November 9, 2011

The proprietors of shadowy online businesses that have become synonymous with cybercrime in recent years were arrested in their native Estonia on Tuesday and charged with running a sophisticated click fraud scheme that infected with malware more than four million computers in over 100 countries — including an estimated 500,000 PCs in the United States. The law enforcement action, dubbed “Operation Ghost Click,” was the result  of a multi-year investigation, and is being called the “biggest cybercriminal takedown in history.”

Vladimir Tsastsin, in undated photo.

Estonian authorities arrested six men, including Vladimir Tsastsin, 31, the owner of several Internet companies that have been closely associated with the malware community for many years. Tsastsin previously headed EstDomains Inc. a domain name registrar that handled the registrations for tens of thousands of domains associated with the far-flung Russian Business Network.

Reporting for The Washington Post in September 2008, I detailed how Tsastsin’s prior convictions in Estonia for credit card fraud, money laundering and forgery violated the registrar agreement set forth by the Internet Corporation for Assigned Names and Numbers (ICANN), which bars convicted felons from serving as officers of a registrar. ICANN later agreed, and revoked EstDomains’ ability to act as a domain registrar, citing Tsastsin’s criminal history.

Also arrested were Timur Gerassimenko, 31; Dmitri Jegorov, 33; Valeri Aleksejev, 31; Konstantin Poltev, 28 (quoted in the above-linked stories as the spokesperson for EstDomains); and Anton Ivanvov, 26. All six men were arrested and taken into custody this week by the Estonian Police and Border Guard. A seventh defendant, a 31-year-old Russian national named Andrey Taame, is still at large.

Source: FBI

Indictments returned against the defendants in the U.S. District Court for the South District of New York detail how the defendants allegedly used a strain of malware generically known as DNS Changer to hijack victim computers for the purposes of redirecting Web browsers to ads that generated pay-per-click revenue for the defendants and their clients. U.S. authorities allege that the men made more than $14 million through click hijacking and advertisement replacement fraud.

DNS Changer most often comes disguised as a video “codec” supposedly needed to view adult movies. It infects systems at the boot sector level, hooking into the host computer at a very low level and making it often very challenging to remove. This malware family didn’t just infect Microsoft Windows systems: Several versions of DNS changer would just as happily infect Mac systems as well. Other variants of the malware even hijacked DNS settings on wireless home routers. The FBI has posted several useful links to help users learn whether their systems are infected with DNS Changer.

Feike Hacquebord, senior threat researcher for security vendor Trend Micro, called the arrest the “biggest cybercriminal takedown in history.” In a blog post published today, Hacquebord and Trend detail the multi-year takedown, which involved a number of front companies, but principally an entity that Tsastsin founded named Rove Digital:

In 2009 we obtained a copy of the hard drives of two C&C servers that replaced advertisements on websites when loaded by DNS Changer victims. On the hard drives we found public SSH keys of several Rove Digital employees. These keys allowed the Rove Digital employees to log in on the C&C servers without password, but with their private key. From log files on the servers we were able to conclude that the C&C servers were controlled from Rove Digital’s office in Tartu.

Rove Digital had also been running a fake AV / rogue DNS affiliate program called Nelicash. We were able to download a schema of the infrastructure for the fake AV part. From a Nelicash C&C server we discovered data on victims who bought fake AV software. Among the purchases of victims, there were several test orders placed by employees of Rove Digital from IP addresses controlled by Rove Digital in Estonia and the US. This shows that Rove Digital was directly involved in the sales of the fake AV.

From the same Nelicash C&C server we were also able to download a detailed planning of the deployment of new rogue DNS servers in 2010 and 2011. Every day, Rove Digital spread a new malware sample that changed systems’ DNS settings to a unique pair of foreign servers. We checked DNS Changer Trojans for a couple of days and we learned that these Trojans changed DNS settings of victims exactly according to their plan.

We collected much more evidence but we are unable to include them all here. All of our findings indicate that Rove Digital is committing cybercrimes on a large scale indeed and is directly responsible for the large DNS Changer botnet.

