealthy “rootkit” that installs deep within infected PCs and loads even before the underlying Windows operating system boots up.

In March 2011, security researchers at ESET found TDSS was being used to deploy Glupteba, another rootkit that steals passwords and other access credentials, disables security software, and tries to compromise other devices on the victim’s network — such as Internet routers and media storage servers — for use in relaying spam or other malicious traffic.

Like its predecessor TDSS, Glupteba is primarily distributed through “pay-per-install” or PPI networks, and via traffic purchased from traffic distribution systems (TDS). Pay-per-install networks try to match cybercriminals who already have access to large numbers of hacked PCs with other crooks seeking broader distribution of their malware.

In a typical PPI network, clients will submit their malware—a spambot or password-stealing Trojan, for example —to the service, which in turn charges per thousand successful installations, with the price depending on the requested geographic location of the desired victims. One of the most common ways PPI affiliates generate revenue is by secretly bundling the PPI network’s installer with pirated software titles that are widely available for download via the web or from file-sharing networks.

Over the past decade, both Glupteba and AWM Proxy have grown substantially. When KrebsOnSecurity first covered AWM Proxy in 2011, the service was selling access to roughly 24,000 infected PCs scattered across dozens of countries. Ten years later, AWM Proxy was offering 10 times that number of hacked systems on any given day, and Glupteba had grown to more than one million infected devices worldwide.

There is also ample evidence to suggest that Glupteba may have spawned Meris, a massive botnet of hacked Internet of Things (IoT) devices that surfaced in September 2021 and was responsible for some of the largest and most disruptive distributed denial-of-service (DDoS) attacks the Internet has ever seen.

But on Dec. 7, 2021, Google announced it had taken technical measures to dismantle the Glupteba botnet, and filed a civil lawsuit (PDF) against two Russian men thought to be responsible for operating the vast crime machine. AWM Proxy’s online storefront disappeared that same day.

AWM Proxy quickly alerted its customers that the service had moved to a new domain, with all customer balances, passwords and purchase histories seamlessly ported over to the new home. However, subsequent takedowns targeting AWM Proxy’s domains and other infrastructure have conspired to keep the service on the ropes and frequently switching domains ever since.

Earlier this month, the United States, Germany, the Netherlands and the U.K. dismantled the “RSOCKS” botnet, a competing proxy service that had been in operation since 2014. KrebsOnSecurity has identified the owner of RSOCKS as a 35-year-old from Omsk, Russia who runs the world’s largest forum catering to spammers.

Shortly after last week’s story on the RSOCKS founder, I heard from Riley Kilmer, co-founder of Spur.us, a startup that tracks criminal proxy services. Kilmer said RSOCKS was similarly disabled after Google’s combined legal sneak attack and technical takedown targeting Glupteba.

“The RSOCKS website gave you the estimated number of proxies in each of their subscription packages, and that number went down to zero on Dec. 7,” Kilmer said. “It’s not clear if that means the services were operated by the same people, or if they were just using the same sources (i.e., PPI programs) to generate new installations of their malware.”

Kilmer said each time his company tried to determine how many systems RSOCKS had for sale, they found each Internet address being sold by RSOCKS was also present in AWM Proxy’s network. In addition, Kilmer said, the application programming interfaces (APIs) used by both services to keep track of infected systems were virtually identical, once again suggesting strong collaboration.

“One hundred percent of the IPs we got back from RSOCKS we’d already identified in AWM,” Kilmer said. “And the IP port combinations they give you when you access an individual IP were the same as from AWM.”

In 2011, KrebsOnSecurity published an investigation that identified one of the founders of AWM Proxy, but Kilmer’s revelation prompted me to take a fresh look at the origins of this sprawling cybercriminal enterprise to determine if there were additional clues showing more concrete links between RSOCKS, AWM Proxy and Glupteba.

IF YOUR PLAN IS TO RIP OFF GOOGLE…

Supporting Kilmer’s theory that AWM Proxy and RSOCKS may simply be using the same PPI networks to spread, further research shows the RSOCKS owner also had an ownership stake in AD1[.]ru, an extremely popular Russian-language pay-per-install network that has been in operation for at least a decade.

Google took aim at Glupteba in part because its owners were using the botnet to divert and steal vast sums in online advertising revenue. So it’s more than a little ironic that the critical piece of evidence linking all of these operations begins with a Google Analytics code included in the HTML code for the original AWM Proxy back in 2008 (UA-3816536).

That analytics code also was present on a handful of other sites over the years, including the now-defunct Russian domain name registrar Domenadom[.]ru, and the website web-site[.]ru, which curiously was a Russian company operating a global real estate appraisal business called American Appraisal.

