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At the outset of their federal criminal trial for hijacking vast swaths of Internet addresses for use in large-scale email spam campaigns, three current or former executives at online advertising firm Adconion Direct (now Amobee) have pleaded guilty to lesser misdemeanor charges of fraud and misrepresentation via email.
In October 2018, prosecutors in the Southern District of California named four Adconion employees — Jacob Bychak, Mark Manoogian, Petr Pacas, and Mohammed Abdul Qayyum — in a ten-count indictment (PDF) on felony charges of conspiracy, wire fraud, and electronic mail fraud.
The government alleged that between December 2010 and September 2014, the defendants engaged in a conspiracy to identify or pay to identify blocks of Internet Protocol (IP) addresses that were registered to others but which were otherwise inactive.
Prosecutors said the men also sent forged letters to an Internet hosting firm claiming they had been authorized by the registrants of the inactive IP addresses to use that space for their own purposes.
All four defendants pleaded not guilty when they were charged back in 2018, but this week Bychak, Manoogian and Qayyum each entered a plea deal.
“The defendants’ jobs with Adconion were to acquire fresh IP addresses and employ other measures to circumvent the spam filters,” reads a statement released today by the U.S. Attorney for the Southern District of California, which said the defendants would pay $100,000 in fines each and perform 100 hours of community service.
“To conceal Adconion’s ties to the stolen IP addresses and the spam sent from these IP addresses, the defendants used a host of DBAs, virtual addresses, and fake names provided by the company,” the statement continues. “While defendants touted ties to well-known name brands, the email marketing campaigns associated with the hijacked IP addresses included advertisements such as ‘BigBeautifulWomen,’ ‘iPhone4S Promos,’ and ‘LatinLove[Cost-per-Click].'”
None of the three plea agreements are currently available on PACER, the online federal court document clearinghouse. However, PACER does show that on June 7 — the same day the pleas were entered by the defendants — the government submitted to the court a superseding set of just two misdemeanor charges (PDF) of fraud in connection with email.
Another document filed in the case says the fourth defendant — Pacas — accepted a deferred prosecution deal, which includes a probationary period and a required $50,000 “donation” to a federal “crime victims fund.”
There are fewer than four billion so-called “Internet Protocol version 4” or IPv4 addresses available for use, but the vast majority of them have already been allocated. The global dearth of available IP addresses has turned them into a commodity wherein each IP can fetch between $15-$25 on the open market.
This has led to boom times for those engaged in the acquisition and sale of IP address blocks, but it has likewise emboldened those who specialize in absconding with and spamming from dormant IP address blocks without permission from the rightful owners.
In May, prosecutors published information about the source of some IP address ranges from which the Adconion employees allegedly spammed. For example, the government found the men leased some of their IP address ranges from a Dutch company that’s been tied to a scandal involving more than four million addresses siphoned from the African Network Information Centre (AFRINIC), the nonprofit responsible for overseeing IP address allocation for African organizations.
In 2019, AFRINIC fired a top employee after it emerged that in 2013 he quietly commandeered millions of IPs from defunct African entities or from those that were long ago acquired by other firms, and then conspired to sell an estimated $50 million worth of the IPs to marketers based outside Africa.
“Exhibit A” in a recent government court filing shows that in 2013 Adconion leased more than 65,000 IP addresses from Inspiring Networks, a Dutch network services company. In 2020, Inspiring Networks and its director Maikel Uerlings were named in a dogged, multi-part investigation by South African news outlet MyBroadband.co.za and researcher Ron Guilmette as one of two major beneficiaries of the four million IP addresses looted from AFRINIC by its former employee.
Exhibit A, from a May 2022 filing by U.S. federal prosecutors.
The address block in the above image — 196.246.0.0/16 — was reportedly later reclaimed by AFRINIC following an investigation. Inspiring Networks has not responded to requests for comment.
Prosecutors allege the Adconion employees also obtained hijacked IP address blocks from Daniel Dye, another man tied to this case who was charged separately. For many years, Dye was a system administrator for Optinrealbig, a Colorado company that relentlessly pimped all manner of junk email, from mortgage leads and adult-related services to counterfeit products and Viagra. In 2018, Dye pleaded guilty to violations of the CAN-SPAM Act.
Optinrealbig’s CEO was the spam king Scott Richter, who changed the name of the company to Media Breakaway after being successfully sued for spamming by AOL, Microsoft, MySpace, and the New York Attorney General Office, among others. In 2008, this author penned a column for The Washington Post detailing how Media Breakaway had hijacked tens of thousands of IP addresses from a defunct San Francisco company for use in its spamming operations.
The last-minute plea deals by the Adconion employees were reminiscent of another recent federal criminal prosecution for IP address sleight-of-hand. In November 2021, the CEO of South Carolina technology firm Micfo pleaded guilty just two days into his trial, admitting 20 counts of wire fraud in connection with an elaborate network of phony companies set up to obtain more than 700,000 IPs from the American Registry for Internet Numbers (ARIN) — AFRINIC’s counterpart in North America.
