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The U.S. Federal Bureau of Investigation (FBI) this week seized 13 domain names connected to “booter” services that let paying customers launch crippling distributed denial-of-service (DDoS) attacks. Ten of the domains are reincarnations of DDoS-for-hire services the FBI seized in December 2022, when it charged six U.S. men with computer crimes for allegedly operating booters.
Booter services are advertised through a variety of methods, including Dark Web forums, chat platforms and even youtube.com. They accept payment via PayPal, Google Wallet, and/or cryptocurrencies, and subscriptions can range in price from just a few dollars to several hundred per month. The services are generally priced according to the volume of traffic to be hurled at the target, the duration of each attack, and the number of concurrent attacks allowed.
The websites that saw their homepages replaced with seizure notices from the FBI this week include booter services like cyberstress[.]org and exoticbooter[.]com, which the feds say were used to launch millions of attacks against millions of victims.
“School districts, universities, financial institutions and government websites are among the victims who have been targeted in attacks launched by booter services,” federal prosecutors in Los Angeles said in a statement.
Purveyors of booters or “stressers” claim they are not responsible for how customers use their services, and that they aren’t breaking the law because — like most security tools — these services can be used for good or bad purposes. Most booter sites employ wordy “terms of use” agreements that require customers to agree they will only stress-test their own networks — and that they won’t use the service to attack others.
But the DOJ says these disclaimers usually ignore the fact that most booter services are heavily reliant on constantly scanning the Internet to commandeer misconfigured devices that are critical for maximizing the size and impact of DDoS attacks. What’s more, none of the services seized by the government required users to demonstrate that they own the Internet addresses being stress-tested, something a legitimate testing service would insist upon.
This is the third in a series of U.S. and international law enforcement actions targeting booter services. In December 2022, the feds seized four-dozen booter domains and charged six U.S. men with computer crimes related to their alleged ownership of the popular DDoS-for-hire services. In December 2018, the feds targeted 15 booter sites, and three booter store defendants who later pleaded guilty.
While the FBI’s repeated seizing of booter domains may seem like an endless game of virtual Whac-a-Mole, continuously taking these services offline imposes high enough costs for the operators that some of them will quit the business altogether, says Richard Clayton, director of Cambridge University’s Cybercrime Centre.
In 2020, Clayton and others published “Cybercrime is Mostly Boring,” an academic study on the quality and types of work needed to build, maintain and defend illicit enterprises that make up a large portion of the cybercrime-as-a-service market. The study found that operating a booter service effectively requires a mind-numbing amount of constant, tedious work that tends to produce high burnout rates for booter service operators — even when the service is operating efficiently and profitably.
For example, running an effective booter service requires a substantial amount of administrative work and maintenance, much of which involves constantly scanning for, commandeering and managing large collections of remote systems that can be used to amplify online attacks, Clayton said. On top of that, building brand recognition and customer loyalty takes time.
“If you’re running a booter and someone keeps taking your domain or hosting away, you have to then go through doing the same boring work all over again,” Clayton told KrebsOnSecurity. “One of the guys the FBI arrested in December [2022] spent six months moaning that he lost his servers, and could people please lend him some money to get it started again.”
In a statement released Wednesday, prosecutors in Los Angeles said four of the six men charged last year for running booter services have since pleaded guilty. However, at least one of the defendants from the 2022 booter bust-up — John M. Dobbs, 32, of Honolulu, HI — has pleaded not guilty and is signaling he intends to take his case to trial.
The FBI seizure notice that replaced the homepages of several booter services this week.
Dobbs is a computer science graduate student who for the past decade openly ran IPStresser[.]com, a popular and powerful attack-for-hire service that he registered with the state of Hawaii using his real name and address. Likewise, the domain was registered in Dobbs’s name and hometown in Pennsylvania. Prosecutors say Dobbs’ service attracted more than two million registered users, and was responsible for launching a staggering 30 million distinct DDoS attacks.
Many accused stresser site operators have pleaded guilty over the years after being hit with federal criminal charges. But the government’s core claim — that operating a booter site is a violation of U.S. computer crime laws — wasn’t properly tested in the courts until September 2021.
That was when a jury handed down a guilty verdict against Matthew Gatrel, a then 32-year-old St. Charles, Ill. man charged in the government’s first 2018 mass booter bust-up. Despite admitting to FBI agents that he ran two booter services (and turning over plenty of incriminating evidence in the process), Gatrel opted to take his case to trial, defended the entire time by court-appointed attorneys.
Gatrel was convicted on all three charges of violating the Computer Fraud and Abuse Act, including conspiracy to commit unauthorized impairment of a protected computer, conspiracy to commit wire fraud, and unauthorized impairment of a protected computer. He was sentenced to two years in prison.
A copy of the FBI’s booter seizure warrant is here (PDF). According to the DOJ, the defendants who pleaded guilty to operating booter sites include:
–Jeremiah Sam Evans Miller, aka “John The Dev,” 23, of San Antonio, Texas, who pleaded guilty on April 6 to conspiracy and violating the computer fraud and abuse act related to the operation of a booter service named RoyalStresser[.]com (formerly known as Supremesecurityteam[.]com);
–Angel Manuel Colon Jr., aka “Anonghost720” and “Anonghost1337,” 37, of Belleview, Florida, who pleaded guilty on February 13 to conspiracy and violating the computer fraud and abuse act related to the operation of a booter service named SecurityTeam[.]io;
–Shamar Shattock, 19, of Margate, Florida, who pleaded guilty on March 22 to conspiracy to violate the computer fraud and abuse act related to the operation of a booter service known as Astrostress[.]com;
–Cory Anthony Palmer, 23, of Lauderhill, Florida, who pleaded guilty on February 16 to conspiracy to violate the computer fraud and abuse act related to the operation of a booter service known as Booter[.]sx.
