It Was Not Until Anonymous Payment Systems That Ransomware Became A Problem

American Hacker Jeffrey “Sneak” Paul joins host Bram Cohen for a deep-dive into the hard problems underlying the rise of ransomware attacks, what it all means and what we can do about it. It Was Not Until Anonymous Payment Systems That Ransomware Became A Problem

On this episode we’re digging into, not a new problem, but an old problem that seems to be getting worse as a growing proportion of our lives are spent connected, to each other, to the internet and inadvertently to criminals who use technology to extort money, often in the form of cryptocurrencies.

It’s called ransomware, and to help us understand and sort through today’s topic, Hard Problems host and Chia CEO Bram Cohen is joined by special guest Jeffrey Paul, better known as Sneak.

On May 7, an employee of Colonial Pipeline Company found a ransomware note on one of the company’s computers. The pipeline provides nearly half of the fuel for the east coast and they were locked out. Days later, they’d admit to paying 4.4 million dollars in bitcoin to the group who did it.

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It’s the most recent high-profile example, but it’s certainly not the only one. We’ve seen hospital systems and industrial players extorted along with lots of normal people. And those are the ones that we hear about, it’s assumed that many victims of extortion simply pay the ransom and keep it to themselves.

This episode was recorded live over the audio-only social network known as Clubhouse. If you’d like to join our live audience, our next recording session is Wednesday, June 2, 2021, at Noon Pacific/3 p.m. Eastern time where we’ll be discussing modern music, its eccentricities and how it’s changing as technology plays an ever-larger role with Grammy-nominated composer and musical pioneer BT.

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What did you think about our episode? We’d love to hear what you think! Send an email to podcasts@coindesk.com with the subject “Ransomware” to let us know what you think or to suggest topics you’d like to hear about.

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Updated: 6-3-2021

Top US Lawmaker Presses Big Companies on Ransomware Crypto Payments

Paying international criminals to unlock data “will put an even bigger target on the back of critical infrastructure,” says U.S. Rep. Carolyn Maloney.

U.S. Rep. Carolyn Maloney (D-N.Y.) wants Colonial Pipeline and CNA Financial to disclose the decision-making processes that led them to pay cryptocurrency to recover data from ransomware attackers.

In letters sent to the firms Thursday, Maloney asked for documents outlining how these victims decided to pay the perpetrators, any documents or communications received from the attackers, whether any government agencies provided input and whether the firms checked to ensure they didn’t violate sanctions.

“I am extremely concerned that the decision to pay international criminal actors sets a dangerous precedent that will put an even bigger target on the back of critical infrastructure going forward,” the chair of the House Oversight Committee said in a statement.

In the letters, Maloney asks for “all responsive documents” that detail how the attack was discovered, whether the companies sought external consultation about paying the ransoms and documents detailing the decryption tools provided by the attackers. She set a June 17 deadline, giving the companies two weeks to gather these materials.

The letters come as another high-profile firm, global meat producer JBS, begins recovering from a ransomware attack that occurred over the weekend.

A spokesperson for the committee did not immediately return a request for further comment about the focus of the investigation.

Growing Scrutiny

Thursday’s letter comes as scrutiny around ransomware attacks and the crypto used to pay these ransoms ramps up in the U.S. government. Earlier in the day, the Department of Justice sent a memo to state U.S. attorney offices and branches, asking U.S. attorneys to file an “urgent report” if they hear of a significant ransomware attack.

The DOJ is also coordinating ransomware investigations out of a central task force. John Carlin, acting deputy attorney general, told Reuters the goal is to find connections between different actors in an effort to mitigate the entire chain of attacks.

President Joe Biden has also directed the federal government to evaluate how it responds to ransomware attacks. This review will require the federal government to “expand” its cryptocurrency analysis tools, a White House spokesperson said.

The House Homeland Security Committee held a hearing on ransomware payments in May, and has another scheduled on June 9 to conduct a post-mortem on the Colonial Pipeline attack. Maloney is not a member of this committee, but previously published a joint statement with Rep. Bennie Thompson, the Homeland Security Committee chair, saying they were “disappointed” that Colonial did not provide specific information about paying a ransom.