Adconion was acquired in June 2014 by Amobee, a Redwood City, Calif. online ad platform that has catered to some of the world’s biggest brands. Amobee’s parent firm — Singapore-based communications giant Singtel — bought Amobee for $321 million in March 2012.
But as Reuters reported in 2021, Amobee cost Singtel nearly twice as much in the last year alone — $589 million — in a “non-cash impairment charge” Singtel disclosed to investors. Marketing industry blog Digiday.com reported in February that Singtel was seeking to part ways with its ad tech subsidiary.
One final note about Amobee: In response to my 2019 story on the criminal charges against the Adconion executives, Amobee issued a statement saying “Amobee has fully cooperated with the government’s investigation of this 2017 matter which pertains to alleged activities that occurred years prior to Amobee’s acquisition of the company.”
Yet as the government’s indictment points out, the alleged hijacking activities took place up until September 2014, which was after Amobee’s acquisition of Adconion Direct in June 2014. Also, the IP address ranges that the Adconion executives were prosecuted for hijacking were all related to incidents in 2013 and 2014, which is hardly “years prior to Amobee’s acquisition of the company.”
Amobee has not yet responded to requests for comment.
The concept of zero trust is not a new one, and some may even argue that the term is overused. In reality, however, its criticality is growing with each passing day. Why? Because many of today’s attacks begin with the user. According to Verizon’s Data Breach Investigations Report, 82% of breaches involve the human element — whether it’s stolen credentials, phishing, misuse or error.
Additionally, today’s businesses are hyper-connected, meaning that — in addition to your employees — customers, partners and suppliers are all part of your ecosystem. Couple that with hybrid work, IoT, the move to the cloud, and more emboldened attackers, and organizational risk increases exponentially.
Adopting a zero trust model can dramatically reduce this risk by eliminating implicit trust. It has become so crucial, in fact, that several governments including the U.S., UK and Australia have released mandates and guidance for how organizations should deploy zero trust to improve national security.
However, because zero trust is more of a concept than a technology, and so many vendors use the term, organizations struggle with the best way to implement it. At Cisco, we believe you should take a holistic approach to zero trust, starting with what you have and adding on as you identify gaps in your defenses. And while layers of protection are necessary for powerful security, so is ease of use.
Zero trust plays a major role in building security resilience, or the ability to withstand unpredictable threats or changes and emerge stronger. Through zero trust, the identity and security posture of users, devices and applications are continuously checked and verified to prevent network intrusions — and to also limit impact if an unauthorized entity does gain access.
Organizations with high zero trust maturity are twice as likely to achieve business resilience.
– Cisco’s Guide to Zero Trust Maturity
Eliminating trust, however, doesn’t really conjure up images of user-friendly technology. No matter how necessary they are for the business, employees are unlikely to embrace security measures that make their jobs more cumbersome and time-consuming. Instead, they want fast, consistent access to any application no matter where they are or which device they are using.
That’s why Cisco is taking a different approach to zero trust — one that removes friction for the user. For example, with Cisco Secure Access by Duo, organizations can provide those connecting to their network with several quick, easy authentication options. This way, they can put in place multi-factor authentication (MFA) that frustrates attackers, not users.
Cisco Secure Access by Duo is a key pillar of zero trust security, providing industry-leading features for secure access, authentication and device monitoring. Duo is customizable, straightforward to use, and simple to set up. It enables the use of modern authentication methods including biometrics, passwordless and single sign-on (SSO) to help organizations advance zero trust without sacrificing user experience. Duo also provides the flexibility organizations need to enable secure remote access with or without a VPN connection.
During Cisco’s own roll-out of Duo to over 100,000 people, less than 1% of users contacted the help desk for assistance. On an annual basis, Duo is saving Cisco $3.4 million in employee productivity and $500,000 in IT help desk support costs. Furthermore, 86,000 potential compromises are averted by Duo each month.
La-Z-Boy, one of the world’s leading residential furniture producers, also wanted to defend its employees against cybersecurity breaches through MFA and zero trust. It needed a data security solution that worked agnostically, could grow with the company, and that was easy to roll out and implement.
“When COVID first hit and people were sent home to work remotely, we started seeing more hacking activity…” said Craig Vincent, director of IT infrastructure and operations at La-Z-Boy. “We were looking for opportunities to secure our environment with a second factor…. We knew that even post-pandemic we would need a hybrid solution.”
“It was very quick and easy to see where Duo fit into our environment quite well, and worked with any application or legacy app, while deploying quickly.” – Craig Vincent, Director of IT Infrastructure and Operations, La-Z-Boy
Today, Duo helps La-Z-Boy maintain a zero trust framework, stay compliant, and get clear visibility into what is connecting to its network and VPN. Zero trust helps La-Z-Boy secure its organization against threats such as phishing, stolen credentials and out-of-date devices that may be vulnerable to known exploits and malware.