As its name suggests, DNS Changer works by hijacking the domain name system (DNS) server settings on a computer; these settings point to Internet servers that are responsible for translating human-friendly domain names like into numeric Internet addresses that are easier for computers to understand. DNS Changer swapped out victims’ legitimate DNS server settings with the addresses of DNS Servers controlled by Rove Digital. Armed with that control, the defendants could redirect any part of the Web browsing session on an infected user’s computer.

This presented a unique challenge for the law enforcement officials and private security experts who sought to dismantle the fraud network. Experts had identified a large number of rogue DNS servers that were owned by front companies tied to Rove Digital, and indeed secured a court order to seize control over those servers. But experts warned the FBI that seizing the rogue DNS servers without first putting in place a backup system would effectively kill Internet access for the four million computers worldwide that were infected with DNS Changer.

In response, the court appointed the job of swapping out the rogue DNS servers for clean ones to Internet Systems Consortium (ISC), a California nonprofit that maintains BIND, a DNS software package that is widely used throughout the Internet.

“The big concerns came when all the evidence had built up on the law enforcement side, and people said, ‘Hey, there are millions of infected systems whose DNS is wrong,'” said Barry Greene, president and CEO of ISC. “We really wanted to keep people from having their DNS shut down, and everyone calling the help desk at their ISP or security provider to complain that their Internet wasn’t working.”

In a press call with reporters, FBI officials said they would be working with industry to help notify ISPs about customers infected with DNS Changer.

“It’s a complicated cleanup because the malware they put on there is boot-sector stuff,” Greene said. “So we’re not finished. We just finished phase 1, which is law enforcement putting handcuffs on people and making sure we don’t black out people on the ‘Net. The press release and outreach is phase two, and cleanup is phase three. We’ll be doing that for some time, I think.”

Officials from the FBI and the U.S. Attorney for the Southern District of New York said they would seek to extradite the defendants to the United States. An FBI official told reporters that four of the arrested have been charged in Estonia and will probably face trial and any judgment over in that country before being extradited. The FBI said it would concentrate on extraditing two of the men arrested — Anton Ivanov and Valeri Aleksejev — neither of whom were charged in Estonia but were arrested provisionally.

The U.S. government has had some success in extraditing Estonian cybercriminals. Sergei Tsurikov, an Estonian man convicted of participating in the coordinated $9 million ATM heist against RBS Worldpay in late 2008, was extradited to the U.S. last year after serving part of his time in an Estonian prison. Tsurikov is currently being processed through an federal jail in Atlanta.

A copy of the indictments returned against the seven men is available here (PDF). This link from Estonian news outlet Delfi includes several pictures of the arrest and seizure of equipment from Rove Digital properties.

16 thoughts on “‘Biggest Cybercriminal Takedown in History’

  1. JimV

    Score 1 (maybe more) for the good guys (or at least the better guys)…!

  2. bruce

    Congratulations are in order.

    Can these guys buy their freedom in that part of the world?

  3. Васек

    мистер Краб так по-пидарски себя ведет
    пора бы знать, пока нету решения суда, ёпт нельзя называть человек преступником и всячески склонять мнение статьи к этому
    амерская демократия в действии ёпт

    1. Едераст

      Очень корректная статья. Ни разу не назвает арестованных преступниками. Только факты.

  4. GMF

    Nice article, I like the technical references. These guys are at the heart of what I believe to be “the curse” of the internet. Next, the SPAM kings need to be taken down….

  5. Konn

    It’s known that in Estonia usually Russians win competitions in maths etc, and they say that this gang’s leader had also participated in international competitions etc. I wonder why (when they have all the talent and brains) don’t they put it into practice for something good???? The other guy from Estonia who was sentenced for cyber crimes by the US authorities in 2007 or sth was also Russian. If they are so talented, why don’t they do sth good with their talent????

    1. Mo Money


  6. george

    Mr. Tsastsin may soon play the role of the punching bag himself (at the hands of other inmates).
    What I don’t understand is how it was possible to be convicted for such massive credit card fraud not long ago and yet to be at large and committing a new string of misdeeds.

  7. cherry

    Why should governments care when peoples’ malware infested machines stop surfing the net? Where is the personal responsibility in this situation? If someone is stupid enough to download a “codec” then it would be a cold, hard lesson in being more careful.

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