A gaggle of young misfits that has long tried to silence this Web site now is taking credit for preventing millions of users from playing Sony Playstation and Microsoft Xbox Live games this holiday season.

The group, which calls itself LizardSquad, started attacking the gaming networks on or around Christmas Day. Various statements posted by self-described LizardSquad members on their open online chat forum — chat.lizardpatrol.com — suggest that these misguided individuals launched the attack for no other reason than because they thought it would be amusing to annoy and disappoint people who received new Xbox and Playstation consoles as holiday gifts.

Such assaults, known as distributed denial-of-service (DDoS) attacks — harness the Internet connectivity of many hacked or misconfigured systems so that those systems are forced to simultaneously flood a target network with junk internet traffic. The goal, of course, is to prevent legitimate visitors from being able to load the site or or use the service under attack.

It’s unfortunate that some companies which specialize in DDoS protection services have chosen to promote their products by categorizing these latest attacks as “herculean” and “sophisticated;” these adjectives describe neither the attackers nor their attacks. The sad truth is that these attacks take advantage of compromised and misconfigured systems online, and there are tens of millions of these systems that can be freely leveraged to launch such attacks. What’s more, the tools and instructions for launching such assaults are widely available.

The LizardSquad leadership is closely tied to a cybercrime forum called Darkode[dot]com, a network of ne’er-do-wells that I have written about extensively. So much so, in fact, that the LizardSquad has made attacking KrebsOnSecurity.com and keeping it offline for at least 30 minutes a prerequisite “proof of skills” for any new members who wish to join their ranks (see the screen shot below).

Over the past month, KrebsOnSecurity.com has been the target of multiple such attacks each day. Prolexic — a DDoS protection firm now owned by Akamai — has been extremely helpful in poring over huge troves of data about systems seen attacking this site.

The majority of compromised systems being used to attack my site this month are located within three countries — Taiwan, India, and Vietnam. The bulk of attacks have been so-called “Layer 7” assaults — in that they try to mimic legitimate Web browsing activity in a bid to avoid detection.

But what’s most interesting about these compromised and/or misconfigured systems is how many of them are located at legitimate companies that have been compromised by miscreants. According to Akamai, most of the malicious sources were Windows-based servers powered by Microsoft’s IIS Web server technology.  The top five industries where those compromised systems reside are in entertainment, banking, hosting providers, software-as-a-service providers, and consulting services.

Many of those associated with LizardSquad are wannabe hackers with zero skill and a desire to be connected to something interesting and fun. Unfortunately, many of the LizardSquad individuals involved in these attacks also are embroiled in far more serious online crimes — including identity theft, malware distribution, spam and credit card fraud. While most of the group’s acolytes are known to U.S. enforcement investigators, many are minors, and the sad truth is that federal prosecutors don’t really know what to do with underage felons except to turn them into informants. Meanwhile, the cycle of abuse continues.

Update, Dec. 30, 7:05 p.m. ET: A previous version of this story named multiple companies suspected of hosting compromised systems that may have been abused by LizardSquad members in attacks on this blog. Several of those organizations have reported being unable to find any evidence that their systems were used in an attack, and took strong exception to be included in this story. Since it is entirely possible that the traffic from these systems recorded in this site’s logs could have been mistaken for attack traffic during an active (and still ongoing) attack, I have omitted the names of those companies from this post. I would like to apologize for any confusion or misunderstanding this post may have caused.

The Federal Trade Commission announced this week it is suing a consumer data broker that sold payday loan application data to scammers who used the information to pull money out of consumer bank accounts. The scam brings to mind an underground identity theft service I wrote about in 2012 that was gathering its data from a network of payday loan sites.

According to the FTC’s complaint, data broker LeapLab bought payday loan applications of financially strapped consumers, and then sold that information to marketers whom it knew had no legitimate need for it. “At least one of those marketers, Ideal Financial Solutions – a defendant in another FTC case – allegedly used the information to withdraw millions of dollars from consumers’ accounts without their authorization,” the FTC said.

The FTC charges that the defendants sold approximately five percent of these loan applications to online lenders, who paid them between $10 and $150 per lead. But the defendants also allegedly sold the remaining 95 percent for approximately $0.50 each to third parties who were not online lenders and had no legitimate need for this financial information.