As mentioned, zero trust is a framework, not a single product or technology. For zero trust to be truly effective, it must do four things:
Many technology companies may offer a single component of zero trust, or one aspect of protection, but Cisco’s robust networking and security expertise enables us to provide a holistic zero trust solution. Not only can we support all the steps above, but we can do so across your whole IT ecosystem.
Modern organizations are operating multi-environment ecosystems that include a mix of on-premises and cloud technologies from various vendors. Zero trust solutions should be able to protect across all this infrastructure, no matter which providers are in use. Protections should also extend from the network and cloud to users, devices, applications and data. With Cisco’s extensive security portfolio, operating on multiple clouds and platforms, zero trust controls can be embedded at every layer.
Depending on where you are in your security journey, embedding zero trust at every layer of your infrastructure may sound like a lofty endeavor. That’s why we meet customers where they are on their path to zero trust. Whether your first priority is to meet regulatory requirements, secure hybrid work, protect the cloud, or something else, we have the expertise to help you get started. We provide clear guidance and technologies for zero trust security mapped to established frameworks from organizations like CISA and NIST.
Much of our Cisco Secure portfolio can be used to build a successful zero trust framework, but some examples of what we offer include:
All of our technologies and services are backed by the unparalleled intelligence of Cisco Talos — so you always have up-to-date protection as you build your zero trust architecture. Additionally, our open, integrated security platform — Cisco SecureX — makes it simple to expand and scale your security controls, knowing they will work with your other technologies for more unified defenses.
As Italy’s leading insurance company, Sara Assicurazioni requires complete visibility into its extended network, including a multi-cloud architecture and hybrid workforce. The company has adopted a comprehensive zero trust strategy through Cisco Secure.
“Our decentralized users, endpoints, and cloud-based servers and workloads contribute to a large attack surface,” says Paolo Perrucci, director of information and communications technology architectures and operations at Sara Assicurazioni. “With Cisco, we have the right level of visibility on this surface.”
“The main reason we chose Cisco is that only Cisco can offer a global security solution rather than covering one specific point…. Thanks to Cisco Secure, I’m quite confident that our security posture is now many times better because we are leveraging more scalable, state-of-the-art security solutions.” – Luigi Vassallo, COO & CTO, Sara Assicurazioni
To learn more, explore our zero trust page and sign up for one of our free zero trust workshops.
Watch video: How Cisco implemented zero trust in just five months
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Google says it has suspended the app for the Chinese e-commerce giant Pinduoduo after malware was found in versions of the software. The move comes just weeks after Chinese security researchers published an analysis suggesting the popular e-commerce app sought to seize total control over affected devices by exploiting multiple security vulnerabilities in a variety of Android-based smartphones.
In November 2022, researchers at Google’s Project Zero warned about active attacks on Samsung mobile phones which chained together three security vulnerabilities that Samsung patched in March 2021, and which would have allowed an app to add or read any files on the device.
Google said it believes the exploit chain for Samsung devices belonged to a “commercial surveillance vendor,” without elaborating further. The highly technical writeup also did not name the malicious app in question.
On Feb. 28, 2023, researchers at the Chinese security firm DarkNavy published a blog post purporting to show evidence that a major Chinese ecommerce company’s app was using this same three-exploit chain to read user data stored by other apps on the affected device, and to make its app nearly impossible to remove.
DarkNavy likewise did not name the app they said was responsible for the attacks. In fact, the researchers took care to redact the name of the app from multiple code screenshots published in their writeup. DarkNavy did not respond to requests for clarification.
“At present, a large number of end users have complained on multiple social platforms,” reads a translated version of the DarkNavy blog post. “The app has problems such as inexplicable installation, privacy leakage, and inability to uninstall.”
Update, March 27, 1:24 p.m. ET: Dan Goodin over at Ars Technica has an important update on this story that indicates the Pinduoduo code was exploiting a zero-day vulnerability in Android — not Samsung. From that piece:
“A preliminary analysis by Lookout found that at least two off-Play versions of Pinduoduo for Android exploited CVE-2023-20963, the tracking number for an Android vulnerability Google patched in updates that became available to end users two weeks ago. This privilege-escalation flaw, which was exploited prior to Google’s disclosure, allowed the app to perform operations with elevated privileges. The app used these privileges to download code from a developer-designated site and run it within a privileged environment.
“The malicious apps represent “a very sophisticated attack for an app-based malware,” Christoph Hebeisen, one of three Lookout researchers who analyzed the file, wrote in an email. “In recent years, exploits have not usually been seen in the context of mass-distributed apps. Given the extremely intrusive nature of such sophisticated app-based malware, this is an important threat mobile users need to protect against.”
On March 3, 2023, a denizen of the now-defunct cybercrime community BreachForums posted a thread which noted that a unique component of the malicious app code highlighted by DarkNavy also was found in the ecommerce application whose name was apparently redacted from the DarkNavy analysis: Pinduoduo.
A Mar. 3, 2023 post on BreachForums, comparing the redacted code from the DarkNavy analysis with the same function in the Pinduoduo app available for download at the time.
