New Ransom Payment Schemes Target Executives, Telemedicine

Ransomware groups are constantly devising new methods for infecting victims and convincing them to pay up, but a couple of strategies tested recently seem especially devious. The first centers on targeting healthcare organizations that offer consultations over the Internet and sending them booby-trapped medical records for the “patient.” The other involves carefully editing email inboxes of public company executives to make it appear that some were involved in insider trading.

Alex Holden is founder of Hold Security, a Milwaukee-based cybersecurity firm. Holden’s team gained visibility into discussions among members of two different ransom groups: CLOP (a.k.a. “Cl0p” a.k.a. “TA505“), and a newer ransom group known as Venus.

Last month, the U.S. Department of Health and Human Services (HHS) warned that Venus ransomware attacks were targeting a number of U.S. healthcare organizations. First spotted in mid-August 2022, Venus is known for hacking into victims’ publicly-exposed Remote Desktop services to encrypt Windows devices.

Holden said the internal discussions among the Venus group members indicate this gang has no problem gaining access to victim organizations.

“The Venus group has problems getting paid,” Holden said. “They are targeting a lot of U.S. companies, but nobody wants to pay them.”

Which might explain why their latest scheme centers on trying to frame executives at public companies for insider trading charges. Venus indicated it recently had success with a method that involves carefully editing one or more email inbox files at a victim firm — to insert messages discussing plans to trade large volumes of the company’s stock based on non-public information.

“We imitate correspondence of the [CEO] with a certain insider who shares financial reports of his companies through which your victim allegedly trades in the stock market, which naturally is a criminal offense and — according to US federal laws [includes the possibility of up to] 20 years in prison,” one Venus member wrote to an underling.

“You need to create this file and inject into the machine(s) like this so that metadata would say that they were created on his computer,” they continued. “One of my clients did it, I don’t know how. In addition to pst, you need to decompose several files into different places, so that metadata says the files are native from a certain date and time rather than created yesterday on an unknown machine.”

Holden said it’s not easy to plant emails into an inbox, but it can be done with Microsoft Outlook .pst files, which the attackers may also have access to if they’d already compromised a victim network.

“It’s not going to be forensically solid, but that’s not what they care about,” he said. “It still has the potential to be a huge scandal — at least for a while — when a victim is being threatened with the publication or release of these records.”

Holden said the CLOP ransomware gang has a different problem of late: Not enough victims. The intercepted CLOP communication seen by KrebsOnSecurity shows the group bragged about twice having success infiltrating new victims in the healthcare industry by sending them infected files disguised as ultrasound images or other medical documents for a patient seeking a remote consultation.

The CLOP members said one tried-and-true method of infecting healthcare providers involved gathering healthcare insurance and payment data to use in submitting requests for a remote consultation on a patient who has cirrhosis of the liver.

“Basically, they’re counting on doctors or nurses reviewing the patient’s chart and scans just before the appointment,” Holden said. “They initially discussed going in with cardiovascular issues, but decided cirrhosis or fibrosis of the liver would be more likely to be diagnosable remotely from existing test results and scans.”

While CLOP as a money making collective is a fairly young organization, security experts say CLOP members hail from a group of Threat Actors (TA) known as “TA505,” which MITRE’s ATT&CK database says is a financially motivated cybercrime group that has been active since at least 2014. “This group is known for frequently changing malware and driving global trends in criminal malware distribution,” MITRE assessed.

In April, 2021, KrebsOnSecurity detailed how CLOP helped pioneer another innovation aimed at pushing more victims into paying an extortion demand: Emailing the ransomware victim’s customers and partners directly and warning that their data would be leaked to the dark web unless they can convince the victim firm to pay up.

Security firm Tripwire points out that the HHS advisory on Venus says multiple threat actor groups are likely distributing the Venus ransomware. Tripwire’s tips for all organizations on avoiding ransomware attacks include:

• Making secure offsite backups.
• Running up-to-date security solutions and ensuring that your computers are protected with the latest security patches against vulnerabilities.
• Using hard-to-crack unique passwords to protect sensitive data and accounts, as well as enabling multi-factor authentication.
• Encrypting sensitive data wherever possible.
• Continuously educating and informing staff about the risks and methods used by cybercriminals to launch attacks and steal data.

While the above tips are important and useful, one critical area of ransomware preparedness overlooked by too many organizations is the need to develop — and then periodically rehearse — a plan for how everyone in the organization should respond in the event of a ransomware or data ransom incident. Drilling this breach response plan is key because it helps expose weaknesses in those plans that could be exploited by the intruders.

As noted in last year’s story Don’t Wanna Pay Ransom Gangs? Test Your Backups, experts say the biggest reason ransomware targets and/or their insurance providers still pay when they already have reliable backups of their systems and data is that nobody at the victim organization bothered to test in advance how long this data restoration process might take.

“Suddenly the victim notices they have a couple of petabytes of data to restore over the Internet, and they realize that even with their fast connections it’s going to take three months to download all these backup files,” said Fabian Wosar, chief technology officer at Emsisoft. “A lot of IT teams never actually make even a back-of-the-napkin calculation of how long it would take them to restore from a data rate perspective.”

Judge Orders U.S. Lawyer in Russian Botnet Case to Pay Google

In December 2021, Google filed a civil lawsuit against two Russian men thought to be responsible for operating Glupteba, one of the Internet’s largest and oldest botnets. The defendants, who initially pursued a strategy of counter suing Google for interfering in their sprawling cybercrime business, later brazenly offered to dismantle the botnet in exchange for payment from Google. The judge in the case was not amused, found for the plaintiff, and ordered the defendants and their U.S. attorney to pay Google’s legal fees.

Glupteba is a rootkit that steals passwords and other access credentials, disables security software, and tries to compromise other devices on the victim network — such as Internet routers and media storage servers — for use in relaying spam or other malicious traffic.

Collectively, the tens of thousands of systems infected with Glupteba on any given day feed into a number of major cybercriminal businesses: The botnet’s proprietors sell the credential data they steal, use the botnet to place disruptive ads on the infected computers, and mine cryptocurrencies. Glupteba also rents out infected systems as “proxies,” directing third-party traffic through the infected devices to disguise the origin of the traffic.

In June 2022, KrebsOnSecurity showed how the malware proxy services RSOCKS and AWMProxy were entirely dependent on the Glupteba botnet for fresh proxies, and that the founder of AWMProxy was Dmitry Starovikov — one of the Russian men named in Google’s lawsuit.

Google sued Starovikov and 15 other “John Doe” defendants, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), the Computer Fraud and Abuse Act, trademark and unfair competition law, and unjust enrichment.

In June, Google and the named defendants agreed that the case would proceed as a nonjury action because Google had withdrawn its claim for damages — seeking only injunctive relief to halt the operations of the botnet.

The defendants, who worked for a Russian firm called “Valtron” that was also named in the lawsuit, told Google that they were interested in settling. The defendants said they could potentially help Google by taking the botnet offline.

But the court expressed frustration that the defendants were unwilling to consent to a permanent injunction, and at the same time were unable to articulate why an injunction forbidding them from engaging in unlawful activities would pose a problem.

“The Defendants insisted that they were not engaged in criminal activity, and that any alleged activity in which they were engaged was legitimate,” U.S. District Court Judge Denise Cote wrote. “Nevertheless, the Defendants resisted entry of a permanent injunction, asserting that Google’s use of the preliminary injunction had disrupted their normal business operations.”

While the defendants represented that they had the ability to dismantle the Glupteba botnet, when it came time for discovery — the stage in a lawsuit where both parties can compel the production of documents and other information pertinent to their case — the attorney for the defendants told the court his clients had been fired by Valtron in late 2021, and thus no longer had access to their work laptops or the botnet.

The lawyer for the defendants — New York-based cybercrime defense attorney Igor Litvak — told the court he first learned about his clients’ termination from Valtron on May 20, a fact Judge Cote said she found “troubling” given statements he made to the court after that date representing that his clients still had access to the botnet.

The court ultimately suspended the discovery process against Google, saying there was reason to believe the defendants sought discovery only “to learn whether they could circumvent the steps Google has taken to block the malware.”

On September 6, Litvak emailed Google that his clients were willing to discuss settlement.

“The parties held a call on September 8, at which Litvak explained that the Defendants would be willing to provide Google with the private keys for Bitcoin addresses associated with the Glupteba botnet, and that they would promise not to engage in their alleged criminal activity in the future (without any admission of wrongdoing),” the judge wrote.

“In exchange, the Defendants would receive Google’s agreement not to report them to law enforcement, and a payment of $1 million per defendant, plus $110,000 in attorney’s fees,” Judge Cote continued. “The Defendants stated that, although they do not currently have access to the private keys, Valtron would be willing to provide them with the private keys if the case were settled. The Defendants also stated that they believe these keys would help Google shut down the Glupteba botnet.”

Google rejected the defendants’ offer as extortionate, and reported it to law enforcement. Judge Cote also found Litvak was complicit in the defendants’ efforts to mislead the court, and ordered him to join his clients in paying Google’s legal fees.

“It is now clear that the Defendants appeared in this Court not to proceed in good faith to defend against Google’s claims but with the intent to abuse the court system and discovery rules to reap a profit from Google,” Judge Cote wrote.

Litvak has filed a motion to reconsider (PDF), asking the court to vacate the sanctions against him. He said his goal is to get the case back into court.

“The judge was completely wrong to issue sanctions,” Litvak said in an interview with KrebsOnSecurity. “From the beginning of the case, she acted as if she needed to protect Google from something. If the court does not decide to vacate the sanctions, we will have to go to the Second Circuit (Court of Appeals) and get justice there.”

In a statement on the court’s decision, Google said it will have significant ramifications for online crime, and that since its technical and legal attacks on the botnet last year, Google has observed a 78 percent reduction in the number of hosts infected by Glupteba.

“While Glupteba operators have resumed activity on some non-Google platforms and IoT devices, shining a legal spotlight on the group makes it less appealing for other criminal operations to work with them,” reads a blog post from Google’s General Counsel Halimah DeLaine Prado and vice president of engineering Royal Hansen. “And the steps [Google] took last year to disrupt their operations have already had significant impact.”

Disneyland Malware Team: It’s a Puny World After All

A financial cybercrime group calling itself the Disneyland Team has been making liberal use of visually confusing phishing domains that spoof popular bank brands using Punycode, an Internet standard that allows web browsers to render domain names with non-Latin alphabets like Cyrillic.