In Sept. 2012, I published a blog post about “Usearching[dot]info,” a now-defunct ID theft service that offered the ability to purchase personal information on countless Americans, including SSN, mother’s maiden name, date of birth, email address, and physical address, as well as and driver license data for approximately 75 million citizens in Florida, Idaho, Iowa, Minnesota, Mississippi, Ohio, Texas and Wisconsin.

That story noted that Usearching[dot]info also included data that appeared to come from another source — more than 330,000 consumer bank account records pulled from an archipelago of satellite Web sites that negotiate with a variety of lenders to offer payday loans. From that piece:

“I first began to suspect the information was coming from loan sites when I had a look at the data fields available in each record. A trusted source opened and funded an account at Usearching.info, and purchased 80 of these records, at a total cost of about $20. Each includes the following data: A record number, date of record acquisition, status of application (rejected/appproved/pending), applicant’s name, email address, physical address, phone number, Social Security number, date of birth, bank name, account and routing number, employer name, and the length of time at the current job. These records are sold in bulk, with per-record prices ranging from 16 to 25 cents depending on volume.”

“But it wasn’t until I started calling the people listed in the records that a clearer picture began to emerge. I spoke with more than a dozen individuals whose data was being sold, and found that all had applied for payday loans on or around the date in their respective records. The trouble was, the records my source obtained were all dated October 2011, and almost nobody I spoke with could recall the name of the site they’d used to apply for the loan. All said, however, that they’d initially provided their information to one site, and then were redirected to a number of different payday loan options.”

I have no idea whether LeapLab sold information to this identity theft service, or whether Ideal Financial was a customer of Usearching[dot]info. LeapLab is no longer in business, and Ideal’s assets are frozen and in receivership. But it’s clear Ideal obtained consumer data from multiple sources: The FTC says LeapLab provided Ideal Financial with financial account information for only about 16 percent of Ideal Financial’s victims.

In this, as with so many financial scams, the people least able to afford it get scammed and fleeced. The FTC charges that Ideal Financial purchased information on at least 2.2 million consumers from data brokers and used it to make more than $43 million in unauthorized debits and charges for purported financial products that the consumers never purchased. Sadly, these “financial products” were mostly about how consumers could manage their money better or get themselves out of debt.

This scam is also a reminder of how crooks steal millions with small charges, all made through a vast network of phony company Web sites made to look like established companies with legitimate products. Also, these types of micropayment schemes are more common around the holidays, so now is good time for readers to keep an extra close eye on their bank and credit card statements for any unauthorized charges.

A copy of the FTC civil complaint against LeapLab is here (PDF). Also interesting to read are these exhibits in the case (both PDF).

There are still many unanswered questions about the recent attack on Sony Pictures Entertainment, such as how the attackers broke in, how long they were inside Sony’s network, whether they had inside help, and how the attackers managed to steal terabytes of data without notice. To date, a sizable number of readers remain unconvinced about the one conclusion that many security experts and the U.S. government now agree upon: That North Korea was to blame. This post examines some compelling evidence from past such attacks that has helped inform that conclusion.

The last time the world saw an attack like the one that slammed SPE was on March 20, 2013, when computer networks running three major South Korean banks and two of the country’s largest television broadcasters were hit with crippling attacks that knocked them offline and left many South Koreans unable to withdraw money from ATMs. The attacks came as American and South Korean military forces were conducting joint exercises in the Korean Peninsula.

That attack relied in part on malware dubbed “Dark Seoul,” which was designed to overwrite the initial sections of an infected computer’s hard drive. The data wiping component used in the attack overwrote information on infected hard drives by repeating the words “hastati” or “principes,” depending on which version of the wiper malware was uploaded to the compromised host.

Both of those terms reference the military classes of ancient Rome: “hastati” were the younger, poorer soldiers typically on the front lines; the “principes” referred to more hardened, seasoned soldiers. According to a detailed white paper from McAfee, the attackers left a calling card a day after the attacks in the form of a web pop-up message claiming that the NewRomanic Cyber Army Team was responsible and had leaked private information from several banks and media companies and destroyed data on a large number of machines.

The message read:

“Hi, Dear Friends, We are very happy to inform you the following news. We, NewRomanic Cyber Army Team, verified our #OPFuckKorea2003. We have now a great deal of personal information in our hands. Those includes; 2.49M of [redacted by Mcafee] member table data, cms_info more than 50M from [redacted]. Much information from [redacted] Bank. We destroyed more than 0.18M of PCs. Many auth Hope you are lucky. 11th, 12th, 13th, 21st, 23rd and 27th HASTATI Detachment. Part of PRINCIPES Elements. p.s For more information, please visit www.dropbox.com login with joseph.r.ulatoski@gmail.com::lqaz@WSX3edc$RFV. Please also visit pastebin.com.”