On March 4, 2023, e-commerce expert Liu Huafang posted on the Chinese social media network Weibo that Pinduoduo’s app was using security vulnerabilities to gain market share by stealing user data from its competitors. That Weibo post has since been deleted.
On March 7, the newly created Github account Davinci1010 published a technical analysis claiming that until recently Pinduoduo’s source code included a “backdoor,” a hacking term used to describe code that allows an adversary to remotely and secretly connect to a compromised system at will.
That analysis includes links to archived versions of Pinduoduo’s app released before March 5 (version 6.50 and lower), which is when Davinci1010 says a new version of the app removed the malicious code.
Pinduoduo has not yet responded to requests for comment. Pinduoduo parent company PDD Holdings told Reuters Google has not shared details about why it suspended the app.
The company told CNN that it strongly rejects “the speculation and accusation that Pinduoduo app is malicious just from a generic and non-conclusive response from Google,” and said there were “several apps that have been suspended from Google Play at the same time.”
Pinduoduo is among China’s most popular e-commerce platforms, boasting approximately 900 million monthly active users.
Most of the news coverage of Google’s move against Pinduoduo emphasizes that the malware was found in versions of the Pinduoduo app available outside of Google’s app store — Google Play.
“Off-Play versions of this app that have been found to contain malware have been enforced on via Google Play Protect,” a Google spokesperson said in a statement to Reuters, adding that the Play version of the app has been suspended for security concerns.
However, Google Play is not available to consumers in China. As a result, the app will still be available via other mobile app stores catering to the Chinese market — including those operated by Huawei, Oppo, Tencent and VIVO.
Google said its ban did not affect the PDD Holdings app Temu, which is an online shopping platform in the United States. According to The Washington Post, four of the Apple App Store’s 10 most-downloaded free apps are owned by Chinese companies, including Temu and the social media network TikTok.
The Pinduoduo suspension comes as lawmakers in Congress this week are gearing up to grill the CEO of TikTok over national security concerns. TikTok, which is owned by Beijing-based ByteDance, said last month that it now has roughly 150 million monthly active users in the United States.
A new cybersecurity strategy released earlier this month by the Biden administration singled out China as the greatest cyber threat to the U.S. and Western interests. The strategy says China 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.”
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The victim shaming site operated by the Snatch ransomware group is leaking data about its true online location and internal operations, as well as the Internet addresses of its visitors, KrebsOnSecurity has found. The leaked data suggest that Snatch is one of several ransomware groups using paid ads on Google.com to trick people into installing malware disguised as popular free software, such as Microsoft Teams, Adobe Reader, Mozilla Thunderbird, and Discord.
First spotted in 2018, the Snatch ransomware group has published data stolen from hundreds of organizations that refused to pay a ransom demand. Snatch publishes its stolen data at a website on the open Internet, and that content is mirrored on the Snatch team’s darknet site, which is only reachable using the global anonymity network Tor.
The victim shaming website for the Snatch ransomware gang.
KrebsOnSecurity has learned that Snatch’s darknet site exposes its “server status” page, which includes information about the true Internet addresses of users accessing the website.
Refreshing this page every few seconds shows that the Snatch darknet site generates a decent amount of traffic, often attracting thousands of visitors each day. But by far the most frequent repeat visitors are coming from Internet addresses in Russia that either currently host Snatch’s clear web domain names or recently did.
The Snatch ransomware gang’s victim shaming site on the darknet is leaking data about its visitors. This “server status” page says that Snatch’s website is on Central European Summer Time (CEST) and is powered by OpenSSL/1.1.1f, which is no longer supported by security updates.
Probably the most active Internet address accessing Snatch’s darknet site is 193.108.114[.]41, which is a server in Yekaterinburg, Russia that hosts several Snatch domains, including snatchteam[.]top, sntech2ch[.]top, dwhyj2[.]top and sn76930193ch[.]top. It could well be that this Internet address is showing up frequently because Snatch’s clear-web site features a toggle button at the top that lets visitors switch over to accessing the site via Tor.
Another Internet address that showed up frequently in the Snatch server status page was 194.168.175[.]226, currently assigned to Matrix Telekom in Russia. According to DomainTools.com, this address also hosts or else recently hosted the usual coterie of Snatch domains, as well as quite a few domains phishing known brands such as Amazon and Cashapp.
The Moscow Internet address 80.66.64[.]15 accessed the Snatch darknet site all day long, and that address also housed the appropriate Snatch clear-web domains. More interestingly, that address is home to multiple recent domains that appear confusingly similar to known software companies, including libreoff1ce[.]com and www-discord[.]com.
This is interesting because the phishing domains associated with the Snatch ransomware gang were all registered to the same Russian name — Mihail Kolesnikov, a name that is somewhat synonymous with recent phishing domains tied to malicious Google ads.
Kolesnikov could be a nod to a Russian general made famous during Boris Yeltsin’s reign. Either way, it’s clearly a pseudonym, but there are some other commonalities among these domains that may provide insight into how Snatch and other ransomware groups are sourcing their victims.