Updated: 6-6-2021

White House Tells Execs To ‘Immediately’ Review Ransomware Plans

The White House told corporate leaders they should immediately begin developing plans to counter ransomware attacks after a spate of hacks have crippled key U.S. businesses, from Colonial Pipeline Co. to global meat producer JBS SA.

“To understand your risk, business executives should immediately convene their leadership teams to discuss the ransomware threat and review corporate security posture and business continuity plans to ensure you have the ability to continue or quickly restore operation,” Biden deputy national security adviser Anne Neuberger wrote in a memo distributed by the White House.

The stark warning is the latest effort in the scramble by the Biden administration to respond to the recent attacks, which have also impacted health services in multiple European countries, insurance firm CNA Financial Corp., and even a ferry authority operating in Martha’s Vineyard.

The White House urged companies to create offline backups of crucial information that can be easily restored if they’re subject to ransomware attacks, and to update and patch their IT systems regularly. The administration also suggested employing a third party to check the work of corporate IT teams and testing incident response plans to see how long companies would be able to sustain business operations without access to certain systems.

“The U.S. Government is working with countries around the world to hold ransomware actors and the countries who harbor them accountable, but we cannot fight the threat posed by ransomware alone,” Neuberger said.

In addition to the memo released Thursday, the White House has said it is expanding its cryptocurrency analysis efforts to pursue criminal transactions and is reviewing its own ransomware policies. And Biden plans to raise the issue in a meeting later this month with Russian President Vladimir Putin in Geneva; many of the high-profile attacks have been carried out by groups based in Russia.

Updated: 6-7-2021

Cyber-Crime ETFs Sputter As Meme Stocks Absorb Market’s ‘Oxygen’

Cybersecurity-focused ETFs are struggling to capitalize on a slew of high-profile hacks that have prompted the White House to urge every U.S. company to beef up security measures.

The $2.2 billion ETFMG Prime Cyber Security exchange-traded fund (HACK) and the Global X’s Cybersecurity ETF (BUG) have seen little in the way of inflows. The former notched just $13 million in May after two straight months of outflows, according to data compiled by Bloomberg.

The White House told corporate leaders on Thursday to begin developing plans to fight ransomware attacks and create offline backups of their critical information.

JBS SA, the largest meat producer, was recently forced to cease production at its U.S. beef plants, which provide almost a quarter of American supplies. Another notable attack prompted the shutdown of Colonial Pipeline Co.’s roughly 5,500-mile-long (8,851-kilometers) pipeline system for nearly a week.

“Especially after the pipeline, hackers are a clear and present danger, and yet it is getting little to no real attention,” said James Pillow, managing director at Moors & Cabot Inc. “Most of the proverbial oxygen in the room is being absorbed by meme stocks and crypto.”

Bitcoin has climbed 27% this year amid intense market volatility, and beloved retail favorite AMC Entertainment Holdings Inc. has surged 2,400%, compared with an advance of 12% for the S&P 500. HACK has risen nearly 2.5% in the span, while BUG is down 4%.

The cyber funds’ heavy positioning in growth companies and speculative tech names has weighed on them, according to Mohit Bajaj, director of ETFs at WallachBeth Capital.

“Both funds have underperformed the broader markets all year long, so that is possibly one of the reasons why we haven’t seen as many inflows as of late,” he said.

Two of the largest holdings in BUG are security-software companies Zscaler Inc. and Check Point Software Technologies Ltd., which have dropped 6.5% and 10% in 2021, respectively. Meanwhile, HACK currently counts BlackBerry Ltd. — another meme stock favorite — as its biggest holding. The stock has more than doubled this year.

The increased attention to cybersecurity issues, including the White House’s directive for firms to expand their protections, could have a longer-term benefit to the funds, even if they’re not currently in favor.