All four defendants are scheduled to be sentenced this summer.
The booter domains seized by the FBI this week include:
cyberstress[.]org
exoticbooter[.]com
layerstress[.]net
orbitalstress[.]xyz
redstresser[.]io
silentstress[.]wtf
sunstresser[.]net
silent[.]to
mythicalstress[.]net
dreams-stresser[.]org
stresserbest[.]io
stresserus[.]io
quantum-stress[.]org
A shocking number of organizations — including banks and healthcare providers — are leaking private and sensitive information from their public Salesforce Community websites, KrebsOnSecurity has learned. The data exposures all stem from a misconfiguration in Salesforce Community that allows an unauthenticated user to access records that should only be available after logging in.
A researcher found DC Health had five Salesforce Community sites exposing data.
Salesforce Community is a widely-used cloud-based software product that makes it easy for organizations to quickly create websites. Customers can access a Salesforce Community website in two ways: Authenticated access (requiring login), and guest user access (no login required). The guest access feature allows unauthenticated users to view specific content and resources without needing to log in.
However, sometimes Salesforce administrators mistakenly grant guest users access to internal resources, which can cause unauthorized users to access an organization’s private information and lead to potential data leaks.
Until being contacted by this reporter on Monday, the state of Vermont had at least five separate Salesforce Community sites that allowed guest access to sensitive data, including a Pandemic Unemployment Assistance program that exposed the applicant’s full name, Social Security number, address, phone number, email, and bank account number.
This misconfigured Salesforce Community site from the state of Vermont was leaking pandemic assistance loan application data, including names, SSNs, email address and bank account information.
Vermont’s Chief Information Security Officer Scott Carbee said his security teams have been conducting a full review of their Salesforce Community sites, and already found one additional Salesforce site operated by the state that was also misconfigured to allow guest access to sensitive information.
“My team is frustrated by the permissive nature of the platform,” Carbee said.
Carbee said the vulnerable sites were all created rapidly in response to the Coronavirus pandemic, and were not subjected to their normal security review process.
“During the pandemic, we were largely standing up tons of applications, and let’s just say a lot of them didn’t have the full benefit of our dev/ops process,” Carbee said. “In our case, we didn’t have any native Salesforce developers when we had to suddenly stand up all these sites.”
Earlier this week, KrebsOnSecurity notified Columbus, Ohio-based Huntington Bank that its recently acquired TCF Bank had a Salesforce Community website that was leaking documents related to commercial loans. The data fields in those loan applications included name, address, full Social Security number, title, federal ID, IP address, average monthly payroll, and loan amount.
Huntington Bank has disabled the leaky TCF Bank Salesforce website. Matthew Jennings, deputy chief information security officer at Huntington, said the company was still investigating how the misconfiguration occurred, how long it lasted, and how many records may have been exposed.
KrebsOnSecurity learned of the leaks from security researcher Charan Akiri, who said he wrote a program that identified hundreds of other organizations running misconfigured Salesforce pages. But Akiri said he’s been wary of probing too far, and has had difficulty getting responses from most of the organizations he has notified to date.
“In January and February 2023, I contacted government organizations and several companies, but I did not receive any response from these organizations,” Akiri said. “To address the issue further, I reached out to several CISOs on LinkedIn and Twitter. As a result, five companies eventually fixed the problem. Unfortunately, I did not receive any responses from government organizations.”
The problem Akiri has been trying to raise awareness about came to the fore in August 2021, when security researcher Aaron Costello published a blog post explaining how misconfigurations in Salesforce Community sites could be exploited to reveal sensitive data (Costello subsequently published a follow-up post detailing how to lock down Salesforce Community sites).
On Monday, KrebsOnSecurity used Akiri’s findings to notify Washington D.C. city administrators that at least five different public DC Health websites were leaking sensitive information. One DC Health Salesforce Community website designed for health professionals seeking to renew licenses with the city leaked documents that included the applicant’s full name, address, Social Security number, date of birth, license number and expiration, and more.
Akiri said he notified the Washington D.C. government in February about his findings, but received no response. Reached by KrebsOnSecurity, interim Chief Information Security Officer Mike Rupert initially said the District had hired a third party to investigate, and that the third party confirmed the District’s IT systems were not vulnerable to data loss from the reported Salesforce configuration issue.
But after being presented with a document including the Social Security number of a health professional in D.C. that was downloaded in real-time from the DC Health public Salesforce website, Rupert acknowledged his team had overlooked some configuration settings.
Washington, D.C. health administrators are still smarting from a data breach earlier this year at the health insurance exchange DC Health Link, which exposed personal information for more than 56,000 users, including many members of Congress.
That data later wound up for sale on a top cybercrime forum. The Associated Press reports that the DC Health Link breach was likewise the result of human error, and said an investigation revealed the cause was a DC Health Link server that was “misconfigured to allow access to the reports on the server without proper authentication.”
