Incognito Darknet Market Mass-Extorts Buyers, Sellers

Borrowing from the playbook of ransomware purveyors, the darknet narcotics bazaar Incognito Market has begun extorting all of its vendors and buyers, threatening to publish cryptocurrency transaction and chat records of users who refuse to pay a fee ranging from $100 to $20,000. The bold mass extortion attempt comes just days after Incognito Market administrators reportedly pulled an “exit scam” that left users unable to withdraw millions of dollars worth of funds from the platform.

In the past 24 hours, the homepage for the Incognito Market was updated to include a blackmail message from its owners, saying they will soon release purchase records of vendors who refuse to pay to keep the records confidential.

“We got one final little nasty surprise for y’all,” reads the message to Incognito Market users. “We have accumulated a list of private messages, transaction info and order details over the years. You’ll be surprised at the number of people that relied on our ‘auto-encrypt’ functionality. And by the way, your messages and transaction IDs were never actually deleted after the ‘expiry’….SURPRISE SURPRISE!!! Anyway, if anything were to leak to law enforcement, I guess nobody never slipped up.”

Incognito Market says it plans to publish the entire dump of 557,000 orders and 862,000 cryptocurrency transaction IDs at the end of May.

“Whether or not you and your customers’ info is on that list is totally up to you,” the Incognito administrators advised. “And yes, this is an extortion!!!!”

The extortion message includes a “Payment Status” page that lists the darknet market’s top vendors by their handles, saying at the top that “you can see which vendors care about their customers below.” The names in green supposedly correspond to users who have already opted to pay.

We’ll be publishing the entire dump of 557k orders and 862k crypto transaction IDs at the end of May, whether or not you and your customers’ info is on that list is totally up to you. And yes, this is an extortion!!!!

Incognito Market said it plans to open up a “whitelist portal” for buyers to remove their transaction records “in a few weeks.”

The mass-extortion of Incognito Market users comes just days after a large number of users reported they were no longer able to withdraw funds from their buyer or seller accounts. The cryptocurrency-focused publication Cointelegraph.com reported Mar. 6 that Incognito was exit-scamming its users out of their bitcoins and Monero deposits.

CoinTelegraph notes that Incognito Market administrators initially lied about the situation, and blamed users’ difficulties in withdrawing funds on recent changes to Incognito’s withdrawal systems.

Incognito Market deals primarily in narcotics, so it’s likely many users are now worried about being outed as drug dealers. Creating a new account on Incognito Market presents one with an ad for 5 grams of heroin selling for $450.

The double whammy now hitting Incognito Market users is somewhat akin to the double extortion techniques employed by many modern ransomware groups, wherein victim organizations are hacked, relieved of sensitive information and then presented with two separate ransom demands: One in exchange for a digital key needed to unlock infected systems, and another to secure a promise that any stolen data will not be published or sold, and will be destroyed.

Incognito Market has priced its extortion for vendors based on their status or “level” within the marketplace. Level 1 vendors can supposedly have their information removed by paying a $100 fee. However, larger “Level 5” vendors are asked to cough up $20,000 payments.

The past is replete with examples of similar darknet market exit scams, which tend to happen eventually to all darknet markets that aren’t seized and shut down by federal investigators, said Brett Johnson, a convicted and reformed cybercriminal who built the organized cybercrime community Shadowcrew many years ago.

“Shadowcrew was the precursor to today’s Darknet Markets and laid the foundation for the way modern cybercrime channels still operate today,” Johnson said. “The Truth of Darknet Markets? ALL of them are Exit Scams. The only question is whether law enforcement can shut down the market and arrest its operators before the exit scam takes place.”

Diligere, Equity-Invest Are New Firms of U.K. Con Man

John Clifton Davies, a convicted fraudster estimated to have bilked dozens of technology startups out of more than $30 million through phony investment schemes, has a brand new pair of scam companies that are busy dashing startup dreams: A fake investment firm called Equity-Invest[.]ch, and Diligere[.]co.uk, a scam due diligence company that Equity-Invest insists all investment partners use.

A native of the United Kingdom, Mr. Davies absconded from justice before being convicted on multiple counts of fraud in 2015. Prior to his conviction, Davies served 16 months in jail before being cleared on suspicion of murdering his third wife on their honeymoon in India.