Two other domains connected to that Google Analytics code — Russian plastics manufacturers techplast[.]ru and tekhplast.ru — also shared a different Google Analytics code (UA-1838317) with web-site[.]ru and with the domain “starovikov[.]ru.”

The name on the WHOIS registration records for the plastics domains is an “Alexander I. Ukraincki,” whose personal information also is included in the domains tpos[.]ru and alphadisplay[.]ru, both apparently manufacturers of point-of-sale payment terminals in Russia.

Constella Intelligence, a security firm that indexes passwords and other personal information exposed in past data breaches, revealed dozens of variations on email addresses used by Alexander I. Ukraincki over the years. Most of those email addresses start with some variation of “uai@” followed by a domain from one of the many Russian email providers (e.g., yandex.ru, mail.ru). [Full disclosure: Constella is currently an advertiser on this website].

But Constella also shows those different email addresses all relied on a handful of passwords — most commonly “2222den” and “2222DEN.” Both of those passwords have been used almost exclusively in the past decade by the person who registered more than a dozen email addresses with the username “dennstr.”

The dennstr identity leads to several variations on the same name — Denis Strelinikov, or Denis Stranatka, from Ukraine, but those clues ultimately led nowhere promising. And maybe that was the point.

Things began looking brighter after I ran a search in DomainTools for web-site[.]ru’s original WHOIS records, which shows it was assigned in 2005 to a “private person” who used the email address lycefer@gmail.com. A search in Constella on that email address says it was used to register nearly two dozen domains, including starovikov.ru and starovikov[.]com.

A cached copy of the contact page for Starovikov[.]com shows that in 2008 it displayed the personal information for a Dmitry Starovikov, who listed his Skype username as “lycefer.”

Finally, Russian incorporation documents show the company LLC Website (web-site[.]ru)was registered in 2005 to two men, one of whom was named Dmitry Sergeevich Starovikov.

Bringing this full circle, Google says Starovikov is one of the two operators of the Glupteba botnet:

Mr. Starovikov did not respond to requests for comment. But attorneys for Starovikov and his co-defendant last month filed a response to Google’s complaint in the Southern District of New York, denying (PDF) their clients had any knowledge of the scheme.

Despite all of the disruption caused by Google’s legal and technical meddling, AWM is still around and nearly as healthy as ever, although the service has been branded with a new name and there are dubious claims of new owners. Advertising customer plans ranging from $50 a day to nearly $700 for “VIP access,” AWM Proxy says its malware has been running on approximately 175,000 systems worldwide over the last 24 hours, and that roughly 65,000 of these systems are currently online.

Meanwhile, the administrators of RSOCKS recently alerted customers that the service and any unspent balances will soon be migrated over to a new location.

Many people seem to equate spending time, money and effort to investigate and prosecute cybercriminals with the largely failed war on drugs, meaning there is an endless supply of up-and-coming crooks who will always fill in any gaps in the workforce whenever cybercriminals face justice.

While that may be true for many low-level cyber thieves today, investigations like these show once again how small the cybercriminal underground really is. It also shows how it makes a great deal of sense to focus efforts on targeting and disrupting the relatively small number of established hackers who remain the real force multipliers of cybercrime.

Adconion Execs Plead Guilty in Federal Anti-Spam Case

At the outset of their federal criminal trial for hijacking vast swaths of Internet addresses for use in large-scale email spam campaigns, three current or former executives at online advertising firm Adconion Direct (now Amobee) have pleaded guilty to lesser misdemeanor charges of fraud and misrepresentation via email.

In October 2018, prosecutors in the Southern District of California named four Adconion employees — Jacob Bychak, Mark Manoogian, Petr Pacas, and Mohammed Abdul Qayyum —  in a ten-count indictment (PDF) on felony charges of conspiracy, wire fraud, and electronic mail fraud.

The government alleged that between December 2010 and September 2014, the defendants engaged in a conspiracy to identify or pay to identify blocks of Internet Protocol (IP) addresses that were registered to others but which were otherwise inactive.

Prosecutors said the men also sent forged letters to an Internet hosting firm claiming they had been authorized by the registrants of the inactive IP addresses to use that space for their own purposes.

All four defendants pleaded not guilty when they were charged back in 2018, but this week Bychak, Manoogian and Qayyum each entered a plea deal.

“The defendants’ jobs with Adconion were to acquire fresh IP addresses and employ other measures to circumvent the spam filters,” reads a statement released today by the U.S. Attorney for the Southern District of California, which said the defendants would pay $100,000 in fines each and perform 100 hours of community service.