Salesforce says the data exposures are not the result of a vulnerability inherent to the Salesforce platform, but they can occur when customers’ access control permissions are misconfigured.
“As previously communicated to all Experience Site and Sites customers, we recommend utilizing the Guest User Access Report Package to assist in reviewing access control permissions for unauthenticated users,” reads a Salesforce advisory from Sept. 2022. “Additionally, we suggest reviewing the following Help article, Best Practices and Considerations When Configuring the Guest User Profile.”
In a written statement, Salesforce said it is actively focused on data security for organizations with guest users, and that it continues to release “robust tools and guidance for our customers,” including:
Control Which Users Experience Cloud Site Users Can See
Best Practices and Considerations When Configuring the Guest User Profile
“We’ve also continued to update our Guest User security policies, beginning with our Spring ‘21 release with more to come in Summer ‘23,” the statement reads. “Lastly, we continue to proactively communicate with customers to help them understand the capabilities available to them, and how they can best secure their instance of Salesforce to meet their security, contractual, and regulatory obligations.”
We learned some remarkable new details this week about the recent supply-chain attack on VoIP software provider 3CX. The lengthy, complex intrusion has all the makings of a cyberpunk spy novel: North Korean hackers using legions of fake executive accounts on LinkedIn to lure people into opening malware disguised as a job offer; malware targeting Mac and Linux users working at defense and cryptocurrency firms; and software supply-chain attacks nested within earlier supply chain attacks.
Researchers at ESET say this job offer from a phony HSBC recruiter on LinkedIn was North Korean malware masquerading as a PDF file.
In late March 2023, 3CX disclosed that its desktop applications for both Windows and macOS were compromised with malicious code that gave attackers the ability to download and run code on all machines where the app was installed. 3CX says it has more than 600,000 customers and 12 million users in a broad range of industries, including aerospace, healthcare and hospitality.
3CX hired incident response firm Mandiant, which released a report on Wednesday that said the compromise began in 2022 when a 3CX employee installed a malware-laced software package distributed via an earlier software supply chain compromise that began with a tampered installer for X_TRADER, a software package provided by Trading Technologies.
“This is the first time Mandiant has seen a software supply chain attack lead to another software supply chain attack,” reads the April 20 Mandiant report.
Mandiant found the earliest evidence of compromise uncovered within 3CX’s network was through the VPN using the employee’s corporate credentials, two days after the employee’s personal computer was compromised.
“Eventually, the threat actor was able to compromise both the Windows and macOS build environments,” 3CX said in an April 20 update on their blog.
Mandiant concluded that the 3CX attack was orchestrated by the North Korean state-sponsored hacking group known as Lazarus, a determination that was independently reached earlier by researchers at Kaspersky Lab and Elastic Security.
Mandiant found the compromised 3CX software would download malware that sought out new instructions by consulting encrypted icon files hosted on GitHub. The decrypted icon files revealed the location of the malware’s control server, which was then queried for a third stage of the malware compromise — a password stealing program dubbed ICONICSTEALER.
The double supply chain compromise that led to malware being pushed out to some 3CX customers. Image: Mandiant.
Meanwhile, the security firm ESET today published research showing remarkable similarities between the malware used in the 3CX supply chain attack and Linux-based malware that was recently deployed via fake job offers from phony executive profiles on LinkedIn. The researchers said this was the first time Lazarus had been spotted deploying malware aimed at Linux users.
As reported in a series last summer here, LinkedIn has been inundated this past year by fake executive profiles for people supposedly employed at a range of technology, defense, energy and financial companies. In many cases, the phony profiles spoofed chief information security officers at major corporations, and some attracted quite a few connections before their accounts were terminated.
Mandiant, Proofpoint and other experts say Lazarus has long used these bogus LinkedIn profiles to lure targets into opening a malware-laced document that is often disguised as a job offer. This ongoing North Korean espionage campaign using LinkedIn was first documented in August 2020 by ClearSky Security, which said the Lazarus group operates dozens of researchers and intelligence personnel to maintain the campaign globally.
Microsoft Corp., which owns LinkedIn, said in September 2022 that it had detected a wide range of social engineering campaigns using a proliferation of phony LinkedIn accounts. Microsoft said the accounts were used to impersonate recruiters at technology, defense and media companies, and to entice people into opening a malicious file. Microsoft found the attackers often disguised their malware as legitimate open-source software like Sumatra PDF and the SSH client Putty.
Microsoft attributed those attacks to North Korea’s Lazarus hacking group, although they’ve traditionally referred to this group as “ZINC“. That is, until earlier this month, when Redmond completely revamped the way it names threat groups; Microsoft now references ZINC as “Diamond Sleet.”
The ESET researchers said they found a new fake job lure tied to an ongoing Lazarus campaign on LinkedIn designed to compromise Linux operating systems. The malware was found inside of a document that offered an employment contract at the multinational bank HSBC.
“A few weeks ago, a native Linux payload was found on VirusTotal with an HSBC-themed PDF lure,” wrote ESET researchers Peter Kalnai and Marc-Etienne M.Leveille. “This completes Lazarus’s ability to target all major desktop operating systems. In this case, we were able to reconstruct the full chain, from the ZIP file that delivers a fake HSBC job offer as a decoy, up until the final payload.”