“Cybersecurity is an area that has a lot of potential in the next decade or so,” said Frank Lee, managing director of the investment strategy group at Miracle Mile Advisors. “It just goes back to time horizon — if you’re looking out at the next five or 10 years, it’s a great time to get into it.”

FBI Director Compares Ransomware Challenge To 9/11

Christopher Wray points to Russian hackers, calls for coordinated fight across U.S. society.

FBI Director Christopher Wray said the agency was investigating about 100 different types of ransomware, many tracing back to hackers in Russia, and compared the current spate of cyberattacks with the challenge posed by the Sept. 11, 2001, terrorist attacks.

“There are a lot of parallels, there’s a lot of importance, and a lot of focus by us on disruption and prevention,” Mr. Wray said in an interview Thursday. “There’s a shared responsibility, not just across government agencies but across the private sector and even the average American.”

Mr. Wray’s comments—among his first publicly since two recent ransomware attacks gripped the U.S. meat and oil-and-gas industries—come as senior Biden administration officials have characterized ransomware as an urgent national-security threat and said they are looking at ways to disrupt the criminal ecosystem that supports the booming industry.

Each of the 100 different malicious software variants are responsible for multiple ransomware attacks in the U.S., Mr. Wray said.

Ransomware is a type of malicious computer code that locks up a victim network’s files that hackers use to demand payment for their release, typically with digital currency such as bitcoin.

This week, hackers held hostage the world’s largest meat processor, just weeks after the operator of an essential pipeline bringing gasoline to parts of the East Coast paid about $4.4 million to regain control of its operations and restore service.

Senior officials at the Federal Bureau of Investigation for years have likened the need to confront rising cyber threats to the post-9/11 scramble against international terrorism. But Mr. Wray said the wave of recent ransomware attacks had spotlighted the toll cyberattacks can have on all Americans.

“Now realizing it can affect them when they’re buying gas at the pump or buying a hamburger—I think there’s a growing awareness now of just how much we’re all in this fight together,” Mr. Wray said.

The most prominent recent ransomware hacks represent only a fraction of the some 100 types of ransomware the FBI is investigating, Mr. Wray said. “Those are just two,” he said, adding that each of those 100 different malicious software variants had affected between a dozen and 100 targets.

“The scale of this problem is one that I think the country has to come to terms with,” he said.

Complaints to the FBI and reports from the private sector show ransomware incidents have tripled in the past year, Mr. Wray said. While private-sector estimates of the toll to the U.S. economy vary, companies that track ransomware generally put the cost at hundreds of millions or billions of dollars annually and say it is rapidly increasing.

U.S. authorities have attributed this week’s attack on JBS SA, the world’s biggest meat company by sales, to a criminal ransomware gang in Russia, and the White House has said President Biden planned to bring up the problem during a summit with Russian President Vladimir Putin in Geneva planned for June 16. Mr. Biden said he would look closely at whether to retaliate against Russia for the attacks.

In the interview, Mr. Wray singled out Russia as harboring many of the known users of ransomware.

“If the Russian government wants to show that it’s serious about this issue, there’s a lot of room for them to demonstrate some real progress that we’re not seeing right now,” Mr. Wray said.

Mr. Wray, who has led the bureau since 2017, has about six years remaining in his 10-year term, and Mr. Biden has said he planned to keep Mr. Wray in the post. He has kept a low profile during his tenure, as the FBI faced criticism from former President Donald Trump, who publicly and privately contemplated firing Mr. Wray.

In his few public appearances during the pandemic, Mr. Wray has pushed the private sector and international community to collaborate more with the FBI to battle hackers, including those from criminal gangs and foreign intelligence services seeking information from U.S. companies or institutions.

While the FBI has a policy of discouraging targets of such cyberattacks from paying the ransom, Mr. Wray said the agency was more interested in having companies cooperate with the bureau in their investigations into the attacks, to help piece together the puzzle of who was behind the attacks and figure out ways to thwart them.

On Thursday, Deputy Attorney General Lisa Monaco issued a memorandum to U.S. attorney’s offices around the country urging all ransomware investigations to be coordinated with a task force created in April.

