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Massive hacking attacks on U.S. oil and gas companies coming from Russia

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July 2, 2014

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Russia isn't just interested in the Ukraine and Crimea anymore, it's now setting its goals on U.S. interests as well, although this time it's using the internet to achieve its mischief.

An internet security firm reported this week that Russian hackers have launched unprecedented, highly-sophisticated cyber attacks on American oil and gas companies.

Nicknamed 'Energetic Bear', the cyber operation is the latest example of an ongoing war between American and British cyber spies on one side, and intellectual property-stealing hackers in Russia on the other. China could even be on this as well.

The report by Symantec described how hackers have managed to sneak malware into computers at power plants, energy grid operators, gas pipeline companies and industrial equipment makers.

For now, most of the targets were in the United States and Spain, but the rest were across Europe.

The malware was used to steal documents, usernames and passwords. In the best-case scenario, the hackers only took valuable and sensitive information. At worst, they gained the ability to hijack the controls and even sabotage the U.S.' energy supply.

Another security company, Crowdstrike, first spotted the Energetic Bear operation in 2012. Crowdstrike thinks the hackers at Energetic Bear work for or alongside Russian government intelligence services at the behest of state-owned gas enterprises, including Gazpro and Rosneft.

To no big surprise, neither the Russian embassy, nor those energy companies, responded to requests for comment.

Why should you care? If a rogue nation breaks into oil and natural gas refineries at Exxon-Mobil or BP and figures out where they've discovered vast oil or natural gas reserves, it could beat them to the punch and start drilling first. That's just one reason of a long list of others, however.

If that rogue nation manages to steal blueprints to the power grid or key pipelines, it could disable them to cause economic chaos, or worse, shut everything down during a war.

"The Russians are engaged in very aggressive economic and political espionage right now," Crowdstrike co-founder Dmitri Alperovitch said.

Security researchers said Energetic Bear is notable for its military precision and planning. And Energetic Bear hackers aren't limited to just attacking the energy sector either.

Their malware has also been spotted inside the networks of European and U.S. defense contractors and health care providers, as well as manufacturers, construction companies and universities doing research in the field of nuclear energy.

"So far, we haven't seen anything of this scale with industrial control systems," said Kevin Haley, Symantec's director of security.

In other internet security news

'You need to encrypt all your stored passwords'. That's the simple message coming from Australia's privacy commissioner, at the conclusion of his long investigation of a gigantic data breach of the Cupid Media dating operation last year.

Among the 42 million customers whose data was exposed in the breach of the Queensland-headquartered company were 245,000 Australians, commissioner Timothy Pilgrim added.

The most serious security breach was that the compromised passwords were not hashed or otherwise encrypted before the data breach. Instead they were stored insecurely, in plain text, the commissioner's report states.

“The Commissioner therefore found Cupid's storage of passwords in plain text to be a major failure to take reasonable security steps,” the report warned.

Finding that Cupid Media – which operated a network of 35 dating sites so as to cover niches of ethnicity, religion, sexual preference and location – had breached Australia's privacy regulations, the commissioner's report states-- “Cupid had breached the Privacy Act by failing to take reasonable steps to secure personal information it held.”

During the investigation, the company told the commissioner it didn't hold credit card data, and asserted that since it doesn't check registrations to demonstrate that people are using real names, the data was less sensitive than for example financial information.

But the investigation did find that the preferences collected by the niche sites, along with e-mail addresses and user passwords that were compromised in the data breach, added up to breaches serious enough to bring the company under the remit of the Privacy Act.

Worse, Cupid even quibbled over the original reports that the breached database held 42 million user accounts, asserting that “this figure is not accurate because it includes 'junk' accounts and duplicate accounts”.

That statement didn't satisfy the commissioner one bit, who found that the company was retaining personal data that it didn't require-- “Cupid failed to take reasonable steps to destroy or permanently de-identify the personal information it held in relation to user accounts that were no longer in use or needed”, the commissioner warned.

The company did co-operate with the investigation, notified its users, reset their passwords, and applied patches to fix the security issues.

In other internet security news

Cisco said that it has had a rather large list of products recently certified as secure by the GCHQ's information security arm, the Communications & Electronics Security Group (CESG).

The new certification covers IPsec security gateway products in Cisco's ASA v9.1 family, hardware models 5505, 5510, 5520, 5540, 5550, 5580, 5512-X, 5515-X, 5525-X, 5545-X, 5555-X and 5585-X.