DomainTools says there are more than 1,300 current and former domain names registered to Mihail Kolesnikov between 2013 and July 2023. About half of the domains appear to be older websites advertising female escort services in major cities around the United States (e.g. the now-defunct pittsburghcitygirls[.]com).
The other half of the Kolesnikov websites are far more recent phishing domains mostly ending in “.top” and “.app” that appear designed to mimic the domains of major software companies, including www-citrix[.]top, www-microsofteams[.]top, www-fortinet[.]top, ibreoffice[.]top, www-docker[.]top, www-basecamp[.]top, ccleaner-cdn[.]top, adobeusa[.]top, and www.real-vnc[.]top.
In August 2023, researchers with Trustwave Spiderlabs said they encountered domains registered to Mihail Kolesnikov being used to disseminate the Rilide information stealer trojan.
But it appears multiple crime groups may be using these domains to phish people and disseminate all kinds of information-stealing malware. In February 2023, Spamhaus warned of a huge surge in malicious ads that were hijacking search results in Google.com, and being used to distribute at least five different families of information stealing trojans, including AuroraStealer, IcedID/Bokbot, Meta Stealer, RedLine Stealer and Vidar.
For example, Spamhaus said victims of these malicious ads would search for Microsoft Teams in Google.com, and the search engine would often return a paid ad spoofing Microsoft or Microsoft Teams as the first result — above all other results. The malicious ad would include a logo for Microsoft and at first glance appear to be a safe and trusted place to download the Microsoft Teams client.
However, anyone who clicked on the result was whisked away instead to mlcrosofteams-us[.]top — yet another malicious domain registered to Mr. Kolesnikov. And while visitors to this website may believe they are only downloading the Microsoft Teams client, the installer file includes a copy of the IcedID malware, which is really good at stealing passwords and authentication tokens from the victim’s web browser.
Image: Spamhaus
The founder of the Swiss anti-abuse website abuse.ch told Spamhaus it is likely that some cybercriminals have started to sell “malvertising as a service” on the dark web, and that there is a great deal of demand for this service.
In other words, someone appears to have built a very profitable business churning out and promoting new software-themed phishing domains and selling that as a service to other cybercriminals. Or perhaps they are simply selling any stolen data (and any corporate access) to active and hungry ransomware group affiliates.
The tip about the exposed “server status” page on the Snatch darkweb site came from @htmalgae, the same security researcher who alerted KrebsOnSecurity earlier this month that the darknet victim shaming site run by the 8Base ransomware gang was inadvertently left in development mode.
That oversight revealed not only the true Internet address of the hidden 8Base site (in Russia, naturally), but also the identity of a programmer in Moldova who apparently helped to develop the 8Base code.
@htmalgae said the idea of a ransomware group’s victim shaming site leaking data that they did not intend to expose is deliciously ironic.
“This is a criminal group that shames others for not protecting user data,” @htmalgae said. “And here they are leaking their user data.”
All of the malware mentioned in this story is designed to run on Microsoft Windows devices. But Malwarebytes recently covered the emergence of a Mac-based information stealer trojan called AtomicStealer that was being advertised through malicious Google ads and domains that were confusingly similar to software brands.
Please be extra careful when you are searching online for popular software titles. Cracked, pirated copies of major software titles are a frequent source of infostealer infections, as are these rogue ads masquerading as search results. Make sure to double-check you are actually at the domain you believe you’re visiting *before* you download and install anything.
Stay tuned for Part II of this post, which includes a closer look at the Snatch ransomware group and their founder.
Further reading:
@HTMalgae’s list of the top Internet addresses seen accessing Snatch’s darknet site
Ars Technica: Until Further Notice Think Twice Before Using Google to Download Software
Bleeping Computer: Hackers Abuse Google Ads to Spread Malware in Legit Software
On Dec. 18, 2013, KrebsOnSecurity broke the news that U.S. retail giant Target was battling a wide-ranging computer intrusion that compromised more than 40 million customer payment cards over the previous month. The malware used in the Target breach included the text string “Rescator,” which also was the handle chosen by the cybercriminal who was selling all of the cards stolen from Target customers. Ten years later, KrebsOnSecurity has uncovered new clues about the real-life identity of Rescator.
Rescator, advertising a new batch of cards stolen in a 2014 breach at P.F. Chang’s.
Shortly after breaking the Target story, KrebsOnSecurity reported that Rescator appeared to be a hacker from Ukraine. Efforts to confirm my reporting with that individual ended when they declined to answer questions, and after I declined to accept a bribe of $10,000 not to run my story.
That reporting was based on clues from an early Russian cybercrime forum in which a hacker named Rescator — using the same profile image that Rescator was known to use on other forums — claimed to have originally been known as “Helkern,” the nickname chosen by the administrator of a cybercrime forum called Darklife.
KrebsOnSecurity began revisiting the research into Rescator’s real-life identity in 2018, after the U.S. Department of Justice unsealed an indictment that named a different Ukrainian man as Helkern.