John Clifton Davies was convicted in 2015 of swindling businesses throughout the U.K. that were struggling financially and seeking to restructure their debt. For roughly six years, Davies ran a series of firms that pretended to offer insolvency services. Instead, he simply siphoned what little remaining money these companies had, spending the stolen funds on lavish cars, home furnishings, vacations and luxury watches.

In a three-part series published in 2020, KrebsOnSecurity exposed how Davies — wanted by authorities in the U.K. — had fled the country, taken on the surname Bernard, remarried, and moved to his new (and fourth) wife’s hometown in Ukraine.

After eluding justice in the U.K., Davies reinvented himself as The Private Office of John Bernard, pretending to be a billionaire Swiss investor who made his fortunes in the dot-com boom 20 years ago and who was seeking private equity investment opportunities.

In case after case, Bernard would promise to invest millions in hi-tech startups, only to insist that companies pay tens of thousands of dollars worth of due diligence fees up front. However, the due diligence company he insisted on using — another Swiss firm called The Inside Knowledge — also was secretly owned by Bernard, who would invariably pull out of the deal after receiving the due diligence money.

Bernard found a constant stream of new marks by offering extraordinarily generous finders fees to investment brokers who could introduce him to companies seeking an infusion of cash. Inside Knowledge and The Private Office both closed up shop not long after being exposed here in 2020.

In April 2023, KrebsOnSecurity wrote about Codes2You, a recent Davies venture which purports to be a “full cycle software development company” based in the U.K. The company’s website no longer lists any of Davies’ known associates, but the site does still reference software and cloud services tied to those associates — including MySolve, a “multi-feature platform for insolvency practitioners.”

Earlier this month, KrebsOnSecurity heard from an investment broker who found out his client had paid more than $50,000 in due diligence fees related to a supposed multi-million dollar investment offer from a Swiss concern called Equity-Invest[.]ch.

The investment broker, who spoke on condition that neither he nor his client be named, said Equity-Invest began getting cold feet after his client plunked down the due diligence fees.

“Things started to go sideways when the investor purportedly booked a trip to the US to meet the team but canceled last minute because ‘his pregnant wife got in a car accident,'” the broker explained. “After that, he was radio silent until the contract expired.”

The broker said he grew suspicious when he learned that the Equity-Invest domain name was less than six months old. The broker’s suspicions were confirmed after he discovered the due diligence company that Equity-Invest insisted on using — Diligere[.]co.uk — included an email address on its homepage for another entity called Ardelis Solutions.

A corporate entity in the UK called Ardelis Solutions was key to showing the connection to Davies’ former scam investment and due diligence firms in the Codes2You investigation published earlier this year.

Although Diligere’s website claims the due diligence firm has “13 years of experiance” [sic], its domain name was only registered in April 2023. What’s more, virtually all of the vapid corporate-speak published on Diligere’s homepage is identical to text on the now-defunct InsideKnowledge[.]ch — the fake due diligence firm secretly owned for many years by The Private Office of John Bernard (John Clifton Davies).

“Our steadfast conviction and energy for results is what makes us stand out,” both sites state. “We care for our clients’ and their businesses, we share their ambitions and align our goals to complement their objectives. Our clients know we’re in this together. We work in close partnership with our clients to deliver palpable results regardless of geography, complexity or controversy.”

Requests for comment sent to the contact address listed on Diligere — info@ardelissolutions[.]com — went unreturned. Equity-Invest did not respond to requests for comment.

Feds Take Down 13 More DDoS-for-Hire Services

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.

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 Serial Tech Investment Scammer Takes Up Coding?

John Clifton Davies, a 60-year-old con man from the United Kingdom who fled the country in 2015 before being sentenced to 12 years in prison for fraud, has enjoyed a successful life abroad swindling technology startups by pretending to be a billionaire investor. Davies’ newest invention appears to be “CodesToYou,” which purports to be a “full cycle software development company” based in the U.K.

Several articles here have delved into the history of John Bernard, the pseudonym used by a fake billionaire technology investor who tricked dozens of startups into giving him tens of millions of dollars.

John Bernard’s real name is John Clifton Davies, a convicted fraudster from the United Kingdom who is currently a fugitive from justice. For several years until reinventing himself again quite recently, Bernard pretended to be a billionaire Swiss investor who made his fortunes in the dot-com boom 20 years ago.