The Disneyland Team uses common misspellings for top bank brands in its domains. For example, one domain the gang has used since March 2022 is ushank[.]com — which was created to phish U.S. Bank customers.

But this group also usually makes use of Punycode to make their phony bank domains look more legit. The U.S. financial services firm Ameriprise uses the domain ameriprise.com; the Disneyland Team’s domain for Ameriprise customers is https://www.xn--meripris-mx0doj[.]com [brackets added to defang the domain], which displays in the browser URL bar as ạmeriprisẹ[.]com.

Look carefully, and you’ll notice small dots beneath the “a” and the second “e”. You could be forgiven if you mistook one or both of those dots for a spec of dust on your computer screen or mobile device.

This candid view inside the Disneyland Team comes from Alex Holden, founder of the Milwaukee-based cybersecurity consulting firm Hold Security. Holden’s analysts gained access to a Web-based control panel the crime group has been using to keep track of victim credentials (see screenshot above). The panel reveals the gang has been operating dozens of Punycode-based phishing domains for the better part of 2022.

Have a look at the Punycode in this Disneyland Team phishing domain: https://login2.xn--mirtesnbd-276drj[.]com, which shows up in the browser URL bar as login2.ẹmirạtesnbd[.]com, a domain targeting users of Emirates NBD Bank in Dubai.

Here’s another domain registered this year by the Disneyland Team: https://xn--clientchwb-zxd5678f[.]com, which spoofs the login page of financial advisor Charles Schwab with the landing page of cliẹntșchwab[.]com. Again, notice the dots under the letters “e” and “s”.  Another Punycode domain of theirs sends would-be victims to cliẹrtschwạb[.]com, which combines a brand misspelling with Punycode.

We see the same dynamic with the Disneyland Team Punycode domain https://singlepoint.xn--bamk-pxb5435b[.]com, which translates to singlepoint.ụșbamk[.]com — again phishing U.S. Bank customers.

What’s going on here? Holden says the Disneyland Team is Russian-speaking — if not also based in Russia —  but it is not a phishing gang per se. Rather, this group uses the phony bank domains in conjunction with malicious software that is already secretly installed on a victim’s computer.

Holden said the Disneyland Team domains were made to help the group steal money from victims infected with a powerful strain of Microsoft Windows-based banking malware known as Gozi 2.0/Ursnif. Gozi specializes in collecting credentials, and is mainly used for attacks on client-side online banking to facilitate fraudulent bank transfers. Gozi also allows the attackers to connect to a bank’s website using the victim’s computer.

In years past, crooks like these would use custom-made “web injects” to manipulate what Gozi victims see in their Web browser when they visit their bank’s site. These web injects allowed malware to rewrite the bank’s HTML code on the fly, and copy and/or intercept any data users would enter into a web-based form, such as a username and password.

Most Web browser makers, however, have spent years adding security protections to block such nefarious activity. As a result, the Disneyland Team simply tries to make their domains look as much like the real thing as possible, and then funnel victims toward interacting with those imposter sites.

“The reason that it is infeasible for them to use in-browser injects include browser and OS protection measures, and difficulties manipulating dynamic pages for banks that require multi-factor authentication,” Holden said.

In reality, the fake bank website overlaid by the Disneyland Team’s malware relays the victim’s browser activity through to the real bank website, while allowing the attackers to forward any secondary login requests from the bank, such as secret questions or multi-factor authentication challenges.

The Disneyland Team included instructions for its users, noting that when the victim enters their login credentials, he sees a 10-second spinning wheel, and then the message, “Awaiting back office approval for your request. Please don’t close this window.”

The “SKIP” button in the screenshot above sends the user to the real bank login page, “in case the account is not interesting to us,” the manual explains. “Also, this redirect works if none of our operators are working at the time.”

The “TAKE” button in the Disneyland Team control panel allows users or affiliates to claim ownership over a specific infected machine or bot, which then excludes other users from interacting with that victim.

In the event that it somehow takes a long time to get the victim (bot) connected to the Disneyland Team control panel, or if it is necessary to delay a transaction, users can push a button that prompts the following message to appear on the victim’s screen:

“Your case ID number is 875472. An online banking support representative will get in touch shortly. Please provide your case ID number, and DO NOT close this page.”

The Disneyland user manual explains that the panel can be used to force the victim to log in again if they transmit invalid credentials. It also has other options for stalling victims whilst their accounts are drained. Another fake prompt the panel can produce shows the victim a message saying, “We are currently working on updating our security system. You should be able to log in once the countdown timer expires.”

The user manual says this option blocks the user from accessing their account for two hours. “It is possible to block for an hour with this button, in this case they get less frustrated, within the hours ddos will kill their network.”

Cybercrime groups will sometimes launch distributed denial-of-service (DDoS) attacks on the servers of the companies they’re trying to rob — which is usually intended to distract victims from their fleecing, although Holden said it’s unclear if the Disneyland Team employs this tactic as well.

For many years, KrebsOnSecurity tracked the day-to-day activities of a similar malware crew that used web injects and bots to steal tens of millions of dollars from small- to mid-sized businesses across the United States.

At the end of each story, I would close with a recommendation that anyone concerned about malware snarfing their banking information should strongly consider doing their online banking from a dedicated, security-hardened system which is only used for that purpose. Of course, the dedicated system approach works only if you always use that dedicated system for managing your account online.

Those stories also observed that since the vast majority of the malicious software used in cyberheists is designed to run only on Microsoft Windows computers, it made sense to pick a non-Windows computer for that dedicated banking system, such as a Mac or even a version of Linux. I still stand by this advice.

In case anyone is interested, here (PDF) is a list of all phishing domains currently and previously used by the Disneyland Team.

Top Zeus Botnet Suspect “Tank” Arrested in Geneva

Vyacheslav “Tank” Penchukov, the accused 40-year-old Ukrainian leader of a prolific cybercriminal group that stole tens of millions of dollars from small to mid-sized businesses in the United States and Europe, has been arrested in Switzerland, according to multiple sources.

Penchukov was named in a 2014 indictment by the U.S. Department of Justice as a top figure in the JabberZeus Crew, a small but potent cybercriminal collective from Ukraine and Russia that attacked victim companies with a powerful, custom-made version of the Zeus banking trojan.

The U.S. Federal Bureau of Investigation (FBI) declined to comment for this story. But according to multiple sources, Penchukov was arrested in Geneva, Switzerland roughly three weeks ago as he was traveling to meet up with his wife there.

Penchukov is from Donetsk, a traditionally Russia-leaning region in Eastern Ukraine that was recently annexed by Russia. In his hometown, Penchukov was a well-known deejay (“DJ Slava Rich“) who enjoyed being seen riding around in his high-end BMWs and Porsches. More recently, Penchukov has been investing quite a bit in local businesses.

The JabberZeus crew’s name is derived from the malware they used, which was configured to send them a Jabber instant message each time a new victim entered a one-time password code into a phishing page mimicking their bank. The JabberZeus gang targeted mostly small to mid-sized businesses, and they were an early pioneer of so-called “man-in-the-browser” attacks, malware that can silently siphon any data that victims submit via a web-based form.

Once inside a victim company’s bank accounts, the crooks would modify the firm’s payroll to add dozens of “money mules,” people recruited through work-at-home schemes to handle bank transfers. The mules in turn would forward any stolen payroll deposits — minus their commissions — via wire transfer overseas.

The JabberZeus malware was custom-made for the crime group by the alleged author of the Zeus trojan — Evgeniy Mikhailovich Bogachev, a top Russian cybercriminal with a $3 million bounty on his head from the FBI. Bogachev is accused of running the Gameover Zeus botnet, a massive crime machine of 500,000 to 1 million infected PCs that was used for large DDoS attacks and for spreading Cryptolocker — a peer-to-peer ransomware threat that was years ahead of its time.

Investigators knew Bogachev and JabberZeus were linked because for many years they were reading the private Jabber chats between and among members of the JabberZeus crew, and Bogachev’s monitored aliases were in semi-regular contact with the group about updates to the malware.

Gary Warner, director of research in computer forensics at the University of Alabama at Birmingham, noted in his blog from 2014 that Tank told co-conspirators in a JabberZeus chat on July 22, 2009 that his daughter, Miloslava, had been born and gave her birth weight.

“A search of Ukrainian birth records only showed one girl named Miloslava with that birth weight born on that day,” Warner wrote. This was enough to positively identify Tank as Penchukov, Warner said.

Ultimately, Penchukov’s political connections helped him evade prosecution by Ukrainian cybercrime investigators for many years. The late son of former Ukrainian President Victor Yanukovych (Victor Yanukovych Jr.) would serve as godfather to Tank’s daughter Miloslava. Through his connections to the Yanukovych family, Tank was able to establish contact with key insiders in top tiers of the Ukrainian government, including law enforcement.

Sources briefed on the investigation into Penchukov said that in 2010 — at a time when the Security Service of Ukraine (SBU) was preparing to serve search warrants on Tank and his crew — Tank received a tip that the SBU was coming to raid his home. That warning gave Tank ample time to destroy important evidence against the group, and to avoid being home when the raids happened. Those sources also said Tank used his contacts to have the investigation into his crew moved to a different unit that was headed by his corrupt SBU contact.

Writing for Technology Review, Patrick Howell O’Neil recounted how SBU agents in 2010 were trailing Tank around the city, watching closely as he moved between nightclubs and his apartment.

“In early October, the Ukrainian surveillance team said they’d lost him,” he wrote. “The Americans were unhappy, and a little surprised. But they were also resigned to what they saw as the realities of working in Ukraine. The country had a notorious corruption problem. The running joke was that it was easy to find the SBU’s anticorruption unit—just look for the parking lot full of BMWs.”

AUTHOR’S NOTE/BACKGROUND

I first encountered Tank and the JabberZeus crew roughly 14 years ago as a reporter for The Washington Post, after a trusted source confided that he’d secretly gained access to the group’s private Jabber conversations.

From reading those discussions each day, it became clear Tank was nominally in charge of the Ukrainian crew, and that he spent much of his time overseeing the activities of the money mule recruiters — which were an integral part of their victim cashout scheme.

It was soon discovered that the phony corporate websites the money mule recruiters used to manage new hires had a security weakness that allowed anyone who signed up at the portal to view messages for every other user. A scraping tool was built to harvest these money mule recruitment messages, and at the height of the JabberZeus gang’s activity in 2010 that scraper was monitoring messages on close to a dozen different money mule recruitment sites, each managing hundreds of “employees.”