ESET said the malicious PDF file used in the scheme appeared to have a file extension of “.pdf,” but that this was a ruse. ESET discovered that the dot in the filename wasn’t a normal period but instead a Unicode character (U+2024) representing a “leader dot,” which is often used in tables of contents to connect section headings with the page numbers on which those sections begin.
“The use of the leader dot in the filename was probably an attempt to trick the file manager into treating the file as an executable instead of a PDF,” the researchers continued. “This could cause the file to run when double-clicked instead of opening it with a PDF viewer.”
ESET said anyone who opened the file would see a decoy PDF with a job offer from HSBC, but in the background the executable file would download additional malware payloads. The ESET team also found the malware was able to manipulate the program icon displayed by the malicious PDF, possibly because fiddling with the file extension could cause the user’s system to display a blank icon for the malware lure.
Kim Zetter, a veteran Wired.com reporter and now independent security journalist, interviewed Mandiant researchers who said they expect “many more victims” will be discovered among the customers of Trading Technologies and 3CX now that news of the compromised software programs is public.
“Mandiant informed Trading Technologies on April 11 that its X_Trader software had been compromised, but the software maker says it has not had time to investigate and verify Mandiant’s assertions,” Zetter wrote in her Zero Day newsletter on Substack. For now, it remains unclear whether the compromised X_Trader software was downloaded by people at other software firms.
If there’s a silver lining here, the X_Trader software had been decommissioned in April 2020 — two years before the hackers allegedly embedded malware in it.
“The company hadn’t released new versions of the software since that time and had stopped providing support for the product, making it a less-than-ideal vector for the North Korean hackers to infect customers,” Zetter wrote.
Microsoft on Tuesday released updates to quash at least 74 security bugs in its Windows operating systems and software. Two of those flaws are already being actively attacked, including an especially severe weakness in Microsoft Outlook that can be exploited without any user interaction.
The Outlook vulnerability (CVE-2023-23397) affects all versions of Microsoft Outlook from 2013 to the newest. Microsoft said it has seen evidence that attackers are exploiting this flaw, which can be done without any user interaction by sending a booby-trapped email that triggers automatically when retrieved by the email server — before the email is even viewed in the Preview Pane.
While CVE-2023-23397 is labeled as an “Elevation of Privilege” vulnerability, that label doesn’t accurately reflect its severity, said Kevin Breen, director of cyber threat research at Immersive Labs.
Known as an NTLM relay attack, it allows an attacker to get someone’s NTLM hash [Windows account password] and use it in an attack commonly referred to as “Pass The Hash.”
“The vulnerability effectively lets the attacker authenticate as a trusted individual without having to know the person’s password,” Breen said. “This is on par with an attacker having a valid password with access to an organization’s systems.”
Security firm Rapid7 points out that this bug affects self-hosted versions of Outlook like Microsoft 365 Apps for Enterprise, but Microsoft-hosted online services like Microsoft 365 are not vulnerable.
The other zero-day flaw being actively exploited in the wild — CVE-2023-24880 — is a “Security Feature Bypass” in Windows SmartScreen, part of Microsoft’s slate of endpoint protection tools.
Patch management vendor Action1 notes that the exploit for this bug is low in complexity and requires no special privileges. But it does require some user interaction, and can’t be used to gain access to private information or privileges. However, the flaw can allow other malicious code to run without being detected by SmartScreen reputation checks.
Dustin Childs, head of threat awareness at Trend Micro’s Zero Day Initiative, said CVE-2023-24880 allows attackers to create files that would bypass Mark of the Web (MOTW) defenses.
“Protective measures like SmartScreen and Protected View in Microsoft Office rely on MOTW, so bypassing these makes it easier for threat actors to spread malware via crafted documents and other infected files that would otherwise be stopped by SmartScreen,” Childs said.
Seven other vulnerabilities Microsoft patched this week earned its most-dire “critical” severity label, meaning the updates address security holes that could be exploited to give the attacker full, remote control over a Windows host with little or no interaction from the user.
Also this week, Adobe released eight patches addressing a whopping 105 security holes across a variety of products, including Adobe Photoshop, Cold Fusion, Experience Manager, Dimension, Commerce, Magento, Substance 3D Stager, Cloud Desktop Application, and Illustrator.
For a more granular rundown on the updates released today, see the SANS Internet Storm Center roundup. If today’s updates cause any stability or usability issues in Windows, AskWoody.com will likely have the lowdown on that.
Please consider backing up your data and/or imaging your system before applying any updates. And feel free to sound off in the comments if you experience any problems as a result of these patches.
Two U.S. men have been charged with hacking into a U.S. Drug Enforcement Agency (DEA) online portal that taps into 16 different federal law enforcement databases. Both are alleged to be part of a larger criminal organization that specializes in using fake emergency data requests from compromised police and government email accounts to publicly threaten and extort their victims.
Prosecutors for the Eastern District of New York today unsealed criminal complaints against Sagar Steven Singh — a.k.a “Weep” — a 19-year-old from Pawtucket, Rhode Island; and Nicholas Ceraolo, 25, of Queens, NY, who allegedly went by the handles “Convict” and “Ominus.”
The Justice Department says Singh and Ceraolo belong to a group of cybercriminals known to its members as “ViLE,” who specialize in obtaining personal information about third-party victims, which they then use to harass, threaten or extort the victims, a practice known as “doxing.”
“ViLE is collaborative, and the members routinely share tactics and illicitly obtained information with each other,” prosecutors charged.
