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Five individuals charged with running complex hacking group

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July 25, 2013

So far, at least four Russian citizens and a Ukrainian national have been charged with running a sophisticated hacking organization that over seven years penetrated several computer networks of more than a dozen major American and international corporations.

The five individuals are charged with stealing and selling at least 160 million credit card numbers and causing losses of hundreds of millions of dollars.

The indictments were announced this morning in Newark, New Jersey, where U.S. Attorney Paul Fishman called the case the largest hacking and data breach crime ever prosecuted in the United States.

The victims in a scheme that allegedly ran from 2005 until late in 2012 included the Nasdaq electronic stock exchange, 7-Eleven, JC Penney, the New England supermarket chain Hannaford Brothers, JetBlue, Heartland Payment Systems Inc. (one of the world's largest credit and debit processing companies), French retailer Carrefour S.A., and the Belgium Dexia Bank.

The indictment says that the suspects sent each other several instant messages as they took control of the corporate data, telling each other, for instance-- "NASDAQ is owned." At least one man told others that he used Google news alerts to learn whether his hacks had been discovered, according to the court filing.

The defendants were identified as Russians Vladimir Drinkman, Aleksander Kalinin, Roman Kotov and Dmitriy Smilianets, and Ukrainian Mikhail Rytikov.

Authorities say that one suspect is still in the Netherlands and another is due to appear in U.S. District Court in New Jersey next week. The whereabouts of the three others were not immediately known.

The prosecution builds on a case that resulted in a 20-year prison sentence in 2010 for Albert Gonzalez of Miami, who often used the screen name "soupnazi" and is identified in the new complaint as an unindicted co-conspirator.

Other unindicted co-conspirators were also named. Prosecutors identified Drinkman and Kalinin as "sophisticated" hackers who specialized in penetrating the computer networks of several multinational corporations, financial institutions and payment processors.

Kotov's specialty was harvesting data from the networks after they had been penetrated, and Rytikov provided anonymous web-hosting services that were used to hack into computer networks and covertly remove data, the indictment said.

Smilianets was the information salesman, the government said. All five are charged with taking part in a complex computer hacking conspiracy and conspiracy to commit wire fraud.

The four Russian nationals are also charged with multiple counts of unauthorized computer access and wire fraud as well.

The individuals who purchased the credit and debit card numbers and associated data from the hacking organization then resold them through online forums or directly to others known as "cashers," the indictment said.

According to the indictment, U.S. credit card numbers sold for about $10 each. Canadian numbers were $15 each and European ones sold for as high as $50.

The data was stored on servers all over the world, including New Jersey, Pennsylvania, California, Illinois, Latvia, the Netherlands, the Bahamas, the Ukraine, Panama and in Germany.

The cashers would encode the information on magnetic strips of blank plastic cards and cash out the value, by either withdrawing money from ATMs in the case of debit cards, or running up charges and purchasing goods in the case of credit cards.

In other internet security news

About 50.4 percent of all the world's critical stock and currency exchanges have suffered several cyber attacks in the past year, a new report has found.

A joint investigation by the World Federation of Stock Exchanges and?the International Organization of Securities Commissions reveals that the cyber attacks are increasingly aimed at destabilising financial markets, rather than making monetary gains for the hackers that are involved.

The authors found that people at the very top of the world's economic system are very nervous that a concerned online assault could cripple those markets.

Top bankers are increasingly aware of the possible threat but have little confidence in their ability to thwart attacks, with one quarter of respondents admitting their "current preventative and disaster recovery measures may not be able to stand up against a large-scale and coordinated attack".

And just half of all exchanges believe their local laws are strong enough to deter hackers and would-be cyber attackers.

The stock and currency exchanges want to see more concerted international efforts put in place to ensure that hackers have no chance to bring down critical systems.

“Several players in the financial industry doubt over the effectiveness of these regimes and generally appear to rest on the international nature of cyber crime, which creates a major obstacle in effective enforcement,” said Rohini Tendulkar, author of the report.

But even tougher laws still might not stave off market Armageddon. Hackers from all over the world have proved that they don't even need to target financial systems to move the markets. In April of this year, stocks suddenly tumbled after the Syrian Electronic Army sent a false tweet from news agency AP's eponymous account claiming that the White House had been attacked and President Obama had been injured.

Siobhan MacDermott, chief policy officer at anti-virus and security firm AVG, has previously warned that the world is already in the grip of a cyber war.

MacDermott advises officials from the United States, the EU, NATO and China. She said that even top generals are surprised to hear such stories when it comes to cyber security, which won't reassure nervous financial exchange executives worried about hackers causing cataclysmic damage to infrastructure.

"I recently sat down with a top-ranking general,” said MacDermott, “and I asked what kept him up at night. He told me that when he was in the military, warfare was very simple. You stood on either side of a field, marched into the middle and fought. That's it, nothing else."

"It really didn't get that different until the internet came along, he said, but now I'm holding underpowered weaponry and I just don't know where the shots are coming from. This totally changes the dynamics of how you protect assets. It's sort of like having a water pistol and going up against someone with a cyber weapon of mass destruction."

The report added that cyber crime costs the world between $38 billion and $1 trillion, although it's almost impossible to produce entirely accurate figures due to the indirect costs which are often left out of such calculations.

In other internet security news

Hackers have recently created an exceptionally nasty version of Mac malware that uses back-to-front trickery to disguise its true intentions.

Janicab, which is written in Python, takes advantage of the right-to-left U-202E Unicode character to mask the malicious file’s real extension.

The U-202E marker applies a right-to-left override for the display of part of the malware’s filename.

So a file which appears to be called RecentNews.ppa.pdf is actually The file is designed to trick users into thinking they are opening a .PDF file which is in reality an an executable .APP.