The McAfee report, and a similarly in-depth report from HP Security, mentions that another group calling itself the Whois Team — which defaced a South Korean network provider during the attack — also took responsibility for the destructive Dark Seoul attacks in 2013. But both companies say they believe the NewRomanic Cyber Army Team and the Whois Team are essentially the same group. As Russian security firm Kaspersky notes, the images used by the WhoisTeam and the warning messages left for Sony are remarkably similar:

Interestingly, the attacks on Sony also were preceded by the theft of data that was later leaked on Pastebin and via Dropbox. But how long were the attackers in the Sony case inside Sony’s network before they began wiping drives? And how did they move tens of terabytes of data off of Sony’s network without notice? Those questions remain unanswered, but the McAfee paper holds a few possible clues.

A LENGTHY CAMPAIGN

McAfee posits that, based on the compile times of the backdoor malware used to upload the drive-wiping malware, the targets in the Dark Seoul attacks were likely compromised by a remote-access Trojan delivered by a spear-phishing campaign at least two months before the data destruction began. More importantly, McAfee concludes that the data-wiping and backdoor malware used in the Dark Seoul attack was but a small component of an elaborate cyber-espionage campaign that started in 2009 and targeted only South Korean assets.

“McAfee Labs has uncovered a sophisticated military spying network targeting South Korea that has been in operation since 2009. Our analysis shows this network is connected to the Dark Seoul incident. Furthermore, we have also determined that a single group has been behind a series of threats targeting South Korea since October 2009. In this case the adversary had designed a sophisticated encrypted network designed to gather intelligence on military networks.

We have confirmed cases of Trojans operating through these networks in 2009, 2010, 2011, and 2013. This network was designed to camouflage all communications between the infected systems and the control servers via the Microsoft Cryptography API using RSA 128-bit encryption. Everything extracted from these military networks would be transmitted over this encrypted network once the malware identified interesting information. What makes this case particularly interesting is the use of automated reconnaissance tools to identify what specific military information internal systems contained before the attackers tried to grab any of the files.”

The espionage malware was looking for files that contained specific terms that might indicate they harbored information about U.S. and Korean military cooperation, including “U.S. Army” and “Operation Key Resolve,” an annual military exercise held by U.S. forces and the South Korean military.

The Dark Seoul attacks were hardly an isolated incident. In 2011, the same  Korean bank that was attacked in the 2013 incident was also hit with denial-of-service attacks and destructive malware. On July 4, 2009, a wave of denial-of-service attacks washed over more than two dozen Korean and U.S. Government Web sites, including the White House and the Pentagon. July 4 is Independence Day in the United States, but it also happened to be the very day that North Korea launched seven short-range missiles into the Sea of Japan in a show of military might. By the time the third wave of that attack subsided on July 9, the assailants had pushed malware to tens of thousands of zombie computers used in the assault that wiped all data from the machines.

The co-founder of CrowdStrike, a security firm that focuses heavily on identifying attribution and actors behind major cybercrime attacks, said his firm has a “very high degree of confidence that the FBI is correct in” attributing the attack against Sony Pictures to North Korean hackers, and that CrowdStrike came to this conclusion independently long before the FBI came out with its announcement last week.

“We have a high-confidence that this is a North Korean operator based on the profiles seen dating back to 2006, including prior espionage against the South Korean and U.S. government and  military institutions,” said  Dmitri Alperovitch, chief technology officer and co-founder at CrowdStrike.

“These events are all connected, through both the infrastructure overlap and the malware analysis, and they are connected to the Sony attack,” Alperovitch said. “We haven’t seen the skeptics produce any evidence that it wasn’t North Korea, because there is pretty good technical attribution here. I want to know how many other hacking groups are so interested in things like Key Resolve.”

Security firms like HP refer to the North Korean hacking team as the “Hastati” group, but CrowdStrike calls them by a different nickname: “Silent Chollima.” A Chollima is a mythical winged horse which originates from the Chinese classics.

“North Korea is one of the few countries that doesn’t have a real animal as a national animal,” Alperovitch said. “Which, I think, tells you a lot about the country itself.”