Each mule was given busy work or menial tasks for a few days or weeks prior to being asked to handle money transfers. I believe this was an effort to weed out unreliable money mules. After all, those who showed up late for work tended to cost the crooks a lot of money, as the victim’s bank would usually try to reverse any transfers that hadn’t already been withdrawn by the mules.

When it came time to transfer stolen funds, the recruiters would send a message through the fake company website saying something like: “Good morning [mule name here]. Our client — XYZ Corp. — is sending you some money today. Please visit your bank now and withdraw this payment in cash, and then wire the funds in equal payments — minus your commission — to these three individuals in Eastern Europe.”

Only, in every case the company mentioned as the “client” was in fact a small business whose payroll accounts they’d already hacked into.

So, each day for several years my morning routine went as follows: Make a pot of coffee; shuffle over to the computer and view the messages Tank and his co-conspirators had sent to their money mules over the previous 12-24 hours; look up the victim company names in Google; pick up the phone to warn each that they were in the process of being robbed by the Russian Cyber Mob.

My spiel on all of these calls was more or less the same: “You probably have no idea who I am, but here’s all my contact info and what I do. Your payroll accounts have been hacked, and you’re about to lose a great deal of money. You should contact your bank immediately and have them put a hold on any pending transfers before it’s too late. Feel free to call me back afterwards if you want more information about how I know all this, but for now please just call or visit your bank.”

In many instances, my call would come in just minutes or hours before an unauthorized payroll batch was processed by the victim company’s bank, and some of those notifications prevented what otherwise would have been enormous losses — often several times the amount of the organization’s normal weekly payroll. At some point I stopped counting how many tens of thousands of dollars those calls saved victims, but over several years it was probably in the millions.

Just as often, the victim company would suspect that I was somehow involved in the robbery, and soon after alerting them I would receive a call from an FBI agent or from a police officer in the victim’s hometown. Those were always interesting conversations.

Collectively, these notifications to victims led to dozens of stories over several years about small businesses battling their financial institutions to recover their losses. I never wrote about a single victim that wasn’t okay with my calling attention to their plight and to the sophistication of the threat facing other companies.

This incessant meddling on my part very much aggravated Tank, who on more than one occasion expressed mystification as to how I knew so much about their operations and victims. Here’s a snippet from one of their Jabber chats in 2009, after I’d written a story for The Washington Post about their efforts to steal $415,000 from the coffers of Bullitt County, Kentucky. In the chat below, “lucky12345” is the Zeus author Bogachev:

tank: Are you there?
tank: This is what they damn wrote about me.
tank: http://voices.washingtonpost.com/securityfix/2009/07/an_odyssey_of_fraud_part_ii.html#more
tank: I’ll take a quick look at history
tank: Originator: BULLITT COUNTY FISCAL Company: Bullitt County Fiscal Court
tank: Well, you got [it] from that cash-in.
lucky12345: From 200K?
tank: Well, they are not the right amounts and the cash out from that account was shitty.
tank: Levak was written there.
tank: Because now the entire USA knows about Zeus.
tank: 
lucky12345: It’s fucked.

On Dec. 13, 2009, one of Tank’s top money mule recruiters — a crook who used the pseudonym “Jim Rogers” — told his boss something I hadn’t shared beyond a few trusted confidants at that point: That The Washington Post had eliminated my job in the process of merging the newspaper’s Web site (where I worked at the time) with the dead tree edition.

jim_rogers: There is a rumor that our favorite (Brian) didn’t get his contract extension at Washington Post. We are giddily awaiting confirmation  Good news expected exactly by the New Year! Besides us no one reads his column 

tank: Mr. Fucking Brian Fucking Kerbs!

Another member of the JabberZeus crew — Ukrainian-born Maksim “Aqua” Yakubets — also is currently wanted by the FBI, which is offering a $5 million reward for information leading to his arrest and conviction.

Update, Nov. 16, 2022, 7:55 p.m. ET:: Multiple media outlets are reporting that Swiss authorities confirmed they arrested a Ukrainian national wanted on cybercrime charges. The arrest occurred in Geneva on Oct. 23, 2022. “The US authorities accuse the prosecuted person of extortion, bank fraud and identity theft, among other things,” reads a statement from the Swiss Federal Office of Justice (FOJ).

“During the hearing on 24 October, 2022, the person did not consent to his extradition to the USA via a simplified proceeding,” the FOJ continued. “After completion of the formal extradition procedure, the FOJ has decided to grant his extradition to the USA on 15 November, 2022. The decision of the FOJ may be appealed at the Swiss Criminal Federal Court, respectively at the Swiss Supreme Court.”

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.”

Accused ‘Raccoon’ Malware Developer Fled Ukraine After Russian Invasion

A 26-year-old Ukrainian man is awaiting extradition from The Netherlands to the United States on charges that he acted as a core developer for Raccoon, a popular “malware-as-a-service” offering that helped paying customers steal passwords and financial data from millions of cybercrime victims. KrebsOnSecurity has learned that the defendant was busted in March 2022, after fleeing mandatory military service in Ukraine in the weeks following the Russian invasion.

The U.S. Attorney for the Western District of Texas unsealed an indictment last week that named Ukrainian national Mark Sokolovsky as the core developer for the Raccoon Infostealer business, which was marketed on several Russian-language cybercrime forums beginning in 2019.

Raccoon was essentially a Web-based control panel, where — for $200 a month — customers could get the latest version of the Raccoon Infostealer malware, and interact with infected systems in real time. Security experts say the passwords and other data stolen by Raccoon malware were often resold to groups engaged in deploying ransomware.

Working with investigators in Italy and The Netherlands, U.S. authorities seized a copy of the server used by Raccoon to help customers manage their botnets. According to the U.S. Justice Department, FBI agents have identified more than 50 million unique credentials and forms of identification (email addresses, bank accounts, cryptocurrency addresses, credit card numbers, etc.) stolen with the help of Raccoon.

The unsealed indictment (PDF) doesn’t delve much into how investigators tied Sokolovsky to Raccoon, but two sources close to the investigation shared more information about that process on condition of anonymity because they were not authorized to discuss the case publicly.

According to those sources, U.S. authorities zeroed in on an operational security mistake that the Raccoon developer made early on in his posts to the crime forums, connecting a Gmail account for a cybercrime forum identity used by the Raccoon developer (“Photix”) to an Apple iCloud account belonging to Sokolovsky. For example, the indictment includes a photo that investigators subpoenaed from Sokolovsky’s iCloud account that shows him posing with several stacks of bundled cash.

When Russia invaded Ukraine in late February 2022, Sokolovsky was living in Kharkiv, a city in northeast Ukraine that would soon come under heavy artillery bombardment from Russian forces. Authorities monitoring Sokolovsky’s iCloud account had spent weeks watching him shuttle between Kharkiv and the Ukrainian capital Kyiv, but on Mar. 18, 2022, his phone suddenly showed up in Poland.

Investigators learned from Polish border guards that Sokolovsky had fled Ukraine in a Porsche Cayenne along with a young blond woman, leaving his mother and other family behind. The image at the top of this post was shared with U.S. investigators by Polish border security officials, and it shows Sokolovsky leaving Poland for Germany on Mar. 18.

At the time, all able-bodied men of military age were required to report for service to help repel the Russian invasion, and it would have been illegal for Sokolovsky to leave Ukraine without permission. But both sources said investigators believe Sokolovsky bribed border guards to let them pass.

Authorities soon tracked Sokolovsky’s phone through Germany and eventually to The Netherlands, with his female companion helpfully documenting every step of the trip on her Instagram account. Here is a picture she posted of the two embracing upon their arrival in Amsterdam’s Dam Square:

Authorities in The Netherlands arrested Sokolovsky on Mar. 20, and quickly seized control over the Raccoon Infostealer infrastructure. Meanwhile, on March 25 the accounts that had previously advertised the Raccoon Stealer malware on cybercrime forums announced the service was closing down. The parting message to customers said nothing of an arrest, and instead insinuated that the core members in charge of the malware-as-a-service project had perished in the Russian invasion.

“Unfortunately, due to the ‘special operation,’ we will have to close our Raccoon Stealer project,” the team announced Mar. 25. “Our team members who were responsible for critical components of the product are no longer with us. Thank you for this experience and time, for every day, unfortunately everything, sooner or later, the end of the WORLD comes to everyone.”

Sokolovsky’s extradition to the United States has been granted, but he is appealing that decision. He faces one count of conspiracy to commit computer fraud; one count of conspiracy to commit wire fraud; one count of conspiracy to commit money laundering, and one count of aggravated identity theft.

Sources tell KrebsOnSecurity that Sokolovsky has been consulting with Houston, Tx.-based attorney F. Andino Reynal, the same lawyer who represented Alex Jones in the recent defamation lawsuit against Jones and his conspiracy theory website Infowars. Reynal was responsible for what Jones himself referred to as the “Perry Mason” moment of the trial, wherein the plaintiff’s lawyer revealed that Reynal had inadvertently given them an entire digital copy of Jones’s cell phone. Mr. Reynal did not respond to requests for comment.

If convicted, Sokolovsky faces a maximum penalty of 20 years in prison for the wire fraud and money laundering offenses, five years for the conspiracy to commit computer fraud charge, and a mandatory consecutive two-year term for the aggravated identity theft offense.

The Justice Department has set up a website — raccoon.ic3.gov — that allows visitors to check whether their email address shows up in the data collected by the Raccoon Stealer service.

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.

Anti-Money Laundering Service AMLBot Cleans House

AMLBot, a service that helps businesses avoid transacting with cryptocurrency wallets that have been sanctioned for cybercrime activity, said an investigation published by KrebsOnSecurity last year helped it shut down three dark web services that secretly resold its technology to help cybercrooks avoid detection by anti-money laundering systems.

In August 2021, KrebsOnSecurity published “New Anti Anti-Money Laundering Services for Crooks,” which examined Antinalysis, a service marketed on cybercrime forums that purported to offer a glimpse of how one’s payment activity might be flagged by law enforcement agencies and private companies that track and trace cryptocurrency transactions.

“Worried about dirty funds in your BTC address? Come check out Antinalysis, the new address risk analyzer,” read the service’s opening announcement. “This service is dedicated to individuals that have the need to possess complete privacy on the blockchain, offering a perspective from the opponent’s point of view in order for the user to comprehend the possibility of his/her funds getting flagged down under autocratic illegal charges.”