Mr. Wray said coordination can pay off for ransomware victims and law enforcement alike. “I don’t want to suggest that this is the norm, but there have been instances where we’ve even been able to work with our partners to identify the encryption keys, which then would enable a company to actually unlock their data—even without paying the ransom,” he said.

Cybersecurity experts who have tracked the proliferation of ransomware attacks for years said they were encouraged by signals from Mr. Wray and others in the Biden administration that the issue had been elevated to a top national-security priority, but said the problem remained vexing.

“We will have to be creative and aggressive if we want to turn back the tide of this problem,” said John Hultquist, vice president of analysis at the cybersecurity firm Mandiant. Security researchers have cited huge profit margins, ease of payments through digital currency and lack of criminal consequences as difficult-to-solve factors contributing to the rise of ransomware.

Other senior administration officials this week echoed Mr. Wray’s call for coordination, saying the government can only do so much to combat ransomware gangs when the targets largely are private companies, most of which operate with little to no federal regulatory oversight of their cybersecurity standards.

Some Republicans have pressed the Biden administration to be more forceful in its response to ransomware and explain more clearly what penalties exist for hackers who target critical infrastructure.

“The danger from cyberattack is real, and we need more urgent cooperation between our public and private sectors, and more severe consequences for global cyber attackers,” Sen. Ben Sasse (R., Neb.) said after the JBS hack was disclosed this week.

Anne Neuberger, the White House deputy national security adviser for cyber and emerging technology, sent a memo to corporate executives and business leaders this week urging companies to “immediately convene their leadership teams to discuss the ransomware threat and review corporate security posture and business continuity plans to ensure you have the ability to continue or quickly restore operations.”

In the memo, a copy of which was reviewed by The Wall Street Journal, Ms. Neuberger said the Biden administration was working with other countries to hold ransomware gangs accountable.

“But we cannot fight the threat posed by ransomware alone,” Ms. Neuberger said. “The private sector has a distinct and key responsibility. The federal government stands ready to help you implement these best practices.”

FBI Director Compares Ransomware Challenge To 9/11

Christopher Wray points to Russian hackers, calls for coordinated fight across U.S. society.

Each of the 100 different malicious software variants are responsible for multiple ransomware attacks in the U.S., Mr. Wray said.

Ransomware is a type of malicious computer code that locks up a victim network’s files that hackers use to demand payment for their release, typically with digital currency such as bitcoin.

“The scale of this problem is one that I think the country has to come to terms with,” he said.

In the interview, Mr. Wray singled out Russia as harboring many of the known users of ransomware.

Some Republicans have pressed the Biden administration to be more forceful in its response to ransomware and explain more clearly what penalties exist for hackers who target critical infrastructure.

In the memo, a copy of which was reviewed by The Wall Street Journal, Ms. Neuberger said the Biden administration was working with other countries to hold ransomware gangs accountable.

FreakOut Malware Worms Its Way Into Vulnerable VMware Servers

A multi-platform Python-based malware targeting Windows and Linux devices has now been upgraded to worm its way into Internet-exposed VMware vCenter servers unpatched against a remote code execution vulnerability.

The malware, dubbed FreakOut by CheckPoint researchers in January (aka Necro and N3Cr0m0rPh), is an obfuscated Python script designed to evade detection using a polymorphic engine and a user-mode rootkit that hides malicious files dropped on compromised systems.

FreakOut spreads itself by exploiting a wide range of OS and apps vulnerabilities and brute-forcing passwords over SSH, adding the infected devices to an IRC botnet controlled by its masters.

The malware’s core functionality enables operators to launch DDoS attacks, backdoor infected systems, sniff and exfiltrate network traffic, and deploy XMRig miners to mine for Monero cryptocurrency.

Malware Upgraded With New Exploits

As Cisco Talos researchers shared in a report published today, FreakOut’s developers have been hard at work improving the malware’s spreading capabilities since early May, when the botnet’s activity has suddenly increased.