The government alleges the defendants and other members of ViLE use various methods to obtain victims’ personal information, including:
-tricking customer service employees;
-submitting fraudulent legal process to social media companies to elicit users’ registration information;
-co-opting and corrupting corporate insiders;
-searching public and private online databases;
-accessing a nonpublic United States government database without authorization
-unlawfully using official email accounts belonging to other countries.
The complaint says once they obtained a victim’s information, Singh and Ceraolo would post the information in an online forum. The government refers to this community only as “Forum-1,” saying that it is administered by the leader of ViLE (referenced in the complaint as “CC-1”).
“Victims are extorted into paying CC-1 to have their information removed from Forum-1,” prosecutors allege. “Singh also uses the threat of revealing personal information to extort victims into giving him access to their social media accounts, which Singh then resells.”
Sources tell KrebsOnSecurity in addition to being members of ViLE, both Weep and Ominous are or were staff members for Doxbin, a highly toxic online community that provides a forum for digging up personal information on people and posting it publicly. This is supported by the Doxbin administrator’s claimed responsibility for a high-profile intrusion at the DEA’s law enforcement data sharing portal last year.
A screenshot of alleged access to the Drug Enforcement Agency’s intelligence sharing portal, shared by “KT,” the current administrator of the doxing and harassment community Doxbin.
The government alleges that on May 7, 2022, Singh used stolen credentials to log into a U.S. federal government portal without authorization. The complaint doesn’t specify which agency portal was hacked, but it does state that the portal included access to law enforcement databases that track narcotics seizures in the United States.
On May 12, 2022, KrebsOnSecurity broke the news that hackers had gained access to a DEA portal that taps into 16 different federal law enforcement databases. As reported at the time, the inside scoop on how that hack went down came from KT, the current administrator of the Doxbin and the individual referenced in the government’s complaint as “CC-1.”
Indeed, a screenshot of the ViLE group website includes the group’s official roster, which lists KT at the top, followed by Weep and Ominus.
A screenshot of the website for the cybercriminal group “ViLE.” Image: USDOJ.
In March 2022, KrebsOnSecurity warned that multiple cybercrime groups were finding success with fraudulent Emergency Data Requests (EDRs), wherein the hackers use compromised police and government email accounts to file warrantless data requests with social media firms and mobile telephony providers, attesting that the information being requested can’t wait for a warrant because it relates to an urgent matter of life and death.
That story showed that the previous owner of the Doxbin also was part of a teenage hacking group that specialized in offering fake EDRs as a service on the dark web.
Prosecutors say they tied Singh to the government portal hack because he connected to it from an Internet address that he’d previously used to access a social media account registered in his name. When they raided Singh’s residence on Sept. 8, 2022 and seized his devices, investigators with Homeland Security found a cellular phone and laptop that allegedly “contained extensive evidence of access to the Portal.”
The complaint alleges that between February 2022 and May 2022, Ceraolo used an official email account belonging to a Bangladeshi police official to pose as a police officer in communication with U.S.-based social media platforms.
“In these communications, Ceraolo requested personal information about users of these platforms, under the false pretense that the users were committing crimes or in life-threatening danger,” the complaint states.
For example, on or about March 13, 2022, Ceraolo allegedly used the Bangladeshi police email account to falsely claim that the target of the EDR had sent bomb threats, distributed child pornography and threatened officials of the Bangladeshi government.
On or about May 9, 2022, the government says, Singh sent a friend screenshots of text messages between himself and someone he had doxed on the Doxbin and was trying to extort for their Instagram handle. The data included the victim’s Social Security number, driver’s license number, cellphone number, and home address.
“Look familiar?” Singh allegedly wrote to the victim. “You’re gonna comply to me if you don’t want anything negative to happen to your parents. . . I have every detail involving your parents . . . allowing me to do whatever I desire to them in malicious ways.”
Neither of the defendants could be immediately reached for comment. KT, the current administrator of Doxbin, declined a request for comment on the charges.
Ceraolo is a self-described security researcher who has been credited in many news stories over the years with discovering security vulnerabilities at AT&T, T-Mobile, Comcast and Cox Communications.
Ceraolo’s stated partner in most of these discoveries — a 30-year-old Connecticut man named Ryan “Phobia” Stevenson — was charged in 2019 with being part of a group that stole millions of dollars worth of cryptocurrencies via SIM-swapping, a crime that involves tricking a mobile provider into routing a target’s calls and text messages to another device.
In 2018, KrebsOnSecurity detailed how Stevenson earned bug bounty rewards and public recognition from top telecom companies for finding and reporting security holes in their websites, all the while secretly peddling those same vulnerabilities to cybercriminals.
According to the Justice Department, if convicted Ceraolo faces up to 20 years’ imprisonment for conspiracy to commit wire fraud; both Ceraolo and Singh face five years’ imprisonment for conspiracy to commit computer intrusions.
A copy of the complaint against Ceraolo and Singh is here (PDF).
The Biden administration today issued its vision for beefing up the nation’s collective cybersecurity posture, including calls for legislation establishing liability for software products and services that are sold with little regard for security. The White House’s new national cybersecurity strategy also envisions a more active role by cloud providers and the U.S. military in disrupting cybercriminal infrastructure, and it names China as the single biggest cyber threat to U.S. interests.