Antinalysis allows free lookups, but anyone wishing to conduct bulk look-ups has to pay at least USD $3, with a minimum $30 purchase. Other plans go for as high as $6,000 for 5,000 requests. Nick Bax, a security researcher who specializes in tracing cryptocurrency transactions, told KrebsOnSecurity at the time that Antinalysis was likely a clone of AMLBot because the two services generated near-identical results.

AMLBot shut down Antinalysis’s access just hours after last year’s story went live. However, Antinalysis[.]org remains online and accepting requests, as does the service’s Tor-based domain, and it is unclear how those services are sourcing their information.

AMLBot spokesperson Polina Smoliar said the company undertook a thorough review after that discovery, and in the process found two other services similar to Antinalysis that were reselling their application programming interface (API) access to cybercrooks.

Smoliar said that following the revelations about Antinalysis, AMLBot audited its entire client base, and implemented the ability to provide APIs only after a contract is signed and the client has been fully audited. AMLBot said it also instituted 24/7 monitoring of all client transactions.

“As a result of these actions, two more services with the name AML (the same as AMLBot has) were found to be involved in fraudulent schemes,” Smoliar said. “Information about the fraudsters was also sent to key market participants, and their transaction data was added to the tracking database to better combat money laundering.”

The Antinalysis homepage and chatter on the cybercrime forums indicates the service was created by a group of coders known as the Incognito Team. Tom Robinson, co-founder of the blockchain intelligence firm Elliptic, said the creator of Antinalysis is also one of the developers of Incognito Market, a darknet marketplace specializing in the sale of narcotics.

“Incognito was launched in late 2020, and accepts payments in both Bitcoin and Monero, a cryptoasset offering heightened anonymity,” Robinson said. “The launch of Antinalysis likely reflects the difficulties faced by the market and its vendors in cashing out their Bitcoin proceeds.”

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.

Violence-as-a-Service: Brickings, Firebombings & Shootings for Hire

A 21-year-old New Jersey man has been 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 the defendant 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.

Patrick McGovern-Allen of Egg Harbor Township, N.J. was arrested on Aug. 12 on a warrant from the U.S. Federal Bureau of Investigation. An FBI complaint alleges McGovern-Allen was part of a group of co-conspirators who are at the forefront of a dangerous escalation in coercion and intimidation tactics increasingly used by competing cybercriminal groups.

Prosecutors say that around 2 a.m. on Jan 2, 2022, McGovern-Allen and an unidentified co-conspirator fired multiple handgun rounds into a residence in West Chester, Pa. Fortunately, none of the residents inside the home at the time were injured. But prosecutors say the assailants actually recorded video of the attack as “proof” that the shooting had been carried out.

A copy of that video was obtained by KrebsOnSecurity. According to investigators, McGovern-Allen was one of the shooters, who yelled “Justin Active was here” as they haphazardly fired at least eight rounds into the lower story of the West Chester residence.

On Dec. 18, 2021, police in Abington Township, Pa., responded to reports of a house fire from homeowners who said it sounded like something was thrown at their residence just prior to the fire.

Weeks later, on the day of the shooting in West Chester, a detective with the Westtown East Goshen Police Department contacted the Abington police and shared another video that was circulating on several online message boards that appeared to show two individuals setting fire to the Abington Township residence. The criminal complaint said the two police officers agreed the same suspect was present in both videos.

A copy of that video also was obtained by KrebsOnSecurity, and it shows at least two individuals smashing a window, then lighting a rag-soaked Mad Dog 20/20 grape wine bottle and hurling it at the side of the home [Update: My apologies for the file download link, but YouTube just deleted both of the videos included in this story — for allegedly violating their community standards].

“The Molotov cocktail caused the immediate surrounding area to ignite, including the siding of the house, grass, and the wooden chair,” the government’s complaint against McGovern-Allen states. “The two suspects then fled on foot toward the street and begin yelling something when the video stops.”

The government mentions the victims only by their initials — “K.M.” in the shooting and “A.R.” in the firebombing — but said both had been the target of previous harassment by rival cybercriminal groups that included swatting attacks, wherein the perpetrators spoof a distress call to the police about a hostage situation, suicide or bomb threat with the goal of sending a heavily-armed police response to a targeted address.

A number of previous swatting incidents have turned deadly. But these more “hands-on” and first person attacks are becoming increasingly common within certain cybercriminal communities, particularly those engaged in 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.

The complaint mentions a handle and user ID allegedly used by McGovern-Allen’s online persona “Tongue” on the Discord chat service, (user: “Tongue#0001”).

“In the chats, [Tongue] tells other Discord users that he was the person who shot K.M.’s house and that he was willing to commit firebombings using Molotov Cocktails,” the complaint alleges. “For example, in one Discord chat from March 2022, [the defendant] states ‘if you need anything done for $ lmk [“let me know”]/I did a shooting/Molotov/but I can also do things for ur entertainment.”

KrebsOnsecurity reviewed hundreds of chat records tied to this Tongue alias, and it appears both attacks were motivated by a desire to get back at a rival cybercriminal by attacking the female friends of that rival.

Recall that the shooters in the West Chester, Pa. incident shouted “Justin Active was here.” Justin Active is the nickname of an individual who is just as active in the same cybercriminal channels, but who has vehemently denied knowledge of or participation in the shooting. Justin Active said on Telegram that the person targeted in the shooting was his ex-girlfriend, and that the firebombing targeted another friend of his.

Justin Active has claimed for months that McGovern-Allen was responsible for both attacks, saying they were intended as an intimidation tactic against him. “DO THE PATRICK MCGOVERN ALLEN RAID DANCE!,” Justin Active’s alias “Nutcase68” shouted on Telegram on Aug. 12, the same day McGovern-Allen was arrested by authorities.

Justin Active’s version of events seems to be supported by a reference in the criminal complaint to an April 2, 2022 chat in which Tongue explained the reason for the shooting.

“The video/is [K]’s house/getting shit/shot/justin active/ was her current bf/ the reason it happened,” Tongue explained. “So that’s why Justin active was there.”

The Telegram chat channels that Justin Active and Tongue both frequented 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.

“If you live near Edmonton Canada dm me need someone bricked,” reads on Telegram message on May 31, 2022.

“If you live near [address redacted] Lakewood, CA, dm [redacted] Paying 3k to slash the tires,” reads another help wanted ad in the same channel on Feb. 24, 2022. “If you live near here and can brick them, dm [address omitted] Richland, WA,” reads another from that same day.

McGovern-Allen was in the news not long ago. According to a Sept. 2020 story from The Press of Atlantic City, a then 19-year-old Patrick McGovern Allen was injured after driving into a building and forcing residents from their home.

“Police found a 2007 Lexus, driven by Patrick McGovern-Allen, 19, that had lost control and left the road, crashing into the eastern end of the 1600 building,” the story recounted. “The car was driven through the steps that provide access to the second-floor apartments, destroying them, and also caused damage to the outer wall.”

A search on the Inmate Locator of the U.S. Bureau of Prisons website shows that McGovern-Allen remains in federal custody at a detention facility in Philadelphia. He’s currently represented by a public defender who has not responded to requests for comment.

A copy of the criminal complaint against McGovern-Allen is available here (PDF).

ANALYSIS

Many of the individuals involved in paying others to commit these physical attacks are also frequent participants in several Telegram channels focused singularly on SIM swapping activity. As a result, the vast majority of the people being targeted for brickings and other real-life physical assaults tend to be other cybercriminals involved in SIM swapping crimes (or individuals on the periphery of that scene).

There are dozens of SIM swappers who are now teenage or 20-something millionaires, by virtue of having stolen vast sums of cryptocurrencies from SIM swapping victims. And now many of these same individuals are finding that communities like Telegram can be leveraged to hire physical harassment and intimidation of their rivals and competitors.

The primary barrier to hiring someone to brick a home or slash some tires seems to be the costs involved: A number of solicitations for these services advertised payment of $3,000 or more upon proof of successful completion, which usually involves recording the attack and hiring a getaway driver in the town where the crime is to take place (calling a cab or hailing an Uber from the scene of a bricking isn’t the brightest idea).

My fear is these violence-as-a-service offerings will at some point migrate outside of the SIM swapping communities. This is precisely what happened with swatting, which for years was a crime perpetrated almost exclusively against online gamers and people streaming their games online. These days, swatting attacks are commonly used by SIM swapping groups as a way to harass and extort regular Internet users into giving up prized social media account names that can be resold for thousands of dollars.

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.

PayPal Phishing Scam Uses Invoices Sent Via PayPal

Scammers are using invoices sent through PayPal.com to trick recipients into calling a number to dispute a pending charge. The missives — which come from Paypal.com and include a link at Paypal.com that displays an invoice for the supposed transaction — state that the user’s account is about to be charged hundreds of dollars. Recipients who call the supplied toll-free number to contest the transaction are soon asked to download software that lets the scammers assume remote control over their computer.

KrebsOnSecurity recently heard from a reader who received an email from paypal.com that he immediately suspected was phony. The message’s subject read, “Billing Department of PayPal updated your invoice.”

While the phishing message attached to the invoice is somewhat awkwardly worded, there are many convincing aspects of this hybrid scam. For starters, all of the links in the email lead to paypal.com. Hovering over the “View and Pay Invoice” button shows the button indeed wants to load a link at paypal.com, and clicking that link indeed brings up an active invoice at paypal.com.

Also, the email headers in the phishing message (PDF) show that it passed all email validation checks as being sent by PayPal, and that it was sent through an Internet address assigned to PayPal.

Both the email and the invoice state that “there is evidence that your PayPal account has been accessed unlawfully.” The message continues:

“$600.00 has been debited to your account for the Walmart Gift Card purchase. This transaction will appear in the automatically deducted amount on PayPal activity after 24 hours. If you suspect you did not make this transaction, immediately contact us at the toll-free number….”

Here’s the invoice that popped up when the “View and Pay Invoice” button was clicked:

The reader who shared this phishing email said he logged into his PayPal account and could find no signs of the invoice in question. A call to the toll-free number listed in the invoice was received by a man who answered the phone as generic “customer service,” instead of trying to spoof PayPal or Walmart. Very quickly into the conversation he suggested visiting a site called globalquicksupport[.]com to download a remote administration tool. It was clear then where the rest of this call was going.