“Although the bot was originally discovered earlier this year, the latest activity shows numerous changes to the bot, ranging from different command and control (C2) communications and the addition of new exploits for spreading, most notably vulnerabilities in VMWare vSphere, SCO OpenServer, Vesta Control Panel and SMB-based exploits that were not present in the earlier iterations of the code,” Cisco Talos security researcher Vanja Svajcer said.

FreakOut bots scan for new systems to target either by randomly generating network ranges or on its masters’ commands sent over IRC via the command-and-control server.

For each IP address in the scan list, the bot will try to use one of the built-in exploits or log in using a hardcoded list of SSH credentials.

While early FreakOut versions were able to exploit only vulnerable versions of Lifearay, Laravel, WebLogic, TerraMaster, and Zend Framework (Laminas Project) web apps, the latest ones have more than double the number of built-in exploits.

Newly Added Exploits To Malware Variants Observed By Cisco Talos In May Include:

VestaCP — VestaCP 0.9.8 – ‘v_sftp_licence’ Command Injection
ZeroShell 3.9.0 — ‘cgi-bin/kerbynet’ Remote Root Command Injection
SCO Openserver 5.0.7 — ‘outputform’ Command Injection
Genexis PLATINUM 4410 2.1 P4410-V2-1.28 — Remote Command Execution vulnerability
OTRS 6.0.1 — Remote Command Execution vulnerability
VMWare vCenter — Remote Command Execution vulnerability
An Nrdh.php remote code execution exploit for an unknown app
Python versions of EternalBlue (CVE-2017-0144) and EternalRomance (CVE-2017-0147) exploits

The VMware vCenter vulnerability (CVE-2021-21972) is present in the vCenter plugin for vRealize Operations (vROps) and is particularly interesting because it impacts all default vCenter Server installations.

Thousands of unpatched vCenter servers are currently reachable over the Internet, as shown by Shodan and BinaryEdge.

Attackers have previously mass scanned for vulnerable Internet-exposed vCenter servers after security researchers published a proof-of-concept (PoC) exploit code.

Russian Foreign Intelligence Service (SVR) state hackers have also added CVE-2021-21972 exploits to their arsenal in February, actively exploiting them in ongoing campaigns.

VMware vulnerabilities have also been exploited in the past in ransomware attacks targeting enterprise networks. As Cisco Talos revealed, FreakOut operators have also been seen deploying a custom ransomware strain showing that they are actively experimenting with new malicious payloads.

Multiple ransomware gangs, including RansomExx, Babuk Locker, and Darkside, previously used VMWare ESXi pre-auth RCE exploits to encrypt virtual hard disks used as centralized enterprise storage space.

“Necro Python bot shows an actor that follows the latest development in remote command execution exploits on various web applications and includes the new exploits into the bot. This increases its chances of spreading and infecting systems,” Svajcer added.

“Users need to make sure to regularly apply the latest security updates to all of the applications, not just operating systems.”

Updated: 6-8-2021

Biden To Discuss Crypto’s Role In Ransomware Attacks At G-7, Says National Security Adviser

The U.S. president has rarely made public statements on crypto and blockchain, though officials in his administration are reportedly reviewing current regulations.

United States President Joe Biden will speak directly about cryptocurrency and its role in the attack on the Colonial Pipeline and other ransomware breaches, according to Biden’s national security adviser, Jake Sullivan.

In a White House press briefing on Monday, Sullivan said U.S. officials, seemingly including Biden, would like to see an action plan regarding ransomware attacks during the president’s visit to the G-7 summit this weekend.

The national security adviser said this plan should address the resilience of such attacks, how to share information with other democracies and “how to deal with the cryptocurrency challenge.”

Sullivan said crypto “lies at the core of how these ransom transactions are played out,” citing cyberattacks as a “national security priority” for the U.S. government — particularly, for “critical infrastructure.” His remarks follow hackers breaching the network behind the Colonial Pipeline in May, reportedly forcing the firm to pay $4.4 million in ransom.