“To conceal Adconion’s ties to the stolen IP addresses and the spam sent from these IP addresses, the defendants used a host of DBAs, virtual addresses, and fake names provided by the company,” the statement continues. “While defendants touted ties to well-known name brands, the email marketing campaigns associated with the hijacked IP addresses included advertisements such as ‘BigBeautifulWomen,’ ‘iPhone4S Promos,’ and ‘LatinLove[Cost-per-Click].'”

None of the three plea agreements are currently available on PACER, the online federal court document clearinghouse. However, PACER does show that on June 7 — the same day the pleas were entered by the defendants —  the government submitted to the court a superseding set of just two misdemeanor charges (PDF) of fraud in connection with email.

Another document filed in the case says the fourth defendant — Pacas — accepted a deferred prosecution deal, which includes a probationary period and a required $50,000 “donation” to a federal “crime victims fund.”

There are fewer than four billion so-called “Internet Protocol version 4” or IPv4 addresses available for use, but the vast majority of them have already been allocated. The global dearth of available IP addresses has turned them into a commodity wherein each IP can fetch between $15-$25 on the open market.

This has led to boom times for those engaged in the acquisition and sale of IP address blocks, but it has likewise emboldened those who specialize in absconding with and spamming from dormant IP address blocks without permission from the rightful owners.

In May, prosecutors published information about the source of some IP address ranges from which the Adconion employees allegedly spammed. For example, the government found the men leased some of their IP address ranges from a Dutch company that’s been tied to a scandal involving more than four million addresses siphoned from the African Network Information Centre (AFRINIC), the nonprofit responsible for overseeing IP address allocation for African organizations.

In 2019, AFRINIC fired a top employee after it emerged that in 2013 he quietly commandeered millions of IPs from defunct African entities or from those that were long ago acquired by other firms, and then conspired to sell an estimated $50 million worth of the IPs to marketers based outside Africa.

“Exhibit A” in a recent government court filing shows that in 2013 Adconion leased more than 65,000 IP addresses from Inspiring Networks, a Dutch network services company. In 2020, Inspiring Networks and its director Maikel Uerlings were named in a dogged, multi-part investigation by South African news outlet MyBroadband.co.za and researcher Ron Guilmette as one of two major beneficiaries of the four million IP addresses looted from AFRINIC by its former employee.

The address block in the above image — 196.246.0.0/16 — was reportedly later reclaimed by AFRINIC following an investigation. Inspiring Networks has not responded to requests for comment.

Prosecutors allege the Adconion employees also obtained hijacked IP address blocks from Daniel Dye, another man tied to this case who was charged separately. For many years, Dye was a system administrator for Optinrealbig, a Colorado company that relentlessly pimped all manner of junk email, from mortgage leads and adult-related services to counterfeit products and Viagra. In 2018, Dye pleaded guilty to violations of the CAN-SPAM Act.

Optinrealbig’s CEO was the spam king Scott Richter, who changed the name of the company to Media Breakaway after being successfully sued for spamming by AOL, Microsoft, MySpace, and the New York Attorney General Office, among others. In 2008, this author penned a column for The Washington Post detailing how Media Breakaway had hijacked tens of thousands of IP addresses from a defunct San Francisco company for use in its spamming operations.

The last-minute plea deals by the Adconion employees were reminiscent of another recent federal criminal prosecution for IP address sleight-of-hand. In November 2021, the CEO of South Carolina technology firm Micfo pleaded guilty just two days into his trial, admitting 20 counts of wire fraud in connection with an elaborate network of phony companies set up to obtain more than 700,000 IPs from the American Registry for Internet Numbers (ARIN) — AFRINIC’s counterpart in North America.

Adconion was acquired in June 2014 by Amobee, a Redwood City, Calif. online ad platform that has catered to some of the world’s biggest brands. Amobee’s parent firm — Singapore-based communications giant Singtel — bought Amobee for $321 million in March 2012.

But as Reuters reported in 2021, Amobee cost Singtel nearly twice as much in the last year alone — $589 million — in a “non-cash impairment charge” Singtel disclosed to investors. Marketing industry blog Digiday.com reported in February that Singtel was seeking to part ways with its ad tech subsidiary.

One final note about Amobee: In response to my 2019 story on the criminal charges against the Adconion executives, Amobee issued a statement saying “Amobee has fully cooperated with the government’s investigation of this 2017 matter which pertains to alleged activities that occurred years prior to Amobee’s acquisition of the company.”

Yet as the government’s indictment points out, the alleged hijacking activities took place up until September 2014, which was after Amobee’s acquisition of Adconion Direct in June 2014. Also, the IP address ranges that the Adconion executives were prosecuted for hijacking were all related to incidents in 2013 and 2014, which is hardly “years prior to Amobee’s acquisition of the company.”

Amobee has not yet responded to requests for comment.