“The Private Office of John Bernard” let it be known to investment brokers that he had tens of millions of dollars to invest in tech startups, and he attracted a stream of new victims by offering extraordinarily generous finder’s fees to brokers who helped him secure new clients. But those brokers would eventually get stiffed because Bernard’s company would never consummate a deal.

Bernard would promise to invest millions in tech startups, and then insist that companies pay tens of thousands of dollars worth of due diligence fees up front. However, the due diligence company he insisted on using — another Swiss firm called The Inside Knowledge GmbH — also was secretly owned by Bernard, who would invariably pull out of the deal after receiving the due diligence money.

A variety of clues suggest Davies has recently adopted at least one other identity — Alan John Mykhailov — who is listed as chairman of a British concern called CodesToYou LTD, incorporated in May 2022. The CodesToYou website says the company employs talented coders in several countries, and that its programmers offer “your ultimate balance between speed, cost and quality.”

In response to questions from KrebsOnSecurity, CodesToYou’s marketing manager — who gave their name only as “Zhena” — said the company was not affiliated with any John Bernard or John Clifton Davies, and maintained that CodesToYou is a legitimate enterprise.

But publicly available information about this company and its leadership suggests otherwise. Official incorporation documents from the U.K.’s Companies House represent that CodesToYou is headed by an Alan John Mykhailov, a British citizen born in March 1958.

Companies House says Mykhailov is an officer in three other companies, including one called Blackstone Corporate Alliance Ltd. According to the Swiss business tracking service business-monitor.ch, Blackstone Corporate Alliance Ltd. is currently the entity holding a decision-making role in John Bernard’s fake due diligence company — The Inside Knowledge GmbH — which is now in liquidation.

Also listed as a partner in Blackstone Corporate Alliance Limited is Igor Hubskyi (a.k.a. Igor Gubskyi), a Ukrainian man who was previously president of The Inside Knowledge GmbH.

The CodesToYou website says the company’s marketing team lead is Maria Yakovleva, and the photo of this employee matches the profile for the LinkedIn account name “Maria Y.” That same LinkedIn profile and photo previously listed Maria by a different first and last name — Mariya Kulikova; back then, Ms. Kulikova’s LinkedIn profile said she was an executive assistant in The Private Office of Mr. John Bernard.

Companies House lists Alan John Mykhailov as a current officer in two other companies, including Frisor Limited, and Ardelis Solutions Limited. A cached copy of the now-defunct Ardelis Solutions website says it was a private equity firm.

CodesToYou’s Maria also included Ardelis Solutions in the work history section of her LinkedIn resume. That is, until being contacted by this author on LinkedIn, after which Maria’s profile picture and any mention of Ardelis Solutions were deleted.

Listed as head of business development at CodesToYou is David Bruno, a Canadian man whose LinkedIn profile says he is founder of an organization called “World Privacy Resource.” As KrebsOnSecurity reported in 2020, Bruno was at the time promoting himself as the co-CEO of a company called SafeSwiss Secure Communication AG, and the founder of another tech startup called Secure Swiss Data.

Secure Swiss Data’s domain — secureswissdata.com — is a Swiss concern that sells encrypted email and data services. According to DomainTools.com, that website name was registered in 2015 by The Inside Knowledge GmbH. In February 2020, a press release announced that Secure Swiss Data was purchased in an “undisclosed multimillion buyout” by SafeSwiss Secure Communication AG.

When reached in 2020 and asked about his relationship to Mr. Bernard, Mr. Bruno said the two were business partners and that he couldn’t imagine that Mr. Bernard would be involved in anything improper. To this day Mr. Bruno is the only person I’ve spoken to who has had anything positive to say about Mr. Bernard.

Mr. Bruno did not respond to requests for comment this time around, but his LinkedIn profile no longer makes any mention of Secure Swiss Data or SafeSwiss — both companies he claimed to run for many years. Nor does it mention CodesToYou. However, Mr. Bruno’s former company SafeSwiss is listed as one of the six “portfolio” companies whose services are promoted on the CodesToYou website.

In mid-2021, Bruno announced he was running for public office in Ontario.

“The Kenora resident is no stranger to the government as he contributed to Canada’s new Digital Charter, Bill C-11, which is a new Cyber Security policy,” reported Drydennow.com, a news website that covers Northwestern Ontario. Drydennow says the next federal election is expected to be held on or before Oct. 16, 2023.

John Clifton Davies was convicted in 2015 of swindling businesses throughout the U.K. that were struggling financially and seeking to restructure their debt. For roughly six years, Davies ran a series of firms that pretended to offer insolvency services, but instead simply siphoned what little remaining money these companies had.

The very first entity mentioned in the technology portfolio advertised on the CodesToYou website is called “MySolve,” and it purports to offer a “multi-feature platform for insolvency practitioners.”

Mr. Davies’ fourth wife, Iryna Davies, is listed as a director of one of the insolvency consulting businesses in the U.K. that was part of John Davies’ 2015 fraud conviction. Prior to his trial for fraud, Davies served 16 months in jail before being cleared of murdering his third wife on their honeymoon in India: Colette Davies, 39, died after falling 80 feet from a viewing point at a steep gorge in the Himachal Pradesh region of India.

Mr. Davies was charged with murder and fraud after he attempted to collect GBP 132,000 in her life insurance payout, but British prosecutors ultimately conceded they did not have enough evidence to convict him.

The scams favored by Davies and his alter egos are smart because he never approaches investors directly; rather, investors are incentivized to put his portfolio in front of tech firms seeking financial backing. And all the best cons begin as an idea or possibility planted in the target’s mind.

It’s also a reliable scam because companies bilked by small-time investment schemes rarely pursue legal action, mainly because the legal fees involved can quickly surpass the losses. On top of that, many victims will likely be too ashamed to admit their duping. Victims who do press their case in court and win then face the daunting challenge of collecting damages from a slew of ephemeral shell corporations.

The latest Bernard victim to speak publicly — a Norwegian company hoping to build a fleet of environmentally friendly shipping vessels — is now embroiled in a lawsuit over a deal gone bad. As part of that scam, Bernard falsely claimed to have secured $100 million from six other wealthy investors, including the founder of Uber and the artist Abel Makkonen Tesfaye, better known as The Weeknd.

Feds Charge NY Man as BreachForums Boss “Pompompurin”

The U.S. Federal Bureau of Investigation (FBI) this week arrested a New York man on suspicion of running BreachForums, a popular English-language cybercrime forum where some of the world biggest hacked databases routinely show up for sale. The forum’s administrator “Pompompurin” has been a thorn in the side of the FBI for years, and BreachForums is widely considered a reincarnation of RaidForums, a remarkably similar crime forum that the FBI infiltrated and dismantled in 2022.

In an affidavit filed with the District Court for the Southern District of New York, FBI Special Agent John Longmire said that at around 4:30 p.m. on March 15, 2023, he led a team of law enforcement agents that made a probable cause arrest of a Conor Brian Fitzpatrick in Peekskill, NY.

“When I arrested the defendant on March 15, 2023, he stated to me in substance and in part that: a) his name was Conor Brian Fitzpatrick; b) he used the alias ‘pompompurin/’ and c) he was the owner and administrator of ‘BreachForums’ the data breach website referenced in the Complaint,” Longmire wrote.

Pompompurin has been something of a nemesis to the FBI for several years. In November 2021, KrebsOnSecurity broke the news that thousands of fake emails about a cybercrime investigation were blasted out from the FBI’s email systems and Internet addresses.

Pompompurin took credit for that stunt, and said he was able to send the FBI email blast by exploiting a flaw in an FBI portal designed to share information with state and local law enforcement authorities. The FBI later acknowledged that a software misconfiguration allowed someone to send the fake emails.

In December, 2022, KrebsOnSecurity broke the news that hackers active on BreachForums had infiltrated the FBI’s InfraGard program, a vetted FBI program designed to build cyber and physical threat information sharing partnerships with experts in the private sector. The hackers impersonated the CEO of a major financial company, applied for InfraGard membership in the CEO’s name, and were granted admission to the community.

From there, the hackers plundered the InfraGard member database, and proceeded to sell contact information on more than 80,000 InfraGard members in an auction on BreachForums. The FBI responded by disabling the portal for some time, before ultimately forcing all InfraGard members to re-apply for membership.

More recently, BreachForums was the sales forum for data stolen from DC Health Link, a health insurance exchange based in Washington, D.C. that suffered a data breach this month. The sales thread initially said the data included the names, Social Security numbers, dates of birth, health plan and enrollee information and more on 170,000 individuals, although the official notice about the breach says 56,415 people were affected.

In April 2022, U.S. Justice Department seized the servers and domains for RaidForums, an extremely popular English-language cybercrime forum that sold access to more than 10 billion consumer records stolen in some of the world’s largest data breaches since 2015. As part of that operation, the feds also charged the alleged administrator, 21-year-old Diogo Santos Coelho of Portugal, with six criminal counts.

Coelho was arrested in the United Kingdom on Jan. 31, 2022. By that time, the new BreachForums had been live for just under a week, but with a familiar look.

BreachForums remains accessible online, and from reviewing the live chat stream on the site’s home page it appears the forum’s active users are only just becoming aware that their administrator — and the site’s database — is likely now in FBI hands:

“Wait if they arrested pom then doesn’t the FBI have all of our details we’ve registered with?” asked one worried BreachForums member.

“But we all have good VPNs I guess, right…right guys?” another denizen offered.

“Like pom would most likely do a plea bargain and cooperate with the feds as much as possible,” replied another.

Fitzpatrick could not be immediately reached for comment. The FBI declined to comment for this story.

There is only one page to the criminal complaint against Fitzpatrick (PDF), which charges him with one count of conspiracy to commit access device fraud. The affidavit on his arrest is available here (PDF).

Update: Corrected spelling of FBI agent’s last name.

Thinking of Hiring or Running a Booter Service? Think Again.

Most people who operate DDoS-for-hire businesses attempt to hide their true identities and location. Proprietors of these so-called “booter” or “stresser” services — designed to knock websites and users offline — have long operated in a legally murky area of cybercrime law. But until recently, their biggest concern wasn’t avoiding capture or shutdown by the feds: It was minimizing harassment from unhappy customers or victims, and insulating themselves against incessant attacks from competing DDoS-for-hire services.

And then there are booter store operators like John Dobbs, a 32-year-old computer science graduate student living in Honolulu, Hawaii. For at least a decade until late last year, Dobbs openly operated 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.

The only work experience Dobbs listed on his resume was as a freelance developer from 2013 to the present day. Dobbs’s resume doesn’t name his booter service, but in it he brags about maintaining websites with half a million page views daily, and “designing server deployments for performance, high-availability and security.”

In December 2022, the U.S. Department of Justice seized Dobbs’s IPStresser website and charged him with one count of aiding and abetting computer intrusions. Prosecutors say his service attracted more than two million registered users, and was responsible for launching a staggering 30 million distinct DDoS attacks.

The government seized four-dozen booter domains, and criminally charged Dobbs and five other U.S. men for allegedly operating stresser services. This was the Justice Department’s second such mass takedown targeting DDoS-for-hire services and their accused operators. In 2018, the feds seized 15 stresser sites, and levied cybercrime charges against three men for their operation of booter services.

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.

Prosecutors said Gatrel’s booter services — downthem[.]org and ampnode[.]com — helped some 2,000 paying customers launch debilitating digital assaults on more than 20,000 targets, including many government, banking, university and gaming websites.

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.

Now, it appears Dobbs is also planning to take his chances with a jury. On Jan. 4, Dobbs entered a plea of not guilty. Neither Dobbs nor his court-appointed attorney responded to requests for comment.

But as it happens, Dobbs himself provided some perspective on his thinking in an email exchange with KrebsOnSecurity back in 2020. I’d reached out to Dobbs because it was obvious he didn’t mind if people knew he operated one of the world’s most popular DDoS-for-hire sites, and I was genuinely curious why he was so unafraid of getting raided by the feds.

“Yes, I am the owner of the domain you listed, however you are not authorized to post an article containing said domain name, my name or this email address without my prior written permission,” Dobbs replied to my initial outreach on March 10, 2020 using his email address from the University of Hawaii at Manoa.

A few hours later, I received more strident instructions from Dobbs, this time via his official email address at ipstresser[.]com.

“I will state again for absolute clarity, you are not authorized to post an article containing ipstresser.com, my name, my GitHub profile and/or my hawaii.edu email address,” Dobbs wrote, as if taking dictation from a lawyer who doesn’t understand how the media works.

When pressed for particulars on his business, Dobbs replied that the number of IPStresser customers was “privileged information,” and said he didn’t even advertise the service. When asked whether he was concerned that many of his competitors were by then serving jail time for operating similar booter services, Dobbs maintained that the way he’d set up the business insulated him from any liability.

“I have been aware of the recent law enforcement actions against other operators of stress testing services,” Dobbs explained. “I cannot speak to the actions of these other services, but we take proactive measures to prevent misuse of our service and we work with law enforcement agencies regarding any reported abuse of our service.”

What were those proactive measures? In a 2015 interview with ZDNet France, Dobbs asserted that he was immune from liability because his clients all had to submit a digital signature attesting that they wouldn’t use the site for illegal purposes.

“Our terms of use are a legal document that protects us, among other things, from certain legal consequences,” Dobbs told ZDNet. “Most other sites are satisfied with a simple checkbox, but we ask for a digital signature in order to imply real consent from our customers.”

Dobbs told KrebsOnSecurity his service didn’t generate much of a profit, but rather that he was motivated by “filling a legitimate need.”

“My reason for offering the service is to provide the ability to test network security measures before someone with malicious intent attacks said network and causes downtime,” he said. “Sure, some people see only the negatives, but there is a long list of companies I have worked with over the years who would say my service is a godsend and has helped them prevent tens of thousands of dollars in downtime resulting from a malicious attack.”

“I do not believe that providing such a service is illegal, assuming proper due diligence to prevent malicious use of the service, as is the case for IPstresser[.]com,” Dobbs continued. “Someone using such a service to conduct unauthorized testing is illegal in many countries, however, the legal liability is that of the user, not of the service provider.”

Dobbs’s profile on GitHub includes more of his ideas about his work, including a curious piece on “software engineering ethics.” In his January 2020 treatise “My Software Engineering Journey,” Dobbs laments that nothing in his formal education prepared him for the reality that a great deal of his work would be so tedious and repetitive (this tracks closely with a 2020 piece here called Career Choice Tip: Cybercrime is Mostly Boring).

“One area of software engineering that I think should be covered more in university classes is maintenance,” Dobbs wrote. “Projects are often worked on for at most a few months, and students do not experience the maintenance aspect of software engineering until they reach the workplace. Let’s face it, ongoing maintenance of a project is boring; there is nothing like the euphoria of completing a project you have been working on for months and releasing it to the world, but I would say that half of my professional career has been related to maintenance.”

Allison Nixon is chief research officer at the New York-based cybersecurity firm Unit 221B. Nixon is part of a small group of researchers who have been closely tracking the DDoS-for-hire industry for years, and she said Dobbs’s claim that what he’s doing is legal makes sense given that it took years for the government to recognize the size of the problem.

“These guys are arguing that their services are legal because for a long time nothing happened to them,” Nixon said. “It’s difficult to argue something is illegal if no one has ever been arrested for it before.”

Nixon says the government’s fight against the booter services — and by extension other types of cybercrimes — is hampered by a legal system that often takes years to cycle through cybercrime cases.

“With cybercrime, the cycle between the crime and investigation and arrest can often take a year or more, and that’s for a really fast case,” Nixon said. “If someone robbed a store, we’d expect a police response within a few minutes. If someone robs a bank’s website, there might be some indication of police activity within a year.”

Nixon praised the 2022 and 2018 booter takedown operations as “huge steps forward,” but added that “there need to be more of them, and faster.”

“This time lag is part of the reason it’s so difficult to shut down the pipeline of new talent going into cybercrime,” she said. “They think what they’re doing is legal because nothing has happened, and because of the amount of time it takes to shut these things down. And it’s really a big problem, where we see a lot of people becoming criminals on the basis that what they’re doing isn’t really illegal because the cops won’t do anything.”

In December 2020, Dobbs filed an application with the state of Hawaii to withdraw IP Stresser Inc. from its roster of active companies. But according to prosecutors, Dobbs would continue to operate his DDoS-for-hire site until at least November 2022.

Two months after our 2020 email interview, Dobbs would earn his second bachelor’s degree (in computer science; his resume says he earned a bachelor’s in civil engineering from Drexel University in 2013). The federal charges against Dobbs came just as he was preparing to enter his final semester toward a master’s degree in computer science at the University of Hawaii.

Nixon says she has a message for anyone involved in operating a DDoS-for-hire service.

“Unless you are verifying that the target owns the infrastructure you’re targeting, there is no legal way to operate a DDoS-for-hire service,” she said. “There is no Terms of Service you could put on the site that would somehow make it legal.”

And her message to the customers of those booter services? It’s a compelling one to ponder, particularly now that investigators in the United States, U.K. and elsewhere have started going after booter service customers.

“When a booter service claims they don’t share logs, they’re lying because logs are legal leverage for when the booter service operator gets arrested,” Nixon said. “And when they do, you’re going to be the first people they throw under the bus.”

S3 Ep110: Spotlight on cyberthreats – an expert speaks [Audio + Text]

Latest episode - security expert John Shier explains what the real-life cybercrime stories in the Sophos Threat Report can teach us

Experian, You Have Some Explaining to Do

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ANALYSIS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More greatest hits from Experian:

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

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

Why Paper Receipts are Money at the Drive-Thru

Check out this handmade sign posted to the front door of a shuttered Jimmy John’s sandwich chain shop in Missouri last week. See if you can tell from the store owner’s message what happened.

If you guessed that someone in the Jimmy John’s store might have fallen victim to a Business Email Compromise (BEC) or “CEO fraud” scheme — wherein the scammers impersonate company executives to steal money — you’d be in good company.

In fact, that was my initial assumption when a reader in Missouri shared this photo after being turned away from his favorite local sub shop. But a conversation with the store’s owner Steve Saladin brought home the truth that some of the best solutions to fighting fraud are even more low-tech than BEC scams.

Visit any random fast-casual dining establishment and there’s a good chance you’ll see a sign somewhere from the management telling customers their next meal is free if they don’t receive a receipt with their food. While it may not be obvious, such policies are meant to deter employee theft.

The idea is to force employees to finalize all sales and create a transaction that gets logged by the company’s systems. The offer also incentivizes customers to help keep employees honest by reporting when they don’t get a receipt with their food, because employees can often conceal transactions by canceling them before they’re completed. In that scenario, the employee gives the customer their food and any change, and then pockets the rest.

You can probably guess by now that this particular Jimmy John’s franchise — in Sunset Hills, Mo. — was among those that chose not to incentivize its customers to insist upon receiving receipts. Thanks to that oversight, Saladin was forced to close the store last week and fire the husband-and-wife managers for allegedly embezzling nearly $100,000 in cash payments from customers.

Saladin said he began to suspect something was amiss after he agreed to take over the Monday and Tuesday shifts for the couple so they could have two consecutive days off together. He said he noticed that cash receipts at the end of the nights on Mondays and Tuesdays were “substantially larger” than when he wasn’t manning the till, and that this was consistent over several weeks.

Then he had friends proceed through his restaurant’s drive-thru, to see if they received receipts for cash payments.

“One of [the managers] would take an order at the drive-thru, and when they determined the customer was going to pay with cash the other would make the customer’s change for it, but then delete the order before the system could complete it and print a receipt,” Saladin said.

Saladin said his attorneys and local law enforcement are now involved, and he estimates the former employees stole close to $100,000 in cash receipts. That was on top of the $115,000 in salaries he paid in total each year to the two employees. Saladin also has to figure out a way to pay his franchisor a fee for each of the stolen transactions.

Now Saladin sees the wisdom of adding the receipt sign, and says all of his stores will soon carry a sign offering $10 in cash to any customers who report not receiving a receipt with their food.

Many business owners are reluctant to involve the authorities when they discover that a current or former employee has stolen from them. Too often, organizations victimized by employee theft shy away from reporting it because they’re worried that any resulting media coverage of the crime will do more harm than good.

But there are quiet ways to ensure embezzlers get their due. A few years back, I attended a presentation by an investigator with the criminal division of the U.S. Internal Revenue Service (IRS) who suggested that any embezzling victims seeking a discreet law enforcement response should simply contact the IRS.

The agent said the IRS is obligated to investigate all notifications it receives from employers about unreported income, but that embezzling victims often neglect to even notify the agency. That’s a shame, he said, because under U.S. federal law, anyone who willfully attempts to evade or defeat taxes can be charged with a felony, with penalties including up to $100,000 in fines, up to five years in prison, and the costs of prosecution.