Krebs on Security

Cards Stolen in Target Breach Flood Underground Markets

December 20, 2013

Credit and debit card accounts stolen in a recent data breach at retail giant Target have been flooding underground black markets in recent weeks, selling in batches of one million cards and going for anywhere from $20 to more than $100 per card, KrebsOnSecurity has learned.

Prior to breaking the story of the Target breach on Wednesday, Dec. 18, I spoke with a fraud analyst at a major bank who said his team had independently confirmed that Target had been breached after buying a huge chunk of the bank’s card accounts from a well-known “card shop” — an online store advertised in cybercrime forums as a place where thieves can reliably buy stolen credit and debit cards.

There are literally hundreds of these shady stores selling stolen credit and debit cards from virtually every bank and country. But this store has earned a special reputation for selling quality “dumps,” data stolen from the magnetic stripe on the backs of credit and debit cards. Armed with that information, thieves can effectively clone the cards and use them in stores. If the dumps are from debit cards and the thieves also have access to the PINs for those cards, they can use the cloned cards at ATMs to pull cash out of the victim’s bank account.

At least two sources at major banks said they’d heard from the credit card companies: More than a million of their cards were thought to have been compromised in the Target breach. One of those institutions noticed that one card shop in particular had recently alerted its loyal customers about a huge new batch of more than a million quality dumps that had been added to the online store. Suspecting that the advertised cache of new dumps were actually stolen in the Target breach, fraud investigators with the bank browsed this card shop’s wares and effectively bought back hundreds of the bank’s own cards.

When the bank examined the common point of purchase among all the dumps it had bought from the shady card shop, it found that all of them had been used in Target stores nationwide between Nov. 27 and Dec. 15. Subsequent buys of new cards added to that same shop returned the same result.

On Dec. 19, Target would confirm that crooks had stolen 40 million debit and credit cards from stores nationwide in a breach that extended from Nov. 27 to Dec. 15. Not long after that announcement, I pinged a source at a small community bank in New England to see whether his institution had been notified by Visa or MasterCard about specific cards that were potentially compromised in the Target breach.

This institution has issued a grand total of more than 120,000 debit and credit cards to its customers, but my source told me the tiny bank had not yet heard anything from the card associations about specific cards that might have been compromised as a result of the Target breach. My source was anxious to determine how many of the bank’s cards were most at risk of being used for fraud, and how many should be proactively canceled and re-issued to customers. The bank wasn’t exactly chomping at the bit to re-issue the cards; that process costs around $3 to $5 per card, but more importantly it didn’t want to unnecessarily re-issue cards at a time when many of its customers would be racing around to buy last-minute Christmas gifts and traveling for the holidays.

On the other hand, this bank had identified nearly 6,000 customer cards — almost 5 percent of all cards issued to customers — that had been used at Target stores nationwide during the breach window described by the retailer.

“Nobody has notified us,” my source said. “Law enforcement hasn’t said anything, our statewide banking associations haven’t sent anything out…nothing. Our senior legal counsel today was asking me if we have positive confirmation from the card associations about affected cards, but so far we haven’t gotten anything.”

When I mentioned that a big bank I’d spoken with had found a 100 percent overlap with the Target breach window after purchasing its available cards off a particular black market card shop called rescator[dot]la, my source at the small bank asked would I be willing to advise his fraud team on how to do the same?

CARD SHOPPING

Ultimately, I agreed to help in exchange for permission to write about the bank’s experience without actually naming the institution. The first step in finding any of the bank’s cards for sale was to browse the card shop’s remarkably efficient and customer-friendly Web site and search for the bank’s “BINs”; the Bank Identification Number is merely the first six digits of a debit or credit card, and each bank has its own unique BIN or multiple BINs.

According to the “base” name for all stolen cards sold at this card shop, the proprietor sells only cards stolen in the Target breach.

A quick search on the card shop for the bank’s BINs revealed nearly 100 of its customers’s cards for sale, a mix of MasterCard dumps ranging in price from $26.60 to $44.80 apiece. As one can imagine, this store doesn’t let customers pay for purchases with credit cards; rather, customers can “add money” to their accounts using a variety of irreversible payment mechanisms, including virtual currencies like Bitcoin, Litecoin, WebMoney and PerfectMoney, as well as the more traditional wire transfers via Western Union and MoneyGram.

