Category: cryptocurrency

An ex-NSA employee has been charged with trying to sell classified data to the Russians (but instead actually talking to an undercover FBI agent).

It’s a weird story, and the FBI affidavit raises more questions than it answers. The employee only worked for the NSA for three weeks—which is weird in itself. I can’t figure out how he linked up with the undercover FBI agent. It’s not clear how much of this was the employee’s idea, and whether he was goaded by the FBI agent. Still, hooray for not leaking NSA secrets to the Russians. (And, almost ten years after Snowden, do we still have this much trouble vetting people before giving them security clearances?)

Mr. Dalke, who had already left the N.S.A. but told the agent that he still worked there on a temporary assignment, then revealed that had taken “highly sensitive information” related to foreign targeting of U.S. systems and information on cyber operations, the prosecutors said. He offered the information in exchange for cryptocurrency and said he was in “financial need.” Court records show he had nearly $84,000 in debt between student loans and credit cards.

EDITED TO ADD (10/5): Marcy Wheeler notes that the FBI seems to be sitting on some common recruitment point, and collecting potential Russian spies.

The Wall Street Journal is reporting that the FBI has recovered over $30 million in cryptocurrency stolen by North Korean hackers earlier this year. It’s only a fraction of the $540 million stolen, but it’s something.

The Axie Infinity recovery represents a shift in law enforcement’s ability to trace funds through a web of so-called crypto addresses, the virtual accounts where cryptocurrencies are stored. These addresses can be created quickly without them being linked to a cryptocurrency company that could freeze the funds.

In its effort to mask the stolen crypto, Lazarus Group used more than 12,000 different addresses, according to Chainalysis. Unlike bank transactions that happen through private networks, movement between crypto accounts is visible to the world on the blockchain.

Advanced blockchain-monitoring tools and cooperation from centralized crypto exchanges enabled the FBI to trace the crypto to where Lazarus Group tried to cash out, investigators said.

The money was laundered through the Tornado Cash mixer.

It’s pretty nasty:

The malware was dubbed “Shikitega” for its extensive use of the popular Shikata Ga Nai polymorphic encoder, which allows the malware to “mutate” its code to avoid detection. Shikitega alters its code each time it runs through one of several decoding loops that AT&T said each deliver multiple attacks, beginning with an ELF file that’s just 370 bytes.

Shikitega also downloads Mettle, a Metasploit interpreter that gives the attacker the ability to control attached webcams and includes a sniffer, multiple reverse shells, process control, shell command execution and additional abilities to control the affected system.

[…]

The final stage also establishes persistence, which Shikitega does by downloading and executing five shell scripts that configure a pair of cron jobs for the current user and a pair for the root user using crontab, which it can also install if not available.

Shikitega also uses cloud hosting solutions to store parts of its payload, which it further uses to obfuscate itself by contacting via IP address instead of domain name. “Without [a] domain name, it’s difficult to provide a complete list of indicators for detections since they are volatile and they will be used for legitimate purposes in a short period of time,” AT&T said.

Bottom line: Shikitega is a nasty piece of code. AT&T recommends Linux endpoint and IoT device managers keep security patches installed, keep EDR software up to date and make regular backups of essential systems.

Another article.

Slashdot thread.

Stewart Baker discusses why the industry-norm responsible disclosure for software vulnerabilities fails for cryptocurrency software.

Why can’t the cryptocurrency industry solve the problem the way the software and hardware industries do, by patching and updating security as flaws are found? Two reasons: First, many customers don’t have an ongoing relationship with the hardware and software providers that protect their funds­—nor do they have an incentive to update security on a regular basis. Turning to a new security provider or using updated software creates risks; leaving everything the way it was feels safer. So users won’t be rushing to pay for and install new security patches.

Second, cryptocurrency is famously and deliberately decentralized, anonymized, and low friction. That means that the company responsible for hardware or software security may have no way to identify who used its product, or to get the patch to those users. It also means that many wallets with security flaws will be publicly accessible, protected only by an elaborate password. Once word of the flaw leaks, the password can be reverse engineered by anyone, and the legitimate owners are likely to find themselves in a race to move their assets before the thieves do. Even in the software industry, hackers routinely reverse engineer Microsoft’s patches to find the security flaws they fix and then try to exploit them before the patches have been fully installed.

He doesn’t have any good ideas to fix this. I don’t either. Just add it to the pile of blockchain’s many problems.

Amid a wave of hacks that have cost investors billions of dollars worth of cryptocurrency, the FBI is calling on decentralised finance (DeFi) platforms to improve their security. In a warning posted on its website, the FBI said that cybercriminals are increasingly targeting DeFi platforms to steal cryptocurrency, often exploiting vulnerabilities in smart contracts to […]… Read More

The post FBI issues warning after crypto-crooks steal $1.3 billion in just three months appeared first on The State of Security.

A new type of scam, called “pig butchering” is gaining momentum. Pig butchering is a unique scam which uses a romance scam script, but with an investment spin on it, where victims are groomed to invest large sums of money, often on fake crypto apps. Behind the scenes of these scams are scam centers run […]… Read More

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