It may be helpful to first recap why Rescator is thought to be so closely tied to the Target breach. For starters, the text string “Rescator” was found in some of the malware used in the Target breach. Investigators would later determine that a variant of the malware used in the Target breach was used in 2014 to steal 56 million payment cards from Home Depot customers. And once again, cards stolen in the Home Depot breach were sold exclusively at Rescator’s shops.
On Nov. 25, 2013, two days before Target said the breach officially began, Rescator could be seen in instant messages hiring another forum member to verify 400,000 payment cards that Rescator claimed were freshly stolen.
By the first week of December 2013, Rescator’s online store — rescator[.]la — was selling more than six million payment card records stolen from Target customers. Prior to the Target breach, Rescator had mostly sold much smaller batches of stolen card and identity data, and the website allowed cybercriminals to automate the sending of fraudulent wire transfers to money mules based in Lviv, Ukraine.
Finally, there is some honor among thieves, and in the marketplace for stolen payment card data it is considered poor form to advertise a batch of cards as “yours” if you are merely reselling cards sold to you by a third-party card vendor or thief. When serious stolen payment card shop vendors wish to communicate that a batch of cards is uniquely their handiwork or that of their immediate crew, they refer to it as “our base.” And Rescator was quite clear in his advertisements that these millions of cards were obtained firsthand.
The new clues about Rescator’s identity came into focus when I revisited the reporting around an April 2013 story here that identified the author of the OSX Flashback Trojan, an early Mac malware strain that quickly spread to more than 650,000 Mac computers worldwide in 2012.
That story about the Flashback author was possible because a source had obtained a Web browser authentication cookie for a founding member of a Russian cybercrime forum called BlackSEO. Anyone in possession of that cookie could then browse the invite-only BlackSEO forum and read the user’s private messages without having to log in.
BlackSEO.com VIP member “Mavook” tells forum admin Ika in a private message that he is the Flashback author.
The legitimate owner of that BlackSEO user cookie went by the nickname Ika, and Ika’s private messages on the forum showed he was close friends with the Flashback author. At the time, Ika also was the administrator of Pustota[.]pw — a closely-guarded Russian forum that counted among its members some of the world’s most successful and established spammers and malware writers.
For many years, Ika held a key position at one of Russia’s largest Internet service providers, and his (mostly glowing) reputation as a reliable provider of web hosting to the Russian cybercrime community gave him an encyclopedic knowledge about nearly every major player in that scene at the time.
The story on the Flashback author featured redacted screenshots that were taken from Ika’s BlackSEO account (see image above). The day after that story ran, Ika posted a farewell address to his mates, expressing shock and bewilderment over the apparent compromise of his BlackSEO account.
In a lengthy post on April 4, 2013 titled “I DON’T UNDERSTAND ANYTHING,” Ika told Pustota forum members he was so spooked by recent events that he was closing the forum and quitting the cybercrime business entirely. Ika recounted how the Flashback story had come the same week that rival cybercriminals tried to “dox” him (their dox named the wrong individual, but included some of Ika’s more guarded identities).
“It’s no secret that karma farted in my direction,” Ika said at the beginning of his post. Unbeknownst to Ika at the time, his Pustota forum also had been completely hacked that week, and a copy of its database shared with this author.
A Google translated version of the farewell post from Ika, the administrator of Pustota, a Russian language cybercrime forum focused on botnets and spam. Click to enlarge.
Ika said the two individuals who tried to dox him did so on an even more guarded Russian language forum — DirectConnection[.]ws, perhaps the most exclusive Russian cybercrime community ever created. New applicants of this forum had to pay a non-refundable deposit, and receive vouches by three established cybercriminals already on the forum. Even if one managed to steal (or guess) a user’s DirectConnection password, the login page could not be reached unless the visitor also possessed a special browser certificate that the forum administrator gave only to approved members.
In no uncertain terms, Ika declared that Rescator went by the nickname MikeMike on DirectConnection:
“I did not want to bring any of this to real life. Especially since I knew the patron of the clowns – specifically Pavel Vrublevsky. Yes, I do state with confidence that the man with the nickname Rescator a.k.a. MikeMike with his partner Pipol have been Pavel Vrublevsky’s puppets for a long time.”
Pavel Vrublevsky is a convicted cybercriminal who became famous as the CEO of the Russian e-payments company ChronoPay, which specialized in facilitating online payments for a variety of “high-risk” businesses, including gambling, pirated Mp3 files, rogue antivirus software and “male enhancement” pills.
As detailed in my 2014 book Spam Nation, Vrublevsky not-so-secretly ran a pharmacy affiliate spam program called Rx-Promotion, which paid spammers and virus writers to blast out tens of billions of junk emails advertising generic Viagra and controlled pharmaceuticals like pain relief medications. Much of my reporting on Vrublevsky’s cybercrime empire came from several years worth of internal ChronoPay emails and documents that were leaked online in 2010 and 2011.