“It’s gotta become a priority on a going forward basis,” said Sullivan, referring to the G-7 addressing such ransomware attacks. He described the issue as a “different order of magnitude of a security threat that the alliance has to concern itself with in a way that it hasn’t historically.”

President Biden has, as an individual, largely been silent on crypto and blockchain both as vice president under former President Barack Obama and during his campaign for office. Last July, then-candidate Biden said he didn’t hold Bitcoin (BTC), following a massive hack that took over high-profile accounts and asked their followers to send crypto.

However, his administration is reportedly reviewing existing rules around crypto and determining whether new restrictions are needed to protect investors following volatility in the market. Since hitting an all-time high price of roughly $65,000 in April, Bitcoin has fallen more than 44% to reach $35,588 at the time of publication.

The G-7 summit is scheduled to be held in the United Kingdom from June 11 to 13. It will be Biden’s first foreign trip acting as U.S. president since his inauguration in January.

Updated: 6-9-2021

New Analysis Sheds Light On DOJ Bitcoin Seizure, As JBS Pays Massive $11M Ransom

The FBI may have access to a lot more BTC in hacking group’s addresses.

JBS USA Holdings Inc. has paid an $11 million ransom in Bitcoin to cybercriminals as new details emerge over the FBI’s recovery of assets from a previous heist.

The payment, estimated to be more than 300 BTC at current prices, was made to shield JBS factories from further disruption. The firm is the world’s largest meat company by sales, processing beef, poultry, and pork from Australia to South America and Europe.

Andre Nogueira, chief executive of the Brazilian meat company’s U.S. division, said that the payment was painful and made after the majority of JBS plants were up and running again to ensure there were no further attacks. According to the Wall Street Journal, the FBI last week attributed the JBS attack to REvil, a criminal cybercrime group with ties to Russia.

The latest high-profile Bitcoin ransom payment will no doubt add to pressure on legislators to act. Earlier today Democratic Senator Elizabeth Warren hacalled for tighter regulation stating that cryptocurrency has “created opportunities to scam investors, assist criminals, and worsen the climate crisis”. Regarding the recent ransomware attacks, she said:

“Every hack that is successfully paid off with a cryptocurrency becomes an advertisement for more hackers to try more cyberattacks,”

The attack on JBS, which was discovered on May 30, was part of a wave of incursions using ransomware that also targeted Colonial Pipeline, the operator of a pipeline bringing gasoline to parts of the U.S. East Coast.

As reported by Cointelegraph, the FBI managed to recover 63.7 BTC from the 75 BTC ransom paid by the firm to another Russian-linked hacker group called DarkSide.

At the time, the crypto community questioned the methods used by the federal agency to gain access to the private keys for the target address. It was also suggested by some that Coinbase was involved in the seizure but company executives denied any connection.

According to crypto asset insurance company Evertas, DarkSide was likely already on the law enforcement radar and had themselves confirmed that they had lost control of their infrastructure, including the ability to extricate crypto funds.

It notes that according to the affidavit, the private key for the subject address was in the possession of the FBI in the Northern District of California, not the actual funds.

Evertas analyzed the transfers using a combination of open-source tools and subscription-based blockchain analytics to reveal that the hacker group split the ransom over three addresses in early May.

The analysis reveals that DarkSide controlled multiple addresses containing a total of 114 BTC up until the middle of May. On 7 June, 63.7 BTC were seized from one of the addresses and Evertas believes the FBI probably controls the rest:

“Evertas suspects that the FBI likely now controls the remaining almost 114 BTC and may be working to tie other payments made to DarkSide by other victims of the hackers’ RaaS [Ransomware as a Service] before effecting official seizures of the remaining funds.”

The revelation may sound positive but analysts at data analytics firm GlobalData believe that cryptocurrencies have just become a lot less secure as the seizure sets the path towards fiat-currency-style control. Thematic Analyst at GlobalData, Danyaal Rashid, said:

“Bitcoin was supposed to liberate us from government control: decentralized and out of the government’s hands. The fact that the US Government has managed to recover most of this ransom, despite it being paid in Bitcoin, goes directly against this.”

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