I can see this scam tricking a great many people, especially since both the email and invoice are sent through PayPal’s systems — which practically guarantees that the message will be successfully delivered. The invoices appear to have been sent from a compromised or fraudulent PayPal Business account, which allows users to send invoices like the one shown above. Details of this scam were shared Wednesday with PayPal’s anti-abuse (phishing@paypal.com) and media relations teams.

PayPal said in a written statement that phishing attempts are common and can take many forms.

“We have a zero-tolerance policy on our platform for attempted fraudulent activity, and our teams work tirelessly to protect our customers,” PayPal said. “We are aware of this well-known phishing scam and have put additional controls in place to mitigate this specific incident. Nonetheless, we encourage customers to always be vigilant online and to contact Customer Service directly if they suspect they are a target of a scam.”

It’s remarkable how well today’s fraudsters have adapted to hijacking the very same tools that financial institutions have long used to make their customers feel safe transacting online. It’s no accident that one of the most prolific scams going right now — the Zelle Fraud Scam — starts with a text message about an unauthorized payment that appears to come from your bank. After all, financial institutions have spent years encouraging customers to sign up for mobile alerts via SMS about suspicious transactions, and to expect the occasional inbound call about possibly fraudulent transactions.

Also, today’s scammers are less interested in stealing your PayPal login than they are in phishing your entire computer and online life with remote administration software, which seems to be the whole point of so many scams these days. Because why rob just one online account when you can plunder them all?

The best advice to sidestep phishing scams is to avoid clicking on links that arrive unbidden in emails, text messages and other mediums. Most phishing scams invoke a temporal element that warns of dire consequences should you fail to respond or act quickly. If you’re unsure whether the message is legitimate, take a deep breath and visit the site or service in question manually — ideally, using a browser bookmark to avoid potential typosquatting sites.

When Efforts to Contain a Data Breach Backfire

Earlier this month, the administrator of the cybercrime forum Breached received a cease-and-desist letter from a cybersecurity firm. The missive alleged that an auction on the site for data stolen from 10 million customers of Mexico’s second-largest bank was fake news and harming the bank’s reputation. The administrator responded to this empty threat by purchasing the stolen banking data and leaking it on the forum for everyone to download.

On August 3, 2022, someone using the alias “Holistic-K1ller” posted on Breached a thread selling data allegedly stolen from Grupo Financiero Banorte, Mexico’s second-biggest financial institution by total loans. Holistic-K1ller said the database included the full names, addresses, phone numbers, Mexican tax IDs (RFC), email addresses and balances on more than 10 million citizens.

There was no reason to believe Holistic-K1ller had fabricated their breach claim. This identity has been highly active on Breached and its predecessor RaidForums for more than two years, mostly selling databases from hacked Mexican entities. Last month, they sold customer information on 36 million customers of the Mexican phone company Telcel; in March, they sold 33,000 images of Mexican IDs — with the front picture and a selfie of each citizen. That same month, they also sold data on 1.4 million customers of Mexican lending platform Yotepresto.

But this history was either overlooked or ignored by Group-IB, the Singapore-based cybersecurity firm apparently hired by Banorte to help respond to the data breach.

“The Group-IB team has discovered a resource containing a fraudulent post offering to buy Grupo Financiero Banorte’s leaked databases,” reads a letter the Breach administrator said they received from Group-IB. “We ask you to remove this post containing Banorte data. Thank you for your cooperation and prompt attention to this urgent matter.”

The administrator of Breached is “Pompompurin,” the same individual who alerted this author in November 2021 to a glaring security hole in a U.S. Justice Department website that was used to spoof security alerts from the FBI. In a post to Breached on Aug. 8, Pompompurin said they bought the Banorte database from Holistic-K1ller’s sales thread because Group-IB was sending emails complaining about it.

“They also attempted to submit DMCA’s against the website,” Pompompurin wrote, referring to legal takedown requests under the Digital Millennium Copyright Act. “Make sure to tell Banorte that now they need to worry about the data being leaked instead of just being sold.”

Group-IB CEO Dmitriy Volkov said the company has seen some success in the past asking hackers to remove or take down certain information, but that making such requests is not a typical response for the security firm.

“It is not a common practice to send takedown notifications to such forums demanding that such content be removed,” Volkov said. “But these abuse letters are legally binding, which helps build a foundation for further steps taken by law enforcement agencies. Actions contrary to international rules in the regulated space of the Internet only lead to more severe crimes, which — as we know from the case of Raidforums — are successfully investigated and stopped by law enforcement.”

Banorte did not respond to requests for comment. But in a brief written statement picked up on Twitter, Banorte said there was no breach involving their infrastructure, and the data being sold is old.

“There has been no violation of our platforms and technological infrastructure,” Banorte said. “The set of information referred to is inaccurate and outdated, and does not put our users and customers at risk.”

That statement may be 100 percent true. Still, it is difficult to think of a better example of how not to do breach response. Banorte shrugging off this incident as a nothingburger is baffling: While it is almost certainly true that the bank balance information in the Banorte leak is now out of date, the rest of the information (tax IDs, phone numbers, email addresses) is harder to change.

“Is there one person from our community that think sending cease and desist letter to a hackers forum operator is a good idea?,” asked Ohad Zaidenberg, founder of CTI League, a volunteer emergency response community that emerged in 2020 to help fight COVID-19 related scams. “Who does it? Instead of helping, they pushed the organization from the hill.”

Kurt Seifried, director of IT for the CloudSecurityAlliance, was similarly perplexed by the response to the Banorte breach.

“If the data wasn’t real….did the bank think a cease and desist would result in the listing being removed?” Seifried wondered on Twitter. “I mean, isn’t selling breach data a worse crime usually than slander or libel? What was their thought process?”

A more typical response when a large bank suspects a breach is to approach the seller privately through an intermediary to ascertain if the information is valid and what it might cost to take it off the market. While it may seem odd to expect cybercriminals to make good on their claims to sell stolen data to only one party, removing sold stolen items from inventory is a fairly basic function of virtually all cybercriminal markets today (apart from perhaps sites that traffic in stolen identity data).

At a minimum, negotiating or simply engaging with a data seller can buy the victim organization additional time and clues with which to investigate the claim and ideally notify affected parties of a breach before the stolen data winds up online.

It is true that a large number of hacked databases put up for sale on the cybercrime underground are sold only after a small subset of in-the-know thieves have harvested all of the low-hanging fruit in the data — e.g., access to cryptocurrency accounts or user credentials that are recycled across multiple websites. And it’s certainly not unheard of for cybercriminals to go back on their word and re-sell or leak information that they have sold previously.

But companies in the throes of responding to a data security incident do themselves and customers no favors when they underestimate their adversaries, or try to intimidate cybercrooks with legal threats. Such responses generally accomplish nothing, except unnecessarily upping the stakes for everyone involved while displaying a dangerous naiveté about how the cybercrime underground works.

Update, Aug. 17, 10:32 a.m.: Thanks to a typo by this author, a request for comment sent to Group-IB was not delivered in advance of this story. The copy above has been updated to include a comment from Group-IB’s CEO.

Scammers Sent Uber to Take Elderly Lady to the Bank

Email scammers sent an Uber to the home of an 80-year-old woman who responded to a well-timed email scam, in a bid to make sure she went to the bank and wired money to the fraudsters.  In this case, the woman figured out she was being scammed before embarking for the bank, but her story is a chilling reminder of how far crooks will go these days to rip people off.

Travis Hardaway is a former music teacher turned app developer from Towson, Md. Hardaway said his mother last month replied to an email she received regarding an appliance installation from BestBuy/GeekSquad. Hardaway said the timing of the scam email couldn’t have been worse: His mom’s dishwasher had just died, and she’d paid to have a new one delivered and installed.

“I think that’s where she got confused, because she thought the email was about her dishwasher installation,” Hardaway told KrebsOnSecurity.

Hardaway said his mom initiated a call to the phone number listed in the phony BestBuy email, and that the scammers told her she owed $160 for the installation, which seemed right at the time. Then the scammers asked her to install remote administration software on her computer so that they could control the machine from afar and assist her in making the payment.

After she logged into her bank and savings accounts with scammers watching her screen, the fraudster on the phone claimed that instead of pulling $160 out of her account, they accidentally transferred $160,000 to her account. They said they they needed her help to make sure the money was “returned.”

“They took control of her screen and said they had accidentally transferred $160,000 into her account,” Hardaway said. “The person on the phone told her he was going to lose his job over this transfer error, that he didn’t know what to do. So they sent her some information about where to wire the money, and asked her to go to the bank. But she told them, ‘I don’t drive,’ and they told her, “No problem, we’re sending an Uber to come help you to the bank.'”

Hardaway said he was out of town when all this happened, and that thankfully his mom eventually grew exasperated and gave up trying to help the scammers.

“They told her they were sending an Uber to pick her up and that it was on its way,” Hardaway said. “I don’t know if the Uber ever got there. But my mom went over to the neighbor’s house and they saw it for what it was — a scam.”

Hardaway said he has since wiped her computer, reinstalled the operating system and changed her passwords. But he says the incident has left his mom rattled.

“She’s really second-guessing herself now,” Hardaway said. “She’s not computer-savvy, and just moved down here from Boston during COVID to be near us, but she’s living by herself and feeling isolated and vulnerable, and stuff like this doesn’t help.”

According to the Federal Bureau of Investigation (FBI), seniors are often targeted because they tend to be trusting and polite. More importantly, they also usually have financial savings, own a home, and have good credit—all of which make them attractive to scammers.

“Additionally, seniors may be less inclined to report fraud because they don’t know how, or they may be too ashamed of having been scammed,” the FBI warned in May. “They might also be concerned that their relatives will lose confidence in their abilities to manage their own financial affairs. And when an elderly victim does report a crime, they may be unable to supply detailed information to investigators.”

In 2021, more than 92,000 victims over the age of 60 reported losses of $1.7 billion to the FBI’s Internet Crime Complaint Center (IC3). The FBI says that represents a 74 percent increase in losses over losses reported in 2020.

The abuse of ride-sharing services to scam the elderly is not exactly new. Authorities in Tampa, Fla. say they’re investigating an incident from December 2021 where fraudsters who’d stolen $700,000 from elderly grandparents used Uber rides to pick up bundles of cash from their victims.

No SOCKS, No Shoes, No Malware Proxy Services!

With the recent demise of several popular “proxy” services that let cybercriminals route their malicious traffic through hacked PCs, there is now something of a supply chain crisis gripping the underbelly of the Internet. Compounding the problem, several remaining malware-based proxy services have chosen to block new registrations to avoid swamping their networks with a sudden influx of customers.

