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More than 30 percent of people using the Tor network are fraudulent

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September 18, 2013

According to a recent study by online reputation–tracking firm Iovation, internet users who access the web through the anonymizing Tor network are much more likely to be hackers or other troublemakers than are typical people.

The company announced yesterday that about 30.2 percent of all transactions it logged as coming from the Tor network during the month of August were fraudulent, compared to about a one per cent fraud rate for internet transactions as a whole outside of the Tor system.

Tor disguises the source of internet connections by shuttling them through hard-to-follow network routes and assigning them IP addresses at random from a large pool of distributed IPs around the globe.

While it's not too difficult to tell whether a connection is coming from Tor, it's rather very hard to know just who is behind any given connection, or even where in the world they are located when they come from Tor.

For that reason, while Tor has often been used for political activism, whistleblowing, and other risky but laudable activities, it's also home to a shady underworld of less-praiseworthy dealings, ranging from drug trafficking to child pornography.

For example, the online black market Silk Road website conducts its business entirely over Tor. Online criminals have recently began experimenting with using Tor as a cover for other kinds of internet traffic, as well.

The number of clients accessing the network on a daily basis doubled in August when the Mevade.A botnent began using Tor to route its command and control data.

Iovation found that about 31.8 percent of all Tor transactions were suspect and that the company isn't just talking about sales on Silk Road, either.

"Transactions simply means any online action at one of our customer sites like online purchases, account registrations, credit applications, logins, wire transfers, comments, etc, etc" said Scott Olson, Iovation's vice president of product.

"Any interaction where fraud, abuse or other similar nature are of grave concern to all our subscribers," he added.

Iovation's Reputation Manager service can't identify individual Tor users, but it can spot traffic that originates from known Tor IP addresses, called "exit nodes."

To conduct its study, it analyzed 240 million transactions conducted in August 2013 and compared the fraud rate of Tor traffic to that of the whole internet.

Iovation is making the ability to identify Tor traffic generally available to its Reputation Manager customers at no charge.

"Tor in itself isn't a bad service," Olson said. "It can be used for positive things as well as fraudulent things. For our clients, they are concerned with mitigating risk and in this case, Tor is disproportionately associated with a much higher fraud rate for online purchases, account applications, logins, etc."

And Iovation isn't the first to identify this issue. As recently as August, the head of Russia's Federal Security Service said he would like to block Tor traffic at the national level as part of the country's anti-terrorism efforts.

Although blocking all Tor traffic would be challenging, blocking traffic that re-enters the mainstream internet via Tor exit nodes is comparatively easy.

Wikipedia prevents editing by Tor users, for example, and if Tor's reputation for being rife with bad actors grows, more sites may choose to do the same.

In other internet security news

According to new documents unearthed using the Freedom of Information Act, the NSA acquired professional computer and server hacking tools complete with their documentation from French security firm Vupen.

A bonafide contract shows the U.S. security agency paid for a whole year's supply of zero-day vulnerability information and the software needed to exploit those security holes to attack various electronic systems.

The documents, obtained by government transparency and accountability site MuckRock, show that the U.S. intelligence nerve-centre signed up to a one-year subscription to Vupen's “binary analysis and exploits service” in September 2012.

Vupen prides itself on advanced vulnerability research as well as selling software exploits for unpatched flaws in systems - known as zero-days - to governments. Several U.S. defense contractors and security startups, such as Endgame Systems, are also in the business of privately researching and selling information about software security vulnerabilities and associated attack code.

That U.S. government organizations may be among Vupen's customers' list isn't a surprise to most people in the internet security industry. The NSA, even though it has advanced offensive cybersecurity capabilities, not least in the shape of its Tailored Access Operations cyber-espionage unit, might still find it valuable to tap into external help from commercial providers such as Vupen.

"Likely reasons for NSA's subscription to Vupen's 0-day exploits could be-- 1) know what capabilities other governments can buy, and, 2) false flag, deniable cyber-ops," writes Christopher Soghoian, principal technologist and senior policy analyst at the American Civil Liberties Union.

"There are specific times when U.S. special forces use AK-47s, even though they have superior guns available. It's the same for the NSA's Vupen purchase. Deniability," he added.

Soghoian, who delivered a presentation about the exploit vulnerability marketplace at the recent Virus Bulletin conference, has previously likened the trade in software exploits to a trade in conventional weapons - think bullets, bombs and rockets.

In other internet security news

Earlier this year, it was revealed in the media how a massive security breach accidentally allowed access to thousands of images of people suspected of petty crimes.

Now it is reavealed that the private company behind that CCTV and image database is claiming its technology has led to the arrest of over one hundred suspects.

London's Metropolitan Police has spent the past twelve months working with Facewatch, a website where business owners can communicate with each other and the police to share information about potential criminals.

Facewatch streamlines the process of handing CCTV footage, snapshots, incident forms and other evidence to police and law enforment agencies.

The system's creators say the police force in London had already made 100 arrests using Facewatch and expects many more as businesses around the capital begin to use it on a larger scale.

However, they had no numbers on the estimate of convictions so far that arose from those arrests, but nevertheless, the site is proving to be a great tool at reducing crime.

Some 7,500 businesses and an additional eight police forces across Britain are also using Facewatch, which the company hopes will become a key part of the U.K.'s police armoury of crime-fighting tools.

Additionally, about 800 museums are also using the system, including London's V&A and the Ashmolean in Oxford, according to the company. was invited last week to have a look at the latest build of Facewatch at the firm's headquarters near Embankment station in London.

Facewatch allows businesses to quickly upload footage or snapshots of suspicious individuals to the website. Customers can also use a neat process similar to Apple's screenshot command to zoom in and cut out a frame of footage on screen and then upload it to the site's servers.