With my source’s newly registered account funded via wire transfer to the tune of USD $450, it was time to go shopping. My source wasn’t prepared to buy up all of the available cards that match his institution’s BINs, so he opted to start with a batch of 20 or so of the more recently-issued cards for sale.

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Sources: Target Investigating Data Breach

December 18, 2013

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Nationwide retail giant Target is investigating a data breach potentially involving millions of customer credit and debit card records, multiple reliable sources tell KrebsOnSecurity. The sources said the breach appears to have begun on or around Black Friday 2013 — by far the busiest shopping day the year.

Update, Dec. 19: 8:20 a.m. ET: Target released a statement this morning confirming a breach, saying that 40 million credit and debit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013.

Original story;

According to sources at two different top 10 credit card issuers, the breach extends to nearly all Target locations nationwide, and involves the theft of data stored on the magnetic stripe of cards used at the stores.

Minneapolis, Minn. based Target Brands Inc. has not responded to multiple requests for comment. Representatives from MasterCard and Visa also could not be immediately reached for comment.

Both sources said the breach was initially thought to have extended from just after Thanksgiving 2013 to Dec. 6. But over the past few days, investigators have unearthed evidence that the breach extended at least an additional week — possibly as far as Dec. 15. According to sources, the breach affected an unknown number of Target customers who shopped at the company’s bricks-and-mortar stores during that timeframe.

“The breach window is definitely expanding,” said one anti-fraud analyst at a top ten U.S. bank card issuer who asked to remain anonymous. “We can’t say for sure that all stores were impacted, but we do see customers all over the U.S. that were victimized.”

There are no indications at this time that the breach affected customers who shopped at Target’s online stores. The type of data stolen — also known as “track data” — allows crooks to create counterfeit cards by encoding the information onto any card with a magnetic stripe. If the thieves also were able to intercept PIN data for debit transactions, they would theoretically be able to reproduce stolen debit cards and use them to withdraw cash from ATMs.
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The Biggest Skimmers of All: Fake ATMs

December 18, 2013

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This blog has spotlighted some incredibly elaborate and minaturized ATM skimmers, fraud devices that thieves attach to ATMs in a bid to steal card data and PINs. But a skimmer discovered in Brazil last month takes this sort of fraud to another level, using a completely fake ATM designed to be stacked directly on top of a legitimate, existing cash machine.

On Saturday, Nov. 23, a customer at a Bank of Brazil branch in Curitiba, Brazil approached the cash machine pictured below, dipped his ATM card in the machine’s slot, and entered his PIN, hoping to get a printed statement of his bank balance.

A completely fake ATM discovered in Brazil, designed to sit directly on top of the real cash machine.

When the transaction failed, the customer became suspicious and discovered that this ATM wasn’t a cash machine at all, but a complete fake designed to be seated directly on top of the real cash machine. Here’s what the legitimate ATM that was underneath looked like.

The real ATM underneath.

When the cops arrived, they pulled the fake ATM off the real cash machine. Here is the fake ATM, set down on the floor.

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The Case for a Compulsory Bug Bounty

December 17, 2013

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Security experts have long opined that one way to make software more secure is to hold software makers liable for vulnerabilities in their products. This idea is often dismissed as unrealistic and one that would stifle innovation in an industry that has been a major driver of commercial growth and productivity over the years. But a new study released this week presents perhaps the clearest economic case yet for compelling companies to pay for information about security vulnerabilities in their products.

Before I delve into this modest proposal, let’s postulate a few assumptions that hopefully aren’t terribly divisive:

Modern societies are becoming increasingly dependent on software and computer programs.
After decades of designing software, human beings still build imperfect, buggy, and insecure programs.
Estimates of the global damage from cybercrime ranges from the low billions to hundreds of billions of dollars annually.
The market for finding, stockpiling and hoarding (keeping secret) software flaws is expanding rapidly.
Vendor-driven “bug bounty” programs which reward researchers for reporting and coordinating the patching of flaws are expanding, but currently do not offer anywhere near the prices offered in the underground or by private buyers.
Software security is a “negative externality”: like environmental pollution, vulnerabilities in software impose costs on users and on society as a whole, while software vendors internalize profits and externalize costs. Thus, absent any demand from their shareholders or customers, profit-driven businesses tend not to invest in eliminating negative externalities.