The strategy says the White House will work with Congress and the private sector to develop legislation that would prevent companies from disavowing responsibility for the security of their software products or services.
Coupled with this stick would be a carrot: An as-yet-undefined “safe harbor framework” that would lay out what these companies could do to demonstrate that they are making cybersecurity a central concern of their design and operations.
“Any such legislation should prevent manufacturers and software publishers with market power from fully disclaiming liability by contract, and establish higher standards of care for software in specific high-risk scenarios,” the strategy explains. “To begin to shape standards of care for secure software development, the Administration will drive the development of an adaptable safe harbor framework to shield from liability companies that securely develop and maintain their software products and services.”
Brian Fox, chief technology officer and founder of the software supply chain security firm Sonatype, called the software liability push a landmark moment for the industry.
“Market forces are leading to a race to the bottom in certain industries, while contract law allows software vendors of all kinds to shield themselves from liability,” Fox said. “Regulations for other industries went through a similar transformation, and we saw a positive result — there’s now an expectation of appropriate due care, and accountability for those who fail to comply. Establishing the concept of safe harbors allows the industry to mature incrementally, leveling up security best practices in order to retain a liability shield, versus calling for sweeping reform and unrealistic outcomes as previous regulatory attempts have.”
In 2012 (approximately three national cyber strategies ago), then director of the U.S. National Security Agency (NSA) Keith Alexander made headlines when he remarked that years of successful cyber espionage campaigns from Chinese state-sponsored hackers represented “the greatest transfer of wealth in history.”
The document released today says the People’s Republic of China (PRC) “now presents the broadest, most active, and most persistent threat to both government and private sector networks,” and says China is “the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do so.”
Many of the U.S. government’s efforts to restrain China’s technology prowess involve ongoing initiatives like the CHIPS Act, a new law signed by President Biden last year that sets aside more than $50 billion to expand U.S.-based semiconductor manufacturing and research and to make the U.S. less dependent on foreign suppliers; the National Artificial Intelligence Initiative; and the National Strategy to Secure 5G.
As the maker of most consumer gizmos with a computer chip inside, China is also the source of an incredible number of low-cost Internet of Things (IoT) devices that are not only poorly secured, but are probably more accurately described as insecure by design.
The Biden administration said it would continue its previously announced plans to develop a system of labeling that could be applied to various IoT products and give consumers some idea of how secure the products may be. But it remains unclear how those labels might apply to products made by companies outside of the United States.
One could convincingly make the case that the world has witnessed yet another historic transfer of wealth and trade secrets over the past decade — in the form of ransomware and data ransom attacks by Russia-based cybercriminal syndicates, as well as Russian intelligence agency operations like the U.S. government-wide Solar Winds compromise.
On the ransomware front, the White House strategy seems to focus heavily on building the capability to disrupt the digital infrastructure used by adversaries that are threatening vital U.S. cyber interests. The document points to the 2021 takedown of the Emotet botnet — a cybercrime machine that was heavily used by multiple Russian ransomware groups — as a model for this activity, but says those disruptive operations need to happen faster and more often.
To that end, the Biden administration says it will expand the capacity of the National Cyber Investigative Joint Task Force (NCIJTF), the primary federal agency for coordinating cyber threat investigations across law enforcement agencies, the intelligence community, and the Department of Defense.
“To increase the volume and speed of these integrated disruption campaigns, the Federal Government must further develop technological and organizational platforms that enable continuous, coordinated operations,” the strategy observes. “The NCIJTF will expand its capacity to coordinate takedown and disruption campaigns with greater speed, scale, and frequency. Similarly, DoD and the Intelligence Community are committed to bringing to bear their full range of complementary authorities to disruption campaigns.”
The strategy anticipates the U.S. government working more closely with cloud and other Internet infrastructure providers to quickly identify malicious use of U.S.-based infrastructure, share reports of malicious use with the government, and make it easier for victims to report abuse of these systems.
“Given the interest of the cybersecurity community and digital infrastructure owners and operators in continuing this approach, we must sustain and expand upon this model so that collaborative disruption operations can be carried out on a continuous basis,” the strategy argues. “Threat specific collaboration should take the form of nimble, temporary cells, comprised of a small number of trusted operators, hosted and supported by a relevant hub. Using virtual collaboration platforms, members of the cell would share information bidirectionally and work rapidly to disrupt adversaries.”
But here, again, there is a carrot-and-stick approach: The administration said it is taking steps to implement Executive Order (EO) 13984 –issued by the Trump administration in January 2021 — which requires cloud providers to verify the identity of foreign persons using their services.
“All service providers must make reasonable attempts to secure the use of their infrastructure against abuse or other criminal behavior,” the strategy states. “The Administration will prioritize adoption and enforcement of a risk-based approach to cybersecurity across Infrastructure-as-a-Service providers that addresses known methods and indicators of malicious activity including through implementation of EO 13984.”
Ted Schlein, founding partner of the cybersecurity venture capital firm Ballistic Ventures, said how this gets implemented will determine whether it can be effective.
“Adversaries know the NSA, which is the elite portion of the nation’s cyber defense, cannot monitor U.S.-based infrastructure, so they just use U.S.-based cloud infrastructure to perpetrate their attacks,” Schlein said. “We have to fix this. I believe some of this section is a bit pollyannaish, as it assumes a bad actor with a desire to do a bad thing will self-identify themselves, as the major recommendation here is around KYC (‘know your customer’).”