This sort of back-to-front trickery has been seen in Windows malware in the past - such as Bredolab and the high-profile Mahdi trojan from last year - but it's reckoned to be a new and unwelcome arrival on Macs.

In order to maintain the subterfuge, the malware displays a decoy document while silently executing in the background, installing malicious code on compromised Macs.

Because of the right-to-left override character, the usual file quarantine notification from OS X will also display with the words written backwards.

Adding an extra layer of sneakiness, the malware has been signed with an Apple Developer ID on top of all that.

That nasty file is designed to record audio and capture screenshots from infected computers, using the third-party command line utility SoX.

But wait, there's more. That information is then uploaded to a command-and-control server whose location is defined by pages on seemingly innocuous pages on YouTube.

A full description of the attack together with several screenshots can be found in a blog post by F-Secure, the Finnish anti-virus firm that was the first to issue a warning about the threat.

A good explanation of the right-to-left trickery that's the main feature of the malware can be found in a blog post by independent anti-virus expert Graham Cluley.

And a tip of the hat goes to David Hartley of Eset who described back-to-front mendaciousness as "Malice through the looking glass".

None of the antivirus experts have stuck their necks out on this point, but the amount of care taken to put together the malware gives us a clear idea of what hackers have been up to lately.

The decoy document dropped by Janicab is in Russian and that may well have something to do with the target audience.

In other internet security news

Servers powering the U.S. Emergency Alert System can be easily tricked into broadcasting bogus and apocalyptic warnings from far away, say internet security experts.

Scientists at computer security firm IO-Active say they found private encryption keys within firmware updates for the devices.

Armed with that information, miscreants could successfully remotely log into the servers, installed at television and radio stations around the United States, and as an administrator, they could broadcast panic-inducing messages to the mass media, creating wide-scale panic all over the nation.

The discovery comes just a few months after shortcomings in the U.S. Emergency Alert System (EAS) were exploited to beam news of a zombie apocalypse to American TVs.

Montana Television Network’s regular programming was interrupted by warnings of the end of the world back in February. Viewers of KRTC in Great Falls, Montana, were confronted by an on-air audio warning that "bodies of the dead are rising from their graves and attacking the living".

A scrolling text warning at the top of the screen naming various Montana counties as targets for the spoof announcement of doom, which sparked calls to the state's cops.

As could be expected, KRTC promptly disavowed the bogus alert and the whole incident. The perpetrators behind this epic prank call still remain unknown to this day.

Initial investigations suggested that weak default passwords on emergency alert systems accessible over the internet may have been used to pull off the hack. But this still remains unconfirmed, even after five months.

But now researchers at IO-Active have found that systems used to receive and authenticate emergency alert messages are vulnerable to remote attack.

The security vulnerability is specific to Linux-powered application servers from two manufacturers, according to the US feds-- the Digital Alert Systems DASDEC-I and DASDEC-II servers, and the Monroe Electronics R-189 One-Net and R-189SE products, apparently all shipped with publicly downloadable firmware that contains private root SSH keys, a recent alert by the U.S. Cyber Emergency Response Team (CERT) warns.

“These DASDEC application servers are currently shipped with their root privileged SSH key as part of the firmware update package," explained Mike Davis, principal research scientist for IO-Active.

"This simple key allows an attacker to remotely log in over the internet and can manipulate any system function. For example, they could disrupt a station’s ability to transmit and could disseminate false emergency information. For any of these issues to be resolved, we believe that re-engineering needs to be done on the digital alerting system side and firmware updates to be pushed to all appliances.”

The EAS is designed to enable the President of the United States to speak to U.S. citizens within just ten minutes of a major disaster occurring.

In the past, such alerts were passed from station to station using the Associate Press (AP) or United Press International (UPI) “wire services” which connected to television and radio stations around the nation.

Whenever the station received an authenticated Emergency Action Notification (EAN), the station would disrupt its current broadcast to deliver the message to the public.

More recently, the system has been switched to a more automated and decentralised system. Once a station receives and authenticates the message, the DASDEC hardware interrupts transmission and overlays the message onto the broadcast with the alert tone containing information about the disaster.

The DASDEC application server receives and authenticates EAS messages so that security shortcomings with the technology are a serious concern.

IO-Active has also issued its own Labs advisory outlining the apparently affected products, the impact of such attacks and how to mitigate the issue.

According to CERT, a fixed version of the firmware is available that allows users to change their login keys, and should be applied to critical devices.

In other internet security news

On any given day, security flaws in server management technology create some hacking opportunities almost on par with direct physical access to servers, says Metasploit creator HD Moore.

The security problem arises from serious shortcomings involving baseboard management controllers, a type of embedded computer used to provide out-of-band monitoring for desktops and servers, which consists of technology installed on nearly all servers today.

To a lesser degree, the security issues also come the Intelligent Platform Management Interface (IPMI) protocol used by some system admins.

A potential hacker could be able to compromise a baseboard management controller (BMC), and should be able to compromise its parent server if he's knowledgeable.

Compromising a server would allow miscreants to copy data from any attached storage, make changes to the operating system, install a backdoor, capture credentials passing through the server, launch denial of service attacks, or simply wipe the hard drives clean, among many other things.

Attacks like that are easily possible according to Moore, Rapid7's chief research officer and creator of penetrating testing software Metasploit, because vulnerable services are accessible across the internet.

Various research by Moore discovered that around 308,000 IPMI-enabled BMCs were exposed on the web, and the list appears to be growing quite rapidly.

Approximately 195,000 of these devices only support IPMI 1.5, which doesn't provide any form of encryption. Another 113,000 of those devices support IPMI v2.0, which suffers from serious design flaws as well.

If you need reliability when it comes to SMTP servers, get the best, get Port 587.

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Source: The U.S. Justice Dept.

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