The “silent” part of the moniker is a reference to the stubborn fact that little is known about the hackers themselves. Unlike hacker groups in other countries where it is common to find miscreants with multiple profiles on social networks and hacker forums that can be used to build a more complete profile of the attackers — the North Koreans heavily restrict the use of Internet communications, even for their cyber warriors.

“First of all, they don’t have a ton of Internet infrastructure in North Korea, and they don’t have forums and social media which typically helps you identify, for example, whether an attack is from Russians or the Chinese,” Alperovitch said. “In general, the North Korean regime is one of the hardest intelligence targets for the intelligence and cyber attribution communities.”

On Monday, the folks at Dyn Research — a company that tracks Internet connectivity issues around the globe — said its sensors noted that North Korea inexplicably went offline on Monday, Dec. 22, at around 16:15 UTC (01:15 UTC Tuesday in the North Korean capital of Pyongyang). But the researchers stopped short of attributing a reason behind the outage.

“Who caused this, and how?,” wrote Jim Cowie, chief scientist at Dyn. “A long pattern of up-and-down connectivity, followed by a total outage, seems consistent with a fragile network under external attack. But it’s also consistent with more common causes, such as power problems.”

Interestingly, this pattern of downtime also was witnessed directly following the above-described 2013 attacks that targeted South Korean banks and media firms. According to Jason Lancaster, a security researcher at HP, the entire North Korean Internet space suffered a similar outage around the same time as the 2013 offensive against South Korea.

“When they came back online, one of those four [North Korean Internet address blocks] was routing through an Intelsat satellite connection,” Lancaster said. “What caused the 2013 outage? They never determined the cause. The speculation was that they were under attack, but there was never any proof of that happening.”

Additional reading:

US-CERT analysis of the computer worm used in the attack on Sony.

TaoSecurity Blog: What Does ‘Responsibility’ Mean for Attribution?

McAfee report on Dark Seoul attacks (PDF)

HP Security: Profiling an Enigma – The Mystery of North Korea’s Cyber Threat Landscape (PDF)

In September 2014, I wrote about receiving a package of $500 in counterfeit U.S. currency from an unknown sender, after mentioning in a blog post about a rash of funny money resellers flooding underground cybercrime markets. Last week, U.S. authorities announced the arrest of a Texas man charged with leading the international counterfeit currency operation from a location in the Republic of Uganda.

U.S. prosecutors say 27-year-old Ryan Andrew Gustafson – a.k.a. “Jack Farrel” and “Willy Clock” — is a U.S. citizen currently residing in Kampala, Uganda. Gustafson was arrested on Dec. 16 by Ugandan authorities and charged with conspiracy, counterfeiting, and unlawful possession of ammunition.

The defendant and his alleged accomplices are suspected of passing approximately $270,000 in fake U.S. currency in Uganda. In total, Ugandan authorities say they seized some $1.8 million in funny money from Gustafson’s operation.

The U.S. Secret Service, which investigates currency counterfeiting, said the investigation began in December 2013 when agents were alerted to the passing of counterfeit notes at retail stores and businesses in the Pittsburgh area. A press release from the Justice Department outlines the rest of the investigation:

“Agents determined that an individual identified as J.G. had passed these notes and was renting a postal box at The UPS Store on Pittsburgh’s South Side.  On Feb 19, 2014, law enforcement learned that J.G. received three packages addressed from Beyond Computers, located in Kampala, Uganda.  Agents executing a search warrant on the packages found $7,000 in counterfeit $100, $50 and $20 FRNs located in two hidden compartments within the packaging envelopes.  A fingerprint on a document inside one of the packages was identified as belonging to Ryan Andrew Gustafson.”

“The Secret Service subsequently worked with Ugandan authorities to identify the source of the counterfeit [cash].  Their efforts led to A.B., who admitted to sending the packages, explaining that an American named “Jack Farrel,” and another person, provided him the counterfeit notes to ship.  Based on information provided by A.B., the Secret Service used facial recognition to identify Jack Farrel as Ryan Andrew Gustafson.”

The government says Gustafson sold the bills through the Tor Carding Forum, a cybercrime shop that is unreachable from the regular Internet. Rather, visiting the Tor Carding Forum requires the visitor to route his communications through Tor, a free software-based service that helps users maintain anonymity by obfuscating their true location online.