This effectively removes two of the current hurdles which prevent police making the best use of any CCTV footage-- 1) The need to physically collect footage from a business and 2) Needing the correct codecs to actually view the footage once people have brought it back into the station.

Each piece of intelligence (the term Facewatch uses for its uploads) is individually tagged and indexed. This allows it to be shared with local businesses, allowing them to quickly identify potential criminals and collate evidence which could lead to a conviction.

When a crime is reported, the business is emailed at each stage of the police investigation, allowing it to keep an eye on how the case is proceeding through the system.

According to Facewatch, this results in a detection rate of about 15 percent, higher than the 5 percent rate of most crimes. Facewatch only focuses on low-level crime, such as theft or antisocial behavior, and isn't designed to take on serious crimes such as DUI, embezzlement, car theft, murder, rape or drug offences.

Simon Gordon, the system's founder, said he was inspired to begin developing the system after becoming frustrated at the number of purse and wallet thefts at Gordon's Wine Bar, which he also owns.

The famous London wine bar is a fitting place to run a surveillance system, says Gordon, as it was once known as a meeting place for spies from either side of the Russian curtain back in the late sixties and early seventies.

Gordon said-- "The old system of using CCTV footage in criminal investigations was very inefficient. We allow businesses to give intelligence directly to police, but also we then get updates on how the investigation is proceeding and when more details can be provided moving forward.

"We want to help the victims of crime by speeding up the investigation, while providing more details in the process. Police don't have to waste time taking reports in person and are freed up to actually catch the criminal, instead of the tedious process of gathering initial information."

Facewatch is currently working on facial recognition software, which will soon be tested in a shopping centre in Hampshire. Detective Chief Inspector Mick Neville, head of the Met's central forensics image team at New Scotland Yard, said-- "Facewatch image submissions to the Metropolitan Police are on the increase and this has led to more prolific thieves being brought to justice."

"Just this week for example I have seen five persistent offenders identified thanks to Facewatch," Neville added during our interview.

Additionally, this is helping to make London safer for businesses and their customers. The more images and footage we get from the public, the more success we will have in catching criminals caught on camera."

Facewatch is also preparing to launch a new mobile app which will allow victims of crime to report the incident themselves. It already offers a “rogues gallery” app, allowing the public and businesses to identify and name various suspects.

Previous figures show that CCTV has so far been a spectacularly inefficient way to catch criminals, with just one single crime in London solved per 1,000 surveillance cameras.

A Metropolitan Police spokeswoman added-- "The London Metropolitan Police is duty bound to investigate all crimes reported by this or any other means. In the fast-moving digital age, it's important that the LMPS remains open-minded and receptive to innovations in the field of crime prevention. The LMPS has worked with Facewatch amongst others to develop innovative ways for the public to engage with us in helping to reduce crime.”

In other internet security news

New hacking software has just been discovered that's linked to several attacks against governments and organizations involved in high-tech industries such as space exploration and nuclear power.

And the malware has been adapted to exploit a recently uncovered Java security flaw. NetTraveler has been outfitted to exploit a recently patched Java security flaw as part of a watering-hole-style attack involving compromised websites that redirects victims to an attack site hosting exploit code and viruses.

Surfaced a few days ago, the latest variants of the malware appear to be targeting dissident Uyghur activists from China, internet security firm Kaspersky Lab warns.

The company was first to warn about the cyber attack back in June but subsequent checks revealed that the malware has been silently doing the rounds since 2004!

NetTraveler (also known as “Travnet”, “Netfile” or Red Star APT) is an advanced persistent threat that has infected hundreds of high profile victims in more than forty countries. Known targets of NetTraveler include Tibetan/Uyghur activists, oil industry companies, scientific research centres and institutes, universities, private companies, governments and their institutions, embassies and military contractors.

Immediately after the public exposure of NetTraveler's operations in June 2013, the attackers shut down all known command-and-control systems and moved them to new servers in China, Hong Kong and Taiwan.

After the switch, the attacks continued more or less unabated. Over the last few days, several spear-phishing emails were sent to multiple Uyghur activists. The Java exploit (CVE-2013-2465) used to distribute this new variant of the Red Star APT was only patched by Oracle less than two months ago.

Earlier attacks have used Office exploits (CVE-2012-0158) that were patched by Microsoft in April of last year.

More details on the evolution of the threat can be found in a blog post by Costin Raiu, director of global research at Kaspersky Lab.

The Uyghur community is an ethnic group who mostly live in Eastern and Central Asia. The community has long desired independence, or at the very least greater autonomy, from Chinese rule.

In other internet security news

Citadel, the nasty botnet at the very heart of a widely criticized takedown by Microsoft in June of this year, has made a comeback and it's stealing banking credentials again, this time mostly from Japanese users, according to Trend Micro.

The security vendor claims to have found at least nine IP addresses, mostly located in Europe and the United States, functioning as the botnet’s command and control servers.

About 96 percent of the overall connections to these C&C servers come from Japan, proving that most of the banking Trojan infections are from that country alone, suggested Trend Micro.

The security firm added the following in a blog post-- "During a six-day period, we detected no less than 20,000 unique IP addresses connecting to those infected servers, with only a very minimal decrease from beginning to end. This means that there is still a large number of infected systems stealing online banking credentials and sending them to the cybercriminals responsible for the botnet."

The banks and financial institutions targeted in this campaign have already released warnings and advisories to their customers regarding the attack itself.

Users are reminded to read those warnings properly before logging into their online banking accounts. As well as Japanese financial and banking organizations, the botnet has also been targeting popular webmail services such as Gmail, Hotmail and Yahoo Mail, Trend Micro added.

Overall, Citadel was the subject of Operation B54, what Microsoft described back in June as its "most aggressive botnet operation to date".

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Source: Iovation.

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