Earlier this month, I published a piece called How Many Zero-Days Hit You Today, which examined a study by vulnerability researcher Stefan Frei about the bustling market for “zero-day” flaws — security holes in software that not even the makers of those products know about. These vulnerabilities — particularly zero-days found in widely-used software like Flash and Java — are extremely valuable because attackers can use them to slip past security defenses unnoticed.

Frei’s analysis conservatively estimated that private companies which purchase software vulnerabilities for use by nation states and other practitioners of cyber espionage provide access to at least 85 zero-day exploits on any given day of the year. That estimate doesn’t even consider the number of zero-day bugs that may be sold or traded each day in the cybercrime underground.

At the end of that post, I asked readers whether it was possible and/or desirable to create a truly global, independent bug bounty program that would help level the playing field in favor of the defenders and independent security researchers. Frei’s latest paper outlines one possible answer.

BUYING ALL BUGS AT ABOVE BLACK-MARKET PRICES

Frei proposes creating a multi-tiered, “international vulnerability purchase program” (IVPP), in which the major software vendors would be induced to purchase all of the available and known vulnerabilities at prices well above what even the black market is willing to pay for them. But more on that in a bit.

The director of research for Austin, Texas-based NSS Labs, Frei examined all of the software vulnerabilities reported in 2012, and found that the top 10 software makers were responsible for more than 30 percent of all flaws fixed. Frei estimates that if these vendors were to have purchased information on all of those flaws at a steep price of $150,000 per vulnerability — an amount that is well above what cybercriminals or vulnerability brokers typically offer for such bugs — this would still come to less than one percent of the annual revenues for these software firms.

Frei points out that the cost of purchasing all vulnerabilities for all products would be considerably lower than the savings that would occur as a result of the expected reduction in losses occurring as a result of cyber crime — even under the conservative estimate that these losses would be reduced by only 10 percent.

In the above chart, for example, we can see Oracle — the software vendor responsible for Java and a whole heap of database software code that is found in thousands of organizations — fixed more than 427 vulnerabilities last year. It also brought in more than $37 billion in revenues that year. If Oracle were to pay researchers top dollar ($150,000) for each vulnerability, that would still come to less than two-tenths of one percent of the company’s annual revenues (USD $67 million).

Frei posits that if vendors were required to internalize the cost of such a program, they would likely be far more motivated to review and/or enhance the security of their software development processes.

Likewise, Frei said, such a lucrative bug bounty system would virtually ensure that every release of commercial software products would be scrutinized by legions of security experts.

“In the short term, it would hit the vendors very badly,” Frei said in a phone interview with KrebsOnSecurity. “But in the long term, this would produce much more secure software.”

“When you look at new innovations like cars, airplanes and electricity, we see that security and reliability was enhanced tremendously with each as soon as there was independent testing,” said Frei, an experienced helicopter pilot. “I was recently reading a book about the history of aviation, and [it noted that in] the first iteration of the NTSB [National Transportation Safety Board] it was explicitly stated that when they investigate an accident, if they could not find a mechanical failure, they blamed the pilot. This is what we do now with software: We blame the user. We say, you should have installed antivirus, or done this and that.”

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Botnet Enlists Firefox Users to Hack Web Sites

December 16, 2013

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An unusual botnet that has ensnared more than 12,500 systems disguises itself as a legitimate add-on for Mozilla Firefox and forces infected PCs to scour Web sites for security vulnerabilities, an investigation by KrebsOnSecurity has discovered.

The botnet, dubbed “Advanced Power” by its operators, appears to have been quietly working since at least May 2013. It’s not clear yet how the initial infection is being spread, but the malware enslaves PCs in a botnet that conducts SQL injection attacks on virtually any Web sites visited by the victim.

The “Advanced Power” botnet installs itself as a legitimate Firefox extension. The malware looks for vulnerabilities in Web sites visited by the victim.

SQL injection attacks take advantage of weak server configurations to inject malicious code into the database behind the public-facing Web server. Attackers can use this access to booby-trap sites with drive-by malware attacks, or force sites to cough up information stored in their databases.