Last week, a seven-year-old proxy service called 911[.]re abruptly announced it was permanently closing after a cybersecurity breach allowed unknown intruders to trash its servers and delete customer data and backups. 911 was already akin to critical infrastructure for many in the cybercriminal community after its top two competitors — VIP72 and LuxSocks — closed or were shut down by authorities over the past 10 months.

The underground cybercrime forums are now awash in pleas from people who are desperately seeking a new supplier of abundant, cheap, and reliably clean proxies to restart their businesses. The consensus seems to be that those days are now over, and while there are many smaller proxy services remaining, few of them on their own are capable of absorbing anywhere near the current demand.

“Everybody is looking for an alternative, bro,” wrote a BlackHatForums user on Aug. 1 in response to one of many “911 alternative” discussion threads. “No one knows an equivalent alternative to 911[.]re. Their service in terms of value and accessibility compared to other proxy providers was unmatched. Hopefully someone comes with a great alternative to 911[.]re.”

Among the more frequently recommended alternatives to 911 is SocksEscort[.]com, a malware-based proxy network that has been in existence since at least 2010. Here’s what part of their current homepage looks like:

But faced with a deluge of new signups in the wake of 911’s implosion, SocksEscort was among the remaining veteran proxy services that opted to close its doors to new registrants, replacing its registration page with the message:

“Due to unusual high demand, and heavy load on our servers, we had to block all new registrations. We won’t be able to support our proxies otherwise, and close SocksEscort as a result. We will resume registrations right after demand drops. Thank you for understanding, and sorry for the inconvenience.”

According to Spur.us, a startup that tracks proxy services, SocksEscort is a malware-based proxy offering, which means the machines doing the proxying of traffic for SocksEscort customers have been infected with malicious software that turns them into a traffic relay.

Spur says SocksEscort’s proxy service relies on software designed to run on Windows computers, and is currently leasing access to more than 14,000 hacked computers worldwide. That is a far cry from the proxy inventory advertised by 911, which stood at more than 200,000 IP addresses for rent just a few days ago.

SocksEscort is what’s known as a “SOCKS Proxy” service. The SOCKS (or SOCKS5) protocol allows Internet users to channel their Web traffic through a proxy server, which then passes the information on to the intended destination. From a website’s perspective, the traffic of the proxy network customer appears to originate from a rented/malware-infected PC tied to a residential ISP customer, not from the proxy service customer.

These services can be used in a legitimate manner for several business purposes — such as price comparisons or sales intelligence — but they are massively abused for hiding cybercrime activity because they make it difficult to trace malicious traffic to its original source.

The disruption at 911[.]re came days after KrebsOnSecurity published an in-depth look at the long-running proxy service, which showed that 911 had a history of incentivizing the installation of its proxy software without user notice or consent, and that it actually ran some of these “pay-per-install” schemes on its own to guarantee a steady supply of freshly-hacked PCs.

More on SocksEscort in an upcoming story.

Further reading:

July 29, 2022: 911 Proxy Service Implodes After Disclosing Breach

July 28, 2022: Breach Exposes Users of Microleaves Proxy Service

July 18, 2022: A Deep Dive Into the Residential Proxy Service ‘911’

June 28, 2022: The Link Between AWM Proxy & the Glupteba Botnet

June 22, 2022: Meet the Administrators of the RSOCKS Proxy Botnet

Sept. 1, 2021: 15-Year-Old Malware Proxy Network VIP72 Goes Dark

911 Proxy Service Implodes After Disclosing Breach

911[.]re, a proxy service that since 2015 has sold access to hundreds of thousands of Microsoft Windows computers daily, announced this week that it is shutting down in the wake of a data breach that destroyed key components of its business operations. The abrupt closure comes ten days after KrebsOnSecurity published an in-depth look at 911 and its connections to shady pay-per-install affiliate programs that secretly bundled 911’s proxy software with other titles, including “free” utilities and pirated software.

911[.]re is was one of the original “residential proxy” networks, which allow someone to rent a residential IP address to use as a relay for his/her Internet communications, providing anonymity and the advantage of being perceived as a residential user surfing the web.

Residential proxy services are often marketed to people seeking the ability to evade country-specific blocking by the major movie and media streaming providers. But some of them — like 911 — build their networks in part by offering “free VPN” or “free proxy” services that are powered by software which turns the user’s PC into a traffic relay for other users. In this scenario, users indeed get to use a free VPN service, but they are often unaware that doing so will turn their computer into a proxy that lets others use their Internet address to transact online.

From a website’s perspective, the IP traffic of a residential proxy network user appears to originate from the rented residential IP address, not from the proxy service customer. These services can be used in a legitimate manner for several business purposes — such as price comparisons or sales intelligence — but they are massively abused for hiding cybercrime activity because they can make it difficult to trace malicious traffic to its original source.

As noted in KrebsOnSecurity’s July 19 story on 911, the proxy service operated multiple pay-per-install schemes that paid affiliates to surreptitiously bundle the proxy software with other software, continuously generating a steady stream of new proxies for the service.

Within hours of that story, 911 posted a notice at the top of its site, saying, “We are reviewing our network and adding a series of security measures to prevent misuse of our services. Proxy balance top-up and new user registration are closed. We are reviewing every existing user, to ensure their usage is legit and [in] compliance with our Terms of Service.”

At this announcement, all hell broke loose on various cybercrime forums, where many longtime 911 customers reported they were unable to use the service. Others affected by the outage said it seemed 911 was trying to implement some sort of “know your customer” rules — that maybe 911 was just trying to weed out those customers using the service for high volumes of cybercriminal activity.

Then on July 28, the 911 website began redirecting to a notice saying, “We regret to inform you that we permanently shut down 911 and all its services on July 28th.”

According to 911, the service was hacked in early July, and it was discovered that someone manipulated the balances of a large number of user accounts. 911 said the intruders abused an application programming interface (API) that handles the topping up of accounts when users make financial deposits with the service.

“Not sure how did the hacker get in,” the 911 message reads. “Therefore, we urgently shut down the recharge system, new user registration, and an investigation started.”

However the intruders got in, 911 said, they managed to also overwrite critical 911[.]re servers, data and backups of that data.

“On July 28th, a large number of users reported that they could not log in the system,” the statement continues. “We found that the data on the server was maliciously damaged by the hacker, resulting in the loss of data and backups. Its [sic] confirmed that the recharge system was also hacked the same way. We were forced to make this difficult decision due to the loss of important data that made the service unrecoverable.”

Operated largely out of China, 911 was an enormously popular service across many cybercrime forums, and it became something akin to critical infrastructure for this community after two of 911’s longtime competitors — malware-based proxy services VIP72 and LuxSocks — closed their doors in the past year.

Now, many on the crime forums who relied on 911 for their operations are wondering aloud whether there are any alternatives that match the scale and utility that 911 offered. The consensus seems to be a resounding “no.”

I’m guessing we may soon learn more about the security incidents that caused 911 to implode. And perhaps other proxy services will spring up to meet what appears to be a burgeoning demand for such services at the moment, with comparatively little supply.

In the meantime, 911’s absence may coincide with a measurable (if only short-lived) reprieve in unwanted traffic to top Internet destinations, including banks, retailers and cryptocurrency platforms, as many former customers of the proxy service scramble to make alternative arrangements.

Riley Kilmer, co-founder of the proxy-tracking service Spur.us, said 911’s network will be difficult to replicate in the short run.

“My speculation is [911’s remaining competitors] are going to get a major boost in the short term, but a new player will eventually come along,” Kilmer said. “None of those are good replacements for LuxSocks or 911. However, they will all allow anyone to use them. For fraud rates, the attempts will continue but through these replacement services which should be easier to monitor and stop. 911 had some very clean IP addresses.”

911 wasn’t the only major proxy provider disclosing a breach this week tied to unauthenticated APIs: On July 28, KrebsOnSecurity reported that internal APIs exposed to the web had leaked the customer database for Microleaves, a proxy service that rotates its customers’ IP addresses every five to ten minutes. That investigation showed Microleaves — like 911 — had a long history of using pay-per-install schemes to spread its proxy software.

Breach Exposes Users of Microleaves Proxy Service

Microleaves, a ten-year-old proxy service that lets customers route their web traffic through millions of Microsoft Windows computers, recently fixed a vulnerability in their website that exposed their entire user database. Microleaves claims its proxy software is installed with user consent, but data exposed in the breach shows the service has a lengthy history of being supplied with new proxies by affiliates incentivized to distribute the software any which way they can — such as by secretly bundling it with other titles.

Launched in 2013, Microleaves is a service that allows customers to route their Internet traffic through PCs in virtually any country or city around the globe. Microleaves works by changing each customer’s Internet Protocol (IP) address every five to ten minutes.

The service, which accepts PayPal, Bitcoin and all major credit cards, is aimed primarily at enterprises engaged in repetitive, automated activity that often results in an IP address being temporarily blocked — such as data scraping, or mass-creating new accounts at some service online.

In response to a report about the data exposure from KrebsOnSecurity, Microleaves said it was grateful for being notified about a “very serious issue regarding our customer information.”

Abhishek Gupta is the PR and marketing manager for Microleaves, which he said in the process of being rebranded to “Shifter.io.” Gupta said the report qualified as a “medium” severity security issue in Shifter’s brand new bug bounty program (the site makes no mention of a bug bounty), which he said offers up to $2,000 for reporting data exposure issues like the one they just fixed. KrebsOnSecurity declined the offer and requested that Shifter donate the amount to the Electronic Frontier Foundation (EFF), a digital rights group.

From its inception nearly a decade ago, Microleaves has claimed to lease between 20-30 million IPs via its service at any time. Riley Kilmer, co-founder of the proxy-tracking service Spur.us, said that 20-30 million number might be accurate for Shifter if measured across a six-month time frame. Currently, Spur is tracking roughly a quarter-million proxies associated with Microleaves/Shifter each day, with a high rate of churn in IPs.

Early on, this rather large volume of IP addresses led many to speculate that Microleaves was just a botnet which was being resold as a commercial proxy service.

The very first discussion thread started by the new user Microleaves on the forum BlackHatWorld in 2013 sought forum members who could help test and grow the proxy network. At the time, the Microleaves user said their proxy network had 150,000 IPs globally, and was growing quickly.

One of BlackHatWorld’s moderators asked the administrator of the forum to review the Microleaves post.

“User states has 150k proxies,” the forum skeptic wrote. “No seller on BHW has 150k working daily proxies none of us do. Which hints at a possible BOTNET. That’s the only way you will get 150k.”

Microleaves has long been classified by antivirus companies as adware or as a “potentially unwanted program” (PUP), the euphemism that antivirus companies use to describe executable files that get installed with ambiguous consent at best, and are often part of a bundle of software tied to some “free” download. Security vendor Kaspersky flags the Microleaves family of software as a trojan horse program that commandeers the user’s Internet connection as a proxy without notifying the user.

“While working, these Trojans pose as Microsoft Windows Update,” Kaspersky wrote.

In a February 2014 post to BlackHatWorld, Microleaves announced that its sister service — reverseproxies[.]com — was now offering an “Auto CAPTCHA Solving Service,” which automates the solving of those squiggly and sometimes frustrating puzzles that many websites use to distinguish bots from real visitors. The CAPTCHA service was offered as an add-on to the Microleaves proxy service, and ranged in price from $20 for a 2-day trial to $320 for solving up to 80 captchas simultaneously.

“We break normal Recaptcha with 60-90% success rate, recaptcha with blobs 30% success, and 500+ other captcha,” Microleaves wrote. “As you know all success rate on recaptcha depends very much on good proxies that are fresh and not spammed!”

WHO IS ACIDUT?

The exposed Microleaves user database shows that the first user created on the service — username “admin” — used the email address alex.iulian@aol.com. A search on that email address in Constella Intelligence, a service that tracks breached data, reveals it was used to create an account at the link shortening service bit.ly under the name Alexandru Florea, and the username “Acidut.” [Full disclosure: Constella is currently an advertiser on this website].

According to the cyber intelligence company Intel 471, a user named Acidut with the email address iulyan87_4u@gmail.com had an active presence on almost a dozen shadowy money-making and cybercrime forums from 2010 to 2017, including BlackHatWorld, Carder[.]pro, Hackforums, OpenSC, and CPAElites.

In a 2011 post on Hackforums, Acidut said they were building a botnet using an “exploit kit,” a set of browser exploits made to be stitched into hacked websites and foist malware on visitors. Acidut claimed their exploit kit was generating 3,000 to 5,000 new bots each day. OpenSC was hacked at one point, and its private messages show Acidut purchased a license from Exmanoize, the handle used by the creator of the Eleonore Exploit Kit.

By November 2013, Acidut was advertising the sale of “26 million SOCKS residential proxies.” In a March 2016 post to CPAElites, Acidut said they had a worthwhile offer for people involved in pay-per-install or “PPI” schemes, which match criminal gangs who pay for malware installs with enterprising hackers looking to sell access to compromised PCs and websites.

Because pay-per-install affiliate schemes rarely impose restrictions on how the software can be installed, such programs can be appealing for cybercriminals who already control large collections of hacked machines and/or compromised websites. Indeed, Acidut went a step further, adding that their program could be quietly and invisibly nested inside of other programs.

“For those of you who are doing PPI I have a global offer that you can bundle to your installer,” Acidut wrote. “I am looking for many installs for an app that will generate website visits. The installer has a silence version which you can use inside your installer. I am looking to buy as many daily installs as possible worldwide, except China.”

Asked about the source of their proxies in 2014, the Microleaves user responded that it was “something related to a PPI network. I can’t say more and I won’t get into details.”

Acidut authored a similar message on the forum BlackHatWorld in 2013, where they encouraged users to contact them on Skype at the username “nevo.julian.” That same Skype contact address was listed prominently on the Microleaves homepage up until about a week ago when KrebsOnSecurity first reached out to the company.

ONLINE[.]IO (NOW MERCIFULLY OFFLINE)

There is a Facebook profile for an Alexandru Iulian Florea from Constanta, Romania, whose username on the social media network is Acidut. Prior to KrebsOnSecurity alerting Shifter of its data breach, the Acidut profile page associated Florea with the websites microleaves.com, shrooms.io, leftclick[.]io, and online[.]io. Mr. Florea did not respond to multiple requests for comment, and his Facebook page no longer mentions these domains.

Leftclick and online[.]io emerged as subsidiaries of Microleaves between 2017 and 2018. According to a help wanted ad posted in 2018 for a developer position at online[.]io, the company’s services were brazenly pitched to investors as “a cybersecurity and privacy tool kit, offering extensive protection using advanced adblocking, anti-tracking systems, malware protection, and revolutionary VPN access based on residential IPs.”

“Online[.]io is developing the first fully decentralized peer-to-peer networking technology and revolutionizing the browsing experience by making it faster, ad free, more reliable, secure and non-trackable, thus freeing the Internet from annoying ads, malware, and trackers,” reads the rest of that help wanted ad.

Microleaves CEO Alexandru Florea gave an “interview” to the website Irishtechnews.ie in 2018, in which he explained how Online[.]io (OIO) was going to upend the online advertising and security industries with its initial coin offering (ICO). The word interview is in air quotes because the following statements by Florea deserved some serious pushback by the interviewer.

“Online[.]io solution, developed using the Ethereum blockchain, aims at disrupting the digital advertising market valued at more than $1 trillion USD,” Alexandru enthused. “By staking OIO tokens and implementing our solution, the website operators will be able to access a new non-invasive revenue stream, which capitalizes on time spent by users online.”

“At the same time, internet users who stake OIO tokens will have the opportunity to monetize on the time spent online by themselves and their peers on the World Wide Web,” he continued. “The time spent by users online will lead to ICE tokens being mined, which in turn can be used in the dedicated merchant system or traded on exchanges and consequently changed to fiat.”

Translation: If you install our proxy bot/CAPTCHA-solver/ad software on your computer — or as an exploit kit on your website — we’ll make millions hijacking ads and you will be rewarded with heaps of soon-to-be-worthless shitcoin. Oh, and all your security woes will disappear, too.

It’s unclear how many Internet users and websites willingly agreed to get bombarded with Online[.]io’s annoying ads and search hijackers — and to have their PC turned into a proxy or CAPTCHA-solving zombie for others. But that is exactly what multiple security companies said happened when users encountered online[.]io, which operated using the Microsoft Windows process name of “online-guardian.exe.”

Incredibly, Crunchbase says Online[.]io raised $6 million in funding for an initial coin offering in 2018, based on the plainly ludicrous claims made above. Since then, however, online[.]io seems to have gone…offline, for good.

SUPER TECH VENTURES?

Until this week, Shifter.io’s website also exposed information about its customer base and most active users, as well as how much money each client has paid over the lifetime of their subscription. The data indicates Shifter has earned more than $11.7 million in direct payments, although it’s unclear how far back in time those payment records go, or how complete they are.

The bulk of Shifter customers who spent more than $100,000 at the proxy service appear to be digital advertising companies, including some located in the United States. None of the several Shifter customers approached by KrebsOnSecurity agreed to be interviewed.

Shifter’s Gupta said he’d been with the company for three years, since the new owner took over the company and made the rebrand to Shifter.

“The company has been on the market for a long time, but operated under a different brand called Microleaves, until new ownership and management took over the company started a reorganization process that is still on-going,” Gupta said. “We are fully transparent. Mostly [our customers] work in the data scraping niche, this is why we actually developed more products in this zone and made a big shift towards APIs and integrated solutions in the past year.”

Ah yes, the same APIs and integrated solutions that were found exposed to the Internet and leaking all of Shifter’s customer information.

Gupta said the original founder of Microleaves was a man from India, who later sold the business to Florea. According to Gupta, the Romanian entrepreneur had multiple issues in trying to run the company, and then sold it three years ago to the current owner — Super Tech Ventures, a private equity company based in Taiwan.

“Our CEO is Wang Wei, he has been with the company since 3 years ago,” Gupta said. “Mr. Florea left the company two years ago after ending this transition period.”

Google and other search engines seem to know nothing about a Super Tech Ventures based in Taiwan. Incredibly, Shifter’s own PR person claimed that he, too, was in the dark on this subject.

“I would love to help, but I really don’t know much about the mother company,” Gupta said, essentially walking back his “fully transparent” statement. “I know they are a branch of the bigger group of asian investment firms focused on private equity in multiple industries.”

Adware and proxy software are often bundled together with “free” software utilities online, or with popular software titles that have been pirated and quietly fused with installers tied to various PPI affiliate schemes.

But just as often, these intrusive programs will include some type of notice — even if installed as part of a software bundle — that many users simply do not read and click “Next” to get on with installing whatever software they’re seeking to use. In these cases, selecting the “basic” or “default” settings while installing usually hides any per-program installation prompts, and assumes you agree to all of the bundled programs being installed. It’s always best to opt for the “custom” installation mode, which can give you a better idea of what is actually being installed, and can let you control certain aspects of the installation.

Either way, it’s best to start with the assumption that if a software or service online is “free,” that there is likely some component involved that allows the provider of that service to monetize your activity. As KrebsOnSecurity noted at the conclusion of last week’s story on a China-based proxy service called 911, the rule of thumb for transacting online is that if you’re not the paying customer, then you and/or your devices are probably the product that’s being sold to others.

Further reading on proxy services:

July 18, 2022: A Deep Dive Into the Residential Proxy Service ‘911’
June 28, 2022: The Link Between AWM Proxy & the Glupteba Botnet
June 22, 2022: Meet the Administrators of the RSOCKS Proxy Botnet
Sept. 1, 2021: 15-Year-Old Malware Proxy Network VIP72 Goes Dark
Aug. 19, 2019: The Rise of “Bulletproof” Residential Networks

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.

A Deep Dive Into the Residential Proxy Service ‘911’

For the past seven years, an online service known as 911 has sold access to hundreds of thousands of Microsoft Windows computers daily, allowing customers to route their Internet traffic through PCs in virtually any country or city around the globe — but predominantly in the United States. 911 says its network is made up entirely of users who voluntarily install its “free VPN” software. But new research shows the proxy service has a long history of purchasing installations via shady “pay-per-install” affiliate marketing schemes, some of which 911 operated on its own.

911[.]re is one of the original “residential proxy” networks, which allow someone to rent a residential IP address to use as a relay for his/her Internet communications, providing anonymity and the advantage of being perceived as a residential user surfing the web.

From a website’s perspective, the IP traffic of a residential proxy network user appears to originate from the rented residential IP address, not from the proxy service customer. These services can be used in a legitimate manner for several business purposes — such as price comparisons or sales intelligence — but they are massively abused for hiding cybercrime activity because they can make it difficult to trace malicious traffic to its original source.

Residential proxy services are often marketed to people seeking the ability to evade country-specific blocking by the major movie and media streaming providers. But some of them — like 911 — build their networks in part by offering “free VPN” or “free proxy” services that are powered by software which turns the user’s PC into a traffic relay for other users. In this scenario, users indeed get to use a free VPN service, but they are often unaware that doing so will turn their computer into a proxy that lets others use their Internet address to transact online.

Researchers at the University of Sherbrooke in Canada recently published an analysis of 911, and found there were roughly 120,000 PCs for rent via the service, with the largest number of them located in the United States.

“The 911[.]re network uses at least two free VPN services to lure its users to install a malware-like software that achieves persistence on the user’s computer,” the researchers wrote. “During the research we identified two free VPN services that [use] a subterfuge to lure users to install software that looks legitimate but makes them part of the network. These two software are currently unknown to most if not all antivirus companies.”

The researchers concluded that 911 is supported by a “mid scale botnet-like infrastructure that operates in several networks, such as corporate, government and critical infrastructure.” The Canadian team said they found many of the 911 nodes available for rent were situated within several major US-based universities and colleges, critical infrastructures such as clean water, defense contractors, law enforcement and government networks.

Highlighting the risk that 911 nodes could pose to internal corporate networks, they observed that “the infection of a node enables the 911.re user to access shared resources on the network such as local intranet portals or other services.”

“It also enables the end user to probe the LAN network of the infected node,” the paper continues. “Using the internal router, it would be possible to poison the DNS cache of the LAN router of the infected node, enabling further attacks.”

THE INTERNET NEVER FORGETS

A review of the clues left behind by 911’s early days on the Internet paint a more complete picture of this long-running proxy network. The domain names used by 911 over the years have a few common elements in their original WHOIS registration records, including the address ustraffic@qq.com and a Yunhe Wang from Beijing.

That ustraffic email is tied to a small number of interesting domains, including browsingguard[.]com, cleantraffic[.]net, execlean[.]net, proxygate[.]net, and flashupdate[.]net.

A cached copy of flashupdate[.]net available at the Wayback Machine shows that in 2016 this domain was used for the “ExE Bucks” affiliate program, a pay-per-install business which catered to people already running large collections of hacked computers or compromised websites. Affiliates were paid a set amount for each installation of the software, with higher commissions for installs in more desirable nations, particularly Europe, Canada and the United States.

“We load only one software — it’s a Socks5 proxy program,” read the message to ExE Bucks affiliates. The website said affiliates were free to spread the proxy software by any means available (i.e. “all promotion methods allowed”). The website’s copyright suggests the ExE Bucks affiliate program dates back to 2012.

Another domain tied to the ustraffic@qq.com email in 2016 was ExeClean[.]net, a service that advertised to cybercriminals seeking to obfuscate their malicious software so that it goes undetected by all or at least most of the major antivirus products on the market.

“Our technology ensures the maximum security from reverse engineering and antivirus detections,” ExEClean promised.

Yet another domain connected to the ustraffic email is p2pshare[.]net, which advertised “free unlimited internet file-sharing platform” for those who agreed to install their software.

Still more domains associated with ustraffic@qq.com suggest 911’s proxy has been disguised as security updates for video player plugins, including flashplayerupdate[.]xyz, mediaplayerupdate[.]xyz, and videoplayerupdate[.]xyz.

The earliest version of the 911 website available from the Wayback Machine is from 2016. A sister service called proxygate[.]net launched roughly a year prior to 911 as a “free” public test of the budding new residential proxy service. “Basically using clients to route for everyone,” was how Proxygate described itself in 2016.

For more than a year after its founding, the 911 website was written entirely in Simplified Chinese. The service has only ever accepted payment via virtual currencies such as Bitcoin and Monero, as well as Alipay and China UnionPay, both payment platforms based in China.

Initially, the terms and conditions of 911’s “End User License Agreement (EULA) named a company called Wugaa Enterprises LLC, which was registered in California in 2016. Records from the California Secretary of State office show that in November 2016, Wugaa Enterprises said it was in the Internet advertising business, and had named as its CEO as one Nicolae Aurelian Mazgarean of Brasov, Romania.

A search of European VAT numbers shows the same Brasov, RO address tied to an enterprise called PPC Leads SRL (in the context of affiliate-based marketing, “PPC” generally refers to the term “pay-per-click”).

911’s EULA would later change its company name and address in 2017, to International Media Ltd. in the British Virgin Islands. That is the same information currently displayed on the 911 website.

The EULA attached to 911 software downloaded from browsingguard[.]com (tied to the same ustraffic@qq email that registered 911) references a company called Gold Click Limited. According to the UK Companies House, Gold Click Limited was registered in 2016 to a 34-year-old Yunhe Wang from Beijing City. Many of the WHOIS records for the above mentioned domains also include the name Yunhe Wang, or some variation thereof.

In a response to questions from KrebsOnSecurity, 911 said the researchers were wrong, and that 911 has nothing to do with any of the other domains mentioned above.

“We have 911 SDK link and how it works described clearly in the “Terms of use” of affiliated partners products, and we have details of how the community powered network works on our webpages,” read an email response.

“Besides that, for protecting the end users, we banned many domains’ access and blocked the vulnerable ports, e.g. spamming emails, and torrent is not possible from the 911 network,” the reply continued. “Same as scanning and many others…Accessing to the Lan network and router is also blocked. We are monitoring 911 user’s account closely, once any abnormal behavior detected, we suspend the user’s account right away.”

FORUM ACTIVITY?

911 has remained one of the most popular services among denizens of the cybercrime underground for years, becoming almost shorthand for connecting to that “last mile” of cybercrime. Namely, the ability to route one’s malicious traffic through a computer that is geographically close to the consumer whose credit card they’re about to charge at some website, or whose bank account they’re about to empty.

Given the frequency with which 911 has been praised by cybercrooks on the top forums, it was odd to find the proprietors of 911 do not appear to have created any official support account for the service on any of several dozen forums reviewed by this author going back a decade. However there are two cybercriminal identities on the forums that have responded to individual 911 help requests, and who promoted the sale of 911 accounts via their handles.

Both of these identities were active on the crime forum fl.l33t[.]su between 2016 and 2019. The user “Transfer” advertised and sold access to 911 from 2016 to 2018, amid many sales threads where they advertised expensive electronics and other consumer goods that were bought online with stolen credit cards.

In a 2017 discussion on fl.l33t[.]su, the user who picked the handle “527865713” could be seen answering private messages in response to help inquiries seeking someone at 911. That identity is tied to an individual who for years advertised the ability to receive and relay large wire transfers from China.

One ad from this user in 2016 offered a “China wire service” focusing on Western Union payments, where “all transfers are accepted in China.” The service charged 20 percent of all “scam wires,” unauthorized wire transfers resulting from bank account takeovers or scams like CEO impersonation schemes.

911 TODAY

In August 2021, 911’s biggest competitor — a 15-year-old proxy network built on malware-compromised PCs called VIP72 — abruptly closed up shop. Almost overnight, an overwhelming number of former VIP72 customers began shifting their proxy activities to 911.

That’s according to Riley Kilmer, co-founder of Spur.us — a security company that monitors anonymity services. Kilmer said 911 also gained an influx of new customers after the Jan. 2022 closure of LuxSocks, another malware-based proxy network.

“911’s user base skyrocketed after VIP72 and then LuxSocks went away,” Kilmer said. “And it’s not hard to see why. 911 and VIP72 are both Windows-based apps that operate in a similar way, where you buy private access to IPs.”

Kilmer said 911 is interesting because it appears to be based in China, while nearly all of the other major proxy networks are Russian-backed or Russian-based.

“They have two basic methods to get new IPs,” Kilmer said. “The free VPN apps, and the other is trojanized torrents. They’ll re-upload Photoshop and stuff like that so that it’s backdoored with the 911 proxy. They claim the proxy is bundled with legitimate software and that users all agree to their Terms of Service, meanwhile they can hide behind the claim that it was some affiliate who installed the software, not them.”

Kilmer said at last count, 911 had nearly 200,000 proxy nodes for sale, spanning more than 200 countries: The largest geographic concentration is the United States, where more than 42,000 proxies are currently for rent by the service.

PARTING THOUGHTS

Beware of “free” or super low-cost VPN services. Proper VPN services are not cheap to operate, so the revenue for the service has to come from somewhere. And there are countless “free” VPN services that are anything but, as we’ve seen with 911.

In general, the rule of thumb for transacting online is that if you’re not the paying customer, then you and/or your devices are probably the product that’s being sold to others. Many free VPN services will enlist users as VPN nodes for others to use, and some even offset costs by collecting and reselling data from their users.

All VPN providers claim to prioritize the privacy of their users, but many then go on to collect and store all manner of personal and financial data from those customers. Others are fairly opaque about their data collection and retention policies.

I’ve largely avoided wading into the fray about which VPN services are best, but there are so many shady and just plain bad ones out there that I’d be remiss if I didn’t mention one VPN provider whose business practices and transparency of operation consistently distinguish them from the rest. If maintaining your privacy and anonymity are primary concerns for you as a VPN user, check out Mullvad.net.

Let me make clear that KrebsOnSecurity does not have any financial or business ties to this company (for the avoidance of doubt, this post doesn’t even link to them). I mention it only because I’ve long been impressed with their candor and openness, and because Mullvad goes out of its way to discourage customers from sharing personal or financial data.

To that end, Mullvad will even accept mailed payments of cash to fund accounts, quite a rarity these days. More importantly, the service doesn’t ask users to share phone numbers, email addresses or any other personal information. Nor does it require customers to create passwords: Each subscription can be activated just by entering a Mullvad account number (woe to those who lose their account number).

I wish more companies would observe this remarkably economical security practice, which boils down to the mantra, “You don’t have to protect what you don’t collect.”

Update, July 24, 11:15 a.m. ET: 911’s homepage now includes a banner saying the service has halted new registrations and payments. “We are reviewing our network and adding a series of security measures to prevent misuse of our services,” the message reads. “Proxy balance top-up and new user registration are closed. We are reviewing every existing user, to ensure their usage is legit and [in] compliance with our Terms of Service.”

Update, July 30, 10:07 a.m. ET: 911 announced on July 28 that it is permanently closing down, following a series of data breaches this month that 911 says resulted in the deletion of customer data.

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.