One brief but interesting section of the strategy titled “Explore a Federal Cyber Insurance Backdrop” contemplates the government’s liability and response to a too-big-to-fail scenario or “catastrophic cyber incident.”
“We will explore how the government can stabilize insurance markets against catastrophic risk to drive better cybersecurity practices and to provide market certainty when catastrophic events do occur,” the strategy reads.
When the Bush administration released the first U.S. national cybersecurity strategy 20 years ago after the 9/11 attacks, the popular term for that same scenario was a “digital Pearl Harbor,” and there was a great deal of talk then about how the cyber insurance market would soon help companies shore up their cybersecurity practices.
In the wake of countless ransomware intrusions, many companies now hold cybersecurity insurance to help cover the considerable costs of responding to such intrusions. Leaving aside the question of whether insurance coverage has helped companies improve security, what happens if every one of these companies has to make a claim at the same time?
The notion of a Digital Pearl Harbor incident struck many experts at the time as a hyperbolic justification for expanding the government’s digital surveillance capabilities, and an overstatement of the capabilities of our adversaries. But back in 2003, most of the world’s companies didn’t host their entire business in the cloud.
Today, nobody questions the capabilities, goals and outcomes of dozens of nation-state level cyber adversaries. And these days, a catastrophic cyber incident could be little more than an extended, simultaneous outage at multiple cloud providers.
The full national cybersecurity strategy is available from the White House website (PDF).
Web hosting giant GoDaddy made headlines this month when it disclosed that a multi-year breach allowed intruders to steal company source code, siphon customer and employee login credentials, and foist malware on customer websites. Media coverage understandably focused on GoDaddy’s admission that it suffered three different cyberattacks over as many years at the hands of the same hacking group. But it’s worth revisiting how this group typically got in to targeted companies: By calling employees and tricking them into navigating to a phishing website.
In a filing with the U.S. Securities and Exchange Commission (SEC), GoDaddy said it determined that the same “sophisticated threat actor group” was responsible for three separate intrusions, including:
-March 2020: A spear-phishing attack on a GoDaddy employee compromised the hosting login credentials of approximately 28,000 GoDaddy customers, as well as login credentials for a small number employees;
-November 2021: A compromised GoDaddy password let attackers steal source code and information tied to 1.2 million customers, including website administrator passwords, sFTP credentials, and private SSL keys;
-December 2022: Hackers gained access to and installed malware on GoDaddy’s cPanel hosting servers that “intermittently redirected random customer websites to malicious sites.”
“Based on our investigation, we believe these incidents are part of a multi-year campaign by a sophisticated threat actor group that, among other things, installed malware on our systems and obtained pieces of code related to some services within GoDaddy,” the company stated in its SEC filing.
What else do we know about the cause of these incidents? We don’t know much about the source of the November 2021 incident, other than GoDaddy’s statement that it involved a compromised password, and that it took about two months for the company to detect the intrusion. GoDaddy has not disclosed the source of the breach in December 2022 that led to malware on some customer websites.
But we do know the March 2020 attack was precipitated by a spear-phishing attack against a GoDaddy employee. GoDaddy described the incident at the time in general terms as a social engineering attack, but one of its customers affected by that March 2020 breach actually spoke to one of the hackers involved.
The hackers were able to change the Domain Name System (DNS) records for the transaction brokering site escrow.com so that it pointed to an address in Malaysia that was host to just a few other domains, including the then brand-new phishing domain servicenow-godaddy[.]com.
The general manager of Escrow.com found himself on the phone with one of the GoDaddy hackers, after someone who claimed they worked at GoDaddy called and said they needed him to authorize some changes to the account.
In reality, the caller had just tricked a GoDaddy employee into giving away their credentials, and he could see from the employee’s account that Escrow.com required a specific security procedure to complete a domain transfer.
The general manager of Escrow.com said he suspected the call was a scam, but decided to play along for about an hour — all the while recording the call and coaxing information out of the scammer.
“This guy had access to the notes, and knew the number to call,” to make changes to the account, the CEO of Escrow.com told KrebsOnSecurity. “He was literally reading off the tickets to the notes of the admin panel inside GoDaddy.”
About halfway through this conversation — after being called out by the general manager as an imposter — the hacker admitted that he was not a GoDaddy employee, and that he was in fact part of a group that enjoyed repeated success with social engineering employees at targeted companies over the phone.
Absent from GoDaddy’s SEC statement is another spate of attacks in November 2020, in which unknown intruders redirected email and web traffic for multiple cryptocurrency services that used GoDaddy in some capacity.
It is possible this incident was not mentioned because it was the work of yet another group of intruders. But in response to questions from KrebsOnSecurity at the time, GoDaddy said that incident also stemmed from a “limited” number of GoDaddy employees falling for a sophisticated social engineering scam.
“As threat actors become increasingly sophisticated and aggressive in their attacks, we are constantly educating employees about new tactics that might be used against them and adopting new security measures to prevent future attacks,” GoDaddy said in a written statement back in 2020.
Voice phishing or “vishing” attacks typically target employees who work remotely. The phishers will usually claim that they’re calling from the employer’s IT department, supposedly to help troubleshoot some issue. The goal is to convince the target to enter their credentials at a website set up by the attackers that mimics the organization’s corporate email or VPN portal.