Willy Clock’s phony currency wasn’t only available via Tor. By the middle of 2014, ads for his funny money were showing up on regular, Internet-based cybercrime forums. One reseller of Willy Clock’s notes even set up his own sales thread on Reddit.

Once again, it appears that sloppy operational security contributed to an arrest of an alleged bad guy. According to the government’s complaint (PDF), the email address that Gustafson provided on his U.S. passport application was the same one he allegedly used to maintain a Facebook account under the Jack Farrel alias. Investigators found that Gustafson also used the same Internet address to access his real Facebook page and the Farrel account. Another Facebook page tied to the Jack Farrel identity says the accused was in Uganda as a project associate at the U.N. refugee shelter program.

An organized gang of hackers from Russia and Ukraine has broken into internal networks at dozens of financial institutions and installed malicious software that allowed the gang to drain bank ATMs of cash. While none of the victim institutions were in the United States or Western Europe, experts say the stealthy methods used by the attackers in these heists would likely work across a broad range of western banks.

Most cybercrime targets consumers and businesses, stealing account information such as passwords and other data that lets thieves cash out hijacked bank accounts, as well as credit and debit cards. But this gang specializes in hacking into banks directly, and then working out ingenious ways to funnel cash directly from the financial institution itself.

A number of the gang’s members are believed to be tied to a group of Eastern European hackers accused of stealing more than USD $2 million from Russian banks using a powerful, custom-made banking trojan known as Carberp. Eight men in Moscow were arrested in 2012 and accused of building and using Carberp, but sources say the core members of the gang were out of jail within hours after their arrest and have been busy rebuilding their crime machine ever since.

According to report released today by Fox-IT and Group-IB, security firms based in The Netherlands and Russia, respectively, the Carberp guys have since changed their tactics: Instead of stealing from thousands of bank account holders, this gang has decided to focus on siphoning funds right out of banks’ coffers. So far, the security firms report, the gang has stolen more than $15 million from Eastern European banks.

To gain a foothold inside financial institutions, this crime group — dubbed the “Anunak group” — sent bank employees targeted, malware-laced emails made to look like the missives were sent by Russian banking regulators. The phishing emails contained malicious software designed to exploit recently-patched security holes in Microsoft Office products.

Incredibly, the group also reportedly bought access to Windows PCs at targeted banks that were already compromised by opportunistic malware spread by other cyber criminals. Indeed, Fox-IT and Group-IB report that the Anunak gang routinely purchased installations of their banking malware from other cybercriminals who operated massive botnets (collections of hacked PCs).

Once inside a financial institution, the criminals typically abused that access to launch even more convincing spear-phishing attacks against other banks. They also gained access to isolated bank network segments that handled ATM transactions, downloading malicious programs made to work specifically with Wincor ATMs. The hackers used that malware — along with a modified legitimate program for managing ATM cash trays — to change the denomination settings for bank notes in 52 different ATMs.

As a result, they were able to make it so that when co-conspirators went to affected ATMs to withdraw 10 bills totaling 100 Russian rubles, they were instead issued 10 bank notes with the denomination of 5,000 rubles, the report notes.

It was bad enough that this group is believed to have hacked into more than 50 Russian banks, but nasty messages encoded into the malware tools employed by the thieves suggest they hold utter contempt for their targets. One malware component the group used to infect targeted systems carried inside of itself the text string “LOL BANK FUCKIUNG”. Another strain of malware deployed by this group’s targeted email campaigns and used to build their own botnet of more than a quarter-million PCs was encrypted with a key that is the MD5 hash of the string “go fuck yourself.”

While they appear to have developed a penchant for stealing directly from banks, these crooks aren’t above going after easy money: Sources tell KrebsOnSecurity that this group of hackers is thought to be the same criminal gang responsible for several credit and debit card breaches at major retailers across the United States, including women’s clothier Bebe Stores Inc., western wear store Sheplers, and office supply store Staples Inc.

A separate source previously told this author that there was a connection between the point-of-sale malware used in the breach at Michaels and the Staples incident, which means this group may also have been involved in the Michaels breach. In any case, Group-IB and Fox-IT note that the Anunak gang has hit a total of 16 retailers so far.

The attacks from Anunak showcase once again how important it is for organizations to refocus more resources away from preventing intrusions toward detecting intrusions as quickly as possible and stopping the bleeding. According to the report, the average time from the moment this group breaks into bank internal networks and the successful theft of cash is a whopping 42 days.

The full report on the Anunak group is available here (PDF).