Although this malware does include a component designed to steal passwords and other sensitive information from infected machines, this feature does not appear to have been activated on the infected hosts. Rather, the purpose of this botnet seems to be using the compromised Windows desktops as a distributed scanning platform for finding exploitable Web sites. According to the botnet’s administrative panel, more than 12,500 PCs have been infected, and these bots in turn have helped to discover at least 1,800 Web pages that are vulnerable to SQL injection attacks.

The fraudulent Firefox add-on.

The malicious code comes from sources referenced in this Malwr writeup and this Virustotal entry (please don’t go looking for this malware unless you really know what you’re doing). On infected systems with Mozilla Firefox installed, the bot code installs a browser plugin called “Microsoft .NET Framework Assistant” (this bogus add-on does not appear to be the same thing as this add-on by the same name). The malicious add-on then tests nearly every page the infected user visits for the presence of several different SQL injection vulnerabilities.

Alex Holden, chief information security officer at Hold Security LLC, said the botnet appears to have been built to automate the tedious and sometimes blind guesswork involved in probing sites for SQL vulnerabilities.

“When you test an application for SQL injection or any other vulnerability, you have a small frame of reference as to the site’s functionality,” Holden said. “You often don’t know or can’t see many user functions. And in some cases you need proper credentials to do it right. In this case, the hackers are using valid requests within many sites that end-users themselves are feeding them. This is a much bigger sample than you would normally get. By no means it is a full regression test, but it is a deep and innovative approach.”

Holden said he believes the authors of this botnet may be natives of and/or reside in the Czech Republic, noting that a few transliterated text strings in the malware are auto-detected by Google Translate as Czech.

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Hacked Via RDP: Really Dumb Passwords

December 13, 2013

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Businesses spend billions of dollars annually on software and hardware to block external cyberattacks, but a shocking number of these same organizations shoot themselves in the foot by poking gaping holes in their digital defenses and then advertising those vulnerabilities to attackers. Today’s post examines an underground service that rents access to hacked PCs at organizations that make this all-too-common mistake.

Makost[dot]net is a service advertised on cybercrime forums which sells access to “RDPs”, mainly Microsoft Windows systems that have been configured (poorly) to accept “Remote Desktop Protocol” connections from the Internet. Windows ships with its own RDP interface built-in; to connect to another Windows desktop or server remotely, simply fire up the Remote Desktop Connection utility in Windows, type in the Internet address of the remote system, and enter the correct username and password for a valid user account on that remote system. Once the connection is made, you’ll see the remote computer’s desktop as if you were sitting right in front of it, and have access to all its programs and files.

Makhost[dot]net sells access to thousands of hacked RDP installations. Prices range from $3 to $10 based on a variety of qualities, such as the number of CPUs, the operating system version and the PC’s upload and download speeds.

Makost currently is selling access to more than 6,000 compromised RDP installations worldwide. As we can see from the screen shot above, hacked systems are priced according to a combination of qualities of the server:

city, state, country of host;
administrative or regular user rights;
operating system version;
number and speed of computer processors;
amount of system memory;
network download and upload speeds;
NAT or direct

KrebsOnSecurity was given a glimpse inside the account of a very active user of this service, an individual who has paid more than $2,000 over the past six months to purchase some 425 hacked RDPs. I took the Internet addresses in this customer’s purchase history and ran WHOIS database lookups on them all in a bid to learn more about the victim organizations. As expected, roughly three-quarters of those addresses told me nothing about the victims; the addresses were assigned to residential or commercial Internet service providers.

But the WHOIS records turned up the names of businesses for approximately 25 percent of the addresses I looked up. The largest group of organizations on this list were in the manufacturing (21 victims) and retail services (20) industries. As I sought to categorize the long tail of other victim organizations, I was reminded of the Twelve Days of Christmas carol.

twelve healthcare providers;
ten education providers;
eight government agencies;
seven technology firms;
six insurance companies;
five law firms;
four financial institutions;
three architects;
two real estate firms;
and a forestry company (in a pear tree?)

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Help Bring Privacy Laws Into 21st Century

December 11, 2013

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Lost in the ongoing media firestorm over the National Security Agency’s domestic surveillance activities is the discussion about concrete steps to bring the nation’s communications privacy laws into the 21st Century. Under current laws that were drafted before the advent of the commercial Internet, federal and local authorