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DHS shuts down Canadian gambling site with Verisign's help

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March 1, 2012

The U.S. Department of Homeland Security has officially shut down and disabled a domain name registered outside of the United States by individuals who are not American citizens, and who registered with a Canadian registrar.

However, what's truly unique about this particular case is that the U.S. authorities didn't get the domain's registrar to seize the domain. Instead, they ordered Verisign, which manages all .com domains and had them void the DNS root records for the domain, essentially rendering it useless and non-operational.

And the domain in question has been in trouble in the past more than once. Bodog happens to be a big name in online gambling everywhere and as such, it became an attractive target for many who are seeking to stop U.S. citizens gambling online.

When we typed in a browser today, it brought us to a page that said the U.S. Department of Homeland Security and the DoJ have seized the domain and rendered it useless.

It was set up and run by Canadian billionaire Calvin Ayre. He, and three others involved with the site, have been indicted on several counts and could be extradited to the United States if the authorities can catch them, and they most likely will.

The indictment filed accuses the four individuals of violation of Maryland laws. The site spent a lot of time and effort talking about the money it made outside of the U.S., and took particular offence to the hiring of advertisers to promote internet gambling on a wide scale, according to court documents.

"Sports betting is illegal in Maryland and a few other states, and federal law prohibits bookmakers from breaking that law simply because they are located outside the U.S.," said attorney Rod Rosenstein in a statement.

The indictment in question claims that Bodog paid out over $100 million in winnings to U.S. gamblers, in violation of U.S. laws. The company is also accused of spending $42 million to promote the site in various U.S. states, including Maryland.

The move came after an undercover investigation by the FBI, and with the help of a whistleblower who used to work at Bodog.

And Calvin Ayre isn't a sympathetic character at all. He knew full well the laws of the various countries and states he marketed his website in, and certainly had the technological capability to at least make the attempt to block residents of countries in which online gambling is illegal from accessing his website, but instead decided to do nothing.

"I see this as abuse of the U.S. criminal justice system for the commercial gain of large corporations. But it is clear that the online gaming industry is legal under international law," Ayre said in a blog posting.

By going to the root manager of all .com domains and having the records void, in effect bypassing the domain registrar entirely, the DHS has sent the web a very clear and loud message-- anything hosted in the U.S., registered in the U.S., or using a domain whose root is controlled by a U.S. corporation is subject to American law. End of the story.

Expect to see a big push from non-American internet service providers of all stripes and colors capitalizing on this event to make "not hosted in America" a major selling point. Indeed, it already is. If your website relies on a .com, .net, .org or other American-controlled domain, and you are not an American company, it may be time to revisit that strategy. All of a sudden, .com domains may have depreciated in value a bit with this event.

In other internet security news

Google is once again under the nagative spotlight after a Stanford scientist discovered that the company and other advertising firms have tampered with the privacy settings of millions of Apple Safari users.

Google, Vibrant Media Inc, WPP PLC's Media Innovation Group LLC and Gannett Co.'s PointRoll all used code that "actually tricked" Safari into allowing users to have their own online browsing habits tracked.

Apple's Safari blocks most tracking by default with exceptions for websites that, for example, require interaction from a user – such as the filling in of an online form.

Google claimed in a statement that the WSJ had "mischaraterized" the code used by the ad companies. "We used known Safari functionality to provide features that signed-in Google users had enabled," the Chocolate Factory said. "It's important to stress that these advertising cookies do not collect personal information."

But lawmakers in the U.S. have once again expressed their worries about Google's data-handling behavior. A letter sent to the Federal Trade Commission penned by three Congressmen on Friday demanded to know what - if anything - the regulator planned to do in response to Google's latest privacy mistake.

Meanwhile, Apple has said that it was "working to put a stop" to the functionality that allowed Google and others to bypass the browser's privacy settings.

Google has since disabled the code, which installed a temporary cookie on the smartphones or iMac computers of Safari users. Google has embedded code into some of its ads that fooled the Apple browser into thinking that a form was being submitted to Google when it wasn't.

And as could be expected, Microsoft didn't waste any time at sending yet another slap in the face at its competitor. Microsoft said in a blog post: "If you find this type of behavior alarming and want to protect your confidential information and privacy while you’re online, there are alternatives for you. Windows Internet Explorer is the browser that respects your privacy. Through unique built in features like Tracking Protection and other privacy features in IE9, you are in control of who is tracking your actions online. Not Google. Not advertisers. Just you."

On March 1st, Google will be removing most of its privacy policies into one terms-of-service document, in part to help the company cross-pollinate its ads on products such as YouTube and others.

In other internet security news

A new security hole was discovered in Google Wallet by The Smartphone Champ, and unlike Thursday's efforts which required root access to the phone and some rather harsh brute force, this security flaw simply involves asking the phone to reset the application data.

Doing that deletes the stored PIN (personal identification number) but not the credit card details themselves, so a new PIN can be entered by the hacker and new credit card transactions instantly become possible.

Google has apparently responded with a statement to this, providing a phone number (855-492-5538) which you can call if you're planning to pass the mobile handset to a friend, or worse, in the event that your phone is stolen.

Google will then disable the prepaid card and its NFC feature to prevent the phone from being used to pay for items using NFC technology.

It's easy to see how this situation has come about, although a bit more difficult to fully understand why Google didn't detect this security flaw earlier.

The Android application manager allows a user to clear app caches, then delete all information belonging to a specific application, as well as uninstalling the mobile app, and we already know that the Google Wallet app actually writes the user's PIN in a stored file, so deleting the data wipes the PIN altogether.

However, the credit card details themselves aren't stored in the phone's filesystem. Instead, they're stored safely in the Secure Element, so they don't get deleted when the application data is removed.

Run the Google Wallet after removing its data, and it assumes it's being run for the first time, and dutifully asks the user to create a PIN. Then ask it to add a prepaid card and it happily finds one already installed in the Secure Element and readies it for its use.

But some might argue that none of this makes Google Wallet any less secure than a real wallet, in fact it remains slightly more secure, and it's typical of the teething problems one hits when implementing such a complicated architecture, involving banks, payment processors and various trusted third parties.

And it's rather embarrassing and could risk the future of a technology which is already proving surprisingly difficult to manage, let alone have users adopt it.

It will be interesting to see how Apple responds to this in its soon-to-be-released iPhone 5. Some say that NFC technology will already be incorporated by Apple into the new device, along with a few other nice features which for now still need to be discovered.

In other internet security news

A group of hackers claim that they successfully hacked into Chinese contract manufacturer Foxconn yesterday, and a long list of email log-ins and intranet passwords were posted online. If this is true, it could cause many fraudulent orders for the company. And Apple is one of Foxconn's largest customer.

In a lengthy message posted to Pastebin, the hacking group Swagg Security claimed the attack on Foxconn. Although they described Foxconn’s dubious track record on the company's poor working conditions at length, the group said this was not the primary motive for the attack on its servers.

The message read: "Although we are considerably disappointed of the working conditions at Foxconn, we are not hacking a company for such a reason and, although we are slightly interested in the existence of an iPhone 5, we are not hacking for that reason either."

And it continued: "We hack for the cyberspace who share a few common viewpoints and philosophies. We enjoy exposing governments and corporations, but the more prominent reason, is the hilarity that ensues when compromising and destroying an infrastructure. How unethical right?" tried to contact Foxconn’s Shenzhen headquarters in China for confirmation but had not heard back at the time we posted this.

But according to their Twitter feed, the hackers gained access to Foxconn’s network via an outdated security vulnerability in a version of Internet Explorer which was extensively being used internally by the company.

The information posted online includes mail server log-in and username credentials, as well as various log-ins for procurement sites and intranets which Swagg Security claimed “could allow individuals to make fraudulent orders under big companies' names such as Apple, Microsoft, IBM, Intel, Dell, HP and a few more”.

“But Foxconn did have an appropriate firewall, however. The issue is that we were able to bypass it almost flawlessly,” the hackers explained in their note.

“Of course with the funding by ourselves, we did have our limitations. However, with several hacking techniques employed and a couple of days in time we were able to dump most of everything of significance nevertheless.”

Other security experts were able to verify that the stolen log-ins worked on more than one Foxconn server. Foxconn does appear to be taking measures to lock down its systems, however. Swagg Security tweeted on Thursday morning that the company had closed the compromised by saying: “Guess you guys made one too many orders”.

F-Secure chief research officer Mikko Hypponen says that, looking at the data released by the hacktivists, Foxconn wasn't following network security best practices. "If you do a Google search for the site:, you'll see that they had a file uploading service there for their partners," he said.

"So my best guess at this stage would be that the hackers managed to upload something malicious on the servers and somehow used that to gain access into the system."

The news comes as pressure mounts on Apple and other big tech companies to clamp down on conditions in supplier factories, in an effort for better and safer working conditions in Foxconn factories.

This morning, concerned Apple customers will drop off over 250,000 signature petitions in cities across the globe including New York, London and Sydney, registering their strong disapproval of supplier working practices, mostly directed at Foxconn, but there are also a few other contract manufacturers as well that are also being targeted.

Overall, Foxconn usually comes in for the most abuse, and understandably so, given that lucrative contracts with big names such as Apple, Dell, Intel and Microsoft have made it one of the largest electronic component manufacturers on the planet.

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Source: The U.S. Department of Homeland Security.

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