Pavel Vrublevsky’s former Facebook profile photo.
In 2014, KrebsOnSecurity learned from a trusted source close to the Target breach investigation that the user MikeMike on DirectConnection — the same account that Ika said belonged to Rescator — used the email address “zaxvatmira@gmail.com.”
At the time, KrebsOnSecurity could not connect that email address to anything or anyone. However, a recent search on zaxvatmira@gmail.com at the breach tracking service Constella Intelligence returns just one result: An account created in November 2010 at the site searchengines[.]ru under the handle “r-fac1.”
A search on “r-fac1” at cyber intelligence firm Intel 471 revealed that this user’s introductory post on searchengines[.]ru advertised musictransferonline[.]com, an affiliate program that paid people to drive traffic to sites that sold pirated music files for pennies apiece.
According to leaked ChronoPay emails from 2010, this domain was registered and paid for by ChronoPay. Those missives also show that in August 2010 Vrublevsky authorized a payment of ~$1,200 for a multi-user license of an Intranet service called MegaPlan.
ChronoPay used the MegaPlan service to help manage the sprawling projects that Vrublevsky referred to internally as their “black” payment processing operations, including pirated pills, porn, Mp3s, and fake antivirus products. ChronoPay employees used their MegaPlan accounts to track payment disputes, order volumes, and advertising partnerships for these high-risk programs.
Borrowing a page from the Quentin Tarantino movie Reservoir Dogs, the employees adopted nicknames like “Mr. Kink,” “Mr. Heppner,” and “Ms. Nati.” However, in a classic failure of operational security, many of these employees had their MegaPlan account messages automatically forwarded to their real ChronoPay email accounts.
A screen shot of the org chart from ChronoPay’s MegaPlan Intranet system.
When ChronoPay’s internal emails were leaked in 2010, the username and password for its MegaPlan subscription were still working and valid. An internal user directory for that subscription included the personal (non-ChronoPay) email address tied to each employee Megaplan nickname. That directory listing said the email address zaxvatmira@gmail.com was assigned to the head of the Media/Mp3 division for ChronoPay, pictured at the top left of the organizational chart above as “Babushka Vani and Koli.”
[Author’s note: I initially overlooked the presence of the email address zaxvatmira@gmail.com in my notes because it did not show up in text searches of my saved emails, files or messages. I rediscovered it recently when a text search for zaxvatmira@gmail.com on my Mac found the address in a screenshot of the ChronoPay MegaPlan interface.]
The nickname two rungs down from “Babushka” in the ChronoPay org chart is “Lev Tolstoy,” which the MegaPlan service showed was picked by someone who used the email address v.zhabukin@freefrog-co-ru.
ChronoPay’s emails show that this Freefrog email address belongs to a Vasily Borisovich Zhabykin from Moscow. The Russian business tracking website rusprofile[.]ru reports that Zhabykin is or was the supervisor or owner of three Russian organizations, including one called JSC Hot Spot.
[Author’s note: The word “babushka” means “grandma” in Russian, and it could be that this nickname is a nod to the ChronoPay CEO’s wife, Vera. The leaked ChronoPay emails show that Vera Vrublevsky managed a group of hackers working with their media division, and was at least nominally in charge of MP3 projects for ChronoPay. Indeed, in messages exposed by the leaked ChronoPay email cache, Zhabykin stated that he was “directly subordinate” to Mrs. Vrublevsky].
JSC Hot Spot is interesting because its co-founder is another ChronoPay employee: 37-year-old Mikhail “Mike” Shefel. A Facebook profile for Mr. Shefel says he is or was vice president of payment systems at ChronoPay. However, the last update on that profile is from 2018, when Shefel appears to have legally changed his last name.
Archive.org shows that Hot Spot’s website — myhotspot[.]ru — sold a variety of consulting services, including IT security assessments, code and system audits, and email marketing. The earliest recorded archive of the Hot Spot website listed three clients on its homepage, including ChronoPay and Freefrog.
ChronoPay internal emails show that Freefrog was one of its investment projects that facilitated the sale of pirated Mp3 files. Rusprofile[.]ru reports that Freefrog’s official company name — JSC Freefrog — is incorporated by a thinly-documented entity based in the Seychelles called Impex Consulting Ltd., and it is unclear who its true owners are.
However, a search at DomainTools.com on the phone number listed on the homepage of myhotspot[.]ru (74957809554) reveals that number is associated with eight domain names.
Six of those domains are some variation of FreeFrog. Another domain registered to that phone number is bothunter[.]me, which included a copyright credit to “Hot Spot 2011.” At the annual Russian Internet Week IT convention in Moscow in 2012, Mr. Shefel gave a short presentation about bothunter, which he described as a service he designed to identify inauthentic (bot) accounts on Russian social media networks.
Interestingly, one of r-fac1’s first posts to Searchengines[.]ru a year earlier saw this user requesting help from other members who had access to large numbers of hacked social media accounts. R-fac1 told forum members that he was only looking to use those accounts to post harmless links and comments to the followers of the hacked profiles, and his post suggested he was testing something.