Experts interviewed for an August 2020 story on a steep rise in successful voice phishing attacks said there are generally at least two people involved in each vishing scam: One who is social engineering the target over the phone, and another co-conspirator who takes any credentials entered at the phishing page — including multi-factor authentication codes shared by the victim — and quickly uses them to log in to the company’s website.
The attackers are usually careful to do nothing with the phishing domain until they are ready to initiate a vishing call to a potential victim. And when the attack or call is complete, they disable the website tied to the domain.
This is key because many domain registrars will only respond to external requests to take down a phishing website if the site is live at the time of the abuse complaint. This tactic also can stymie efforts by companies that focus on identifying newly-registered phishing domains before they can be used for fraud.
A U2F device made by Yubikey.
GoDaddy’s latest SEC filing indicates the company had nearly 7,000 employees as of December 2022. In addition, GoDaddy contracts with another 3,000 people who work full-time for the company via business process outsourcing companies based primarily in India, the Philippines and Colombia.
Many companies now require employees to supply a one-time password — such as one sent via SMS or produced by a mobile authenticator app — in addition to their username and password when logging in to company assets online. But both SMS and app-based codes can be undermined by phishing attacks that simply request this information in addition to the user’s password.
One multifactor option — physical security keys — appears to be immune to these advanced scams. The most commonly used security keys are inexpensive USB-based devices. A security key implements a form of multi-factor authentication known as Universal 2nd Factor (U2F), which allows the user to complete the login process simply by inserting the USB device and pressing a button on the device. The key works without the need for any special software drivers.
The allure of U2F devices for multi-factor authentication is that even if an employee who has enrolled a security key for authentication tries to log in at an impostor site, the company’s systems simply refuse to request the security key if the user isn’t on their employer’s legitimate website, and the login attempt fails. Thus, the second factor cannot be phished, either over the phone or Internet.
In July 2018, Google disclosed that it had not had any of its 85,000+ employees successfully phished on their work-related accounts since early 2017, when it began requiring all employees to use physical security keys in place of one-time codes.
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.
Some of the fake profiles flagged by the co-administrator of a popular sustainability group on LinkedIn.
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.”
The opening slide for a plea by Taylor’s group to LinkedIn.
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.
Another “swarm” of LinkedIn bot accounts flagged by Taylor’s group.
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.
Some of the bot profiles identified by Mark Miller that were seeking access to his DevOps LinkedIn group. Miller said these profiles are all listed in the order they appeared.
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.”
Communities like Craigslist, OfferUp, Facebook Marketplace and others are great for finding low- or no-cost stuff that one can pick up directly from a nearby seller, and for getting rid of useful things that don’t deserve to end up in a landfill. But when dealing with strangers from the Internet, there is always a risk that the person you’ve agreed to meet has other intentions.
Nearly all U.S. states now have designated safe trading stations — mostly at local police departments — which ensure that all transactions are handled in plain view of both the authorities and security cameras.
These safe trading places exist because sometimes in-person transactions from the Internet don’t end well for one or more parties involved. The website Craigslistkillers has catalogued news links for at least 132 murders linked to Craigslist transactions since 2015. Many of these killings involved high-priced items like automobiles and consumer electronics, where the prospective buyer apparently intended all along to kill the owner and steal the item offered for sale. Others were motivated simply by a desire to hurt people.
This is not to say that using Craigslist is uniquely risky or dangerous; I’m sure the vast majority of transactions generated by the site end amicably and without physical violence. And that probably holds true for all of Craigslist’s competitors.
Still, the risk of a deal going badly when one meets total strangers from the Internet is not zero, and so it’s only sensible to take a few simple precautions. For example, choosing to transact at a designated safe place such as a police station dramatically reduces the likelihood that anyone wishing you harm would even show up.
I recently stumbled upon one of these designated exchange places by accident, hence my interest in learning more about them. The one I encountered was at a Virginia county sheriff’s office, and it has two parking spots reserved with a sign that reads, “Internet Purchase & Exchange Location: This Area is Under 24 Hour Video Surveillance” [image above].
According to the list maintained at Safetradestations.com, there are four other such designated locations in Northern Virginia. And it appears most states now have them in at least some major cities. Safeexchangepoint.com also has a searchable index of safe trading locations in the United States and Canada.
Granted, not everyone is going to live close to one of these designated trading stations. Or maybe what you want to buy, sell or trade you’d rather not have recorded in front of police cameras. Either way, here are a few tips on staying safe while transacting in real life with strangers from the Internet (compliments of the aforementioned safe trading websites).
The safest exchange points are easily accessible and in a well-lit, public place where transactions are visible to others nearby. Try to arrange a meeting time that is during daylight hours, and consider bringing a friend along — especially when dealing with high-value items like laptops and smart phones.
Safeexchangepoint.com also advises that police or merchants that host their own exchange locations generally won’t get involved in the details of your transaction unless specified otherwise, and that many police departments (but not all) are willing to check the serial number of an item for sale to make sure it’s not known to be stolen property.
Of course, it’s not always practical or possible to haul that old sofa to the local police department, or a used car that isn’t working. In those situations, safetradestations.com has some decent suggestions:
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.
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.
The now-defunct homepage of xtb-market[.]com, a scam cryptocurrency platform tied to a pig butchering scheme.
“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.”
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.
The now-defunct xtb-market[.]com.
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.”
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.
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