The certification only covers the products to handle information up to Britain's government “Official” classification – that is, most government information.

But as the company's product certification engineer Clint Winebrenner writes-- “This award represents the first Foundation Grade IPsec VPN product capable of supporting both the CESG interim and PRIME cipher suites, enabling public sector customers to take full advantage of the very latest cryptographic algorithms.”

Winebrenner also notes that the classifications in Britain-– Official, Secret and Top Secret were redone in April of this year with the goal of letting off-the-shelf products handle data at the lowest classification.

That means that there will be a lot of similar certifications being granted in the near future, we can assume.

“This business model includes two grades of assurance-- Foundation Grade and High Grade. Foundation Grade products are COTS products designed to provide protection against threats to information classified as OFFICIAL and certification is achieved through the completion of either a Common Criteria or Commercial Product Assurance (CPA) evaluation,” Winebrenner writes.

The certification covers deployments of IPsec VPN technologies both between government sites, and for remote access. Cisco also has its AnyConnect client currently going through certification for mobile access applications.

In other IT news

Cisco said earlier this morning that it's offering an experimental cipher which, among other things, could help preserve the anonymity of data in specific cloud environments.

In putting what it calls FNR (Flexible Naor and Reingold) into the hands of the public, the work is currently experimental rather than production software.

Cisco software engineer Sashank Dara explains that FNR is a block cipher that works without the need for padding, as happens in ciphers such as AES.

Since AES works on a fixed block length – be it 128, 192 or 256 bits – small blocks of data get bloated when they're encrypted, and that's a major cause for concern.

However, this isn't much of an issue for person-to-person messages, given their relatively low volume.

But a cloud provider seeking to gather IP address information for analysis and other purposes will see an awful lot of 32-bit inputs turning into 128-bit outputs, quadrupling the storage requirements if they try to protect the privacy of their customers.

To be sure, FNR is designed to encrypt small objects while preserving their input length, making it applicable to IPv4 addresses, MAC addresses and other arbitrary strings.

It could also encrypt legacy databases containing fields that need their length preserved, reducing the amount of re-engineering required.

The FNR specification explains that privacy of fixed-length fields (such as collected in NetFlow formats) is an emerging challenge for cloud providers, who collect lots of telemetry for analysis and don't want to change their field formats to encrypt the information.

FNR proposes “invertible matrices to provide a neat and generic way to achieve pair-wise independence for any arbitrary length”, the paper states.

Cisco provides a demonstration application using IPv4 address encryption as the example.

In other internet security news

Various reports in the blogosphere this morning say that hackers have successfully attacked a hedge fund, delaying several trades and then stealing profitable secrets in a rare but very direct raid on the United States financial services sector.

BAE Systems Applied Intelligence says that the clever attack cost the unnamed US-based hedge fund millions of dollars over two months, the firm alleges.

Hackers apparently lifted large chunks of data on complex high speed trades from the financial firm, then sent the details to external servers using malware which implanted itself on the victim's network.

For now, the identity of the attackers is unknown, said BAE product director Paul Henninger, but the stolen data could be immensely profitable for smaller hedge fund firms looking for a leg up into the market.

The assumption of espionage was given further weight because attackers added slight delays to the time between the issuance and execution of the victim's trades-- a feat which would certainly lead to the discovery of the attacks but may have provided a competing firm with a much needed trading advantage.

Henninger said that the attacks occurred in January 2013 and was escalated to the company board. Why it took so long for the news to become public isn't known at this time.

"This was something that was getting reviewed at the board level of this hedge fund precisely because it was having a material impact on performance across the whole portfolio," said Henninger.

Incredibly, the attacks began with a successful by very simple spear phishing email campaign against a staffer from where malware was deployed to gain a direct foothold in the company.

The attackers knew exactly what they were doing. Henninger didn't know if the hack was reported to the Securities and Exchange Commission or FBI and noted that the fund would have little incentive to do so.

Attacks against hedge funds don't often make it onto the public record. More than three years ago, Cyber Engineering Services founder Joe Drissel tipped off one hedge fund that it was compromised after he discovered its stolen data on a hacked server.

The unnamed company, which initially laughed off the disclosure, later disconnected its entire enterprise network from the Web when Drissel sent its IT manager a copy of a stolen file.

Attackers had installed no less than three trojans on the victims' machines which went completely undetected by anti-virus software.

Internet security teams have since reported phishing emails targeted towards hedge funds that lured victims to open malicious documents purportedly discussing carried interest fees.

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Source: Symantec.

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