“Good afternoon,” r-fac1 wrote on Dec. 20, 2010. “I’m looking for people with their own not-recently-registered accounts on forums, (except for search) Social networks, Twitter, blogs, their websites. Tasks, depending on your accounts, post text and a link, sometimes just a link. Most often the topic is chatter, relaxation, discussion. Posting my links in your profiles, on your walls. A separate offer for people with a large set of contacts in instant messengers to try to use viral marketing.”
Neither Mr. Shefel nor Mr. Zhabykin responded to requests for comment.
Mr. Zhabykin soon moved on to bigger ventures, co-founding a cryptocurrency exchange based in Moscow’s financial center called Suex. In September 2021, Suex earned the distinction of becoming the first crypto firm to be sanctioned by the U.S. Department of the Treasury, which effectively blocked Suex from the global financial system. The Treasury alleged Suex helped to process millions in criminal transactions, including the proceeds of numerous ransomware attacks.
“I don’t understand how I got mixed up in this,” Zhabykin told The New York Times in 2021. Zhabykin said Suex, which is registered in the Czech Republic, was mostly a failure and had conducted only a half dozen or so transactions since 2019.
The Russian business tracking service Rusprofile says Zhabykin also is the owner of a company based in the United Kingdom called RideWithLocal; the company’s website says it specializes in arranging excursions for extreme sports, including snowboarding, skiing, surfing and parasailing. Images from the RideWithLocal Facebook page show helicopters dropping snowboarders and skiers atop some fairly steep mountains.
A screenshot from the Facebook page of RideWithLocal.
Constella Intelligence found a cached copy of a now-deleted LinkedIn profile for Mr. Zhabykin, who described himself as a “sporttech/fintech specialist and mentor.”
“I create products and services worldwide, focusing on innovation and global challenges,” his LinkedIn profile said. “I’ve started my career in 2002 and since then I worked in Moscow, different regions of Russia, including Siberia and in Finland, Brazil, United Kingdom, Sri Lanka. Over the last 15 years I contributed to many amazing products in the following industries: sports, ecology, sport tech, fin tech, electronic payments, big data, telecommunications, pulp and paper industry, wood processing and travel. My specialities are Product development, Mentorship, Strategy and Business development.”
Rusprofile reports that Mikhail Borisovich Shefel is associated with at least eight current or now-defunct companies in Russia, including Dengi IM (Money IM), Internet Capital, Internet Lawyer, Internet 2, Zao Hot Spot, and (my personal favorite) an entity incorporated in 2021 called “All the Money in the World.”
Constella Intelligence found several official documents for Mr. Shefel that came from hacked Russian phone, automobile and residence records. They indicate Mr. Shefel is the registrant of a black Porsche Cayenne (Plate:X537SR197) and a Mercedes (Plate:P003PX90). Those vehicle records show Mr. Shefel was born on May 28, 1986.
Rusprofile reveals that at some point near the end of 2018, Shefel changed his last name to Lenin. DomainTools reports that in 2018, Mr. Shefel’s company Internet 2 LLC registered the domain name Lenin[.]me. This now-defunct service sold physical USSR-era Ruble notes that bear the image of Vladimir Lenin, the founding father of the Soviet Union.
Meanwhile, Pavel Vrublevsky remains imprisoned in Russia, awaiting trial on fraud charges levied against the payment company CEO in March 2022. Authorities allege Vrublevsky operated several fraudulent SMS-based payment schemes. They also accused Vrublevsky of facilitating money laundering for Hydra, the largest Russian darknet market. Hydra trafficked in illegal drugs and financial services, including cryptocurrency tumbling for money laundering, exchange services between cryptocurrency and Russian rubles, and the sale of falsified documents and hacking services.
In 2013, Vrublevsky was sentenced to 2.5 years in a Russian penal colony for convincing one of his top spammers and botmasters to launch a distributed denial-of-service (DDoS) attack against a ChronoPay competitor that shut down the ticketing system for the state-owned Aeroflot airline.
Following his release, Vrublevsky began working on a new digital payments platform based in Hong Kong called HPay Ltd (a.k.a. Hong Kong Processing Corporation). HPay appears to have had a great number of clients that were running schemes which bamboozled people with fake lotteries and prize contests.
KrebsOnSecurity sought comment on this research from the Federal Bureau of Investigation (FBI) and the U.S. Secret Service, both of which have been involved in the Target breach investigation over the years. The FBI declined to comment. The Secret Service declined to confirm or dispute any of the findings, but said it is still interested in hearing from anyone who might have more information.
“The U.S. Secret Service does not comment on any open investigation and won’t confirm or deny the accuracy in any reporting related to a criminal manner,” the agency said in a written statement. “However, If you have any information relating to the subjects referenced in this article, please contact the U.S. Secret Service at mostwanted@usss.dhs.gov. The Secret Service pays a reward for information leading to the arrest of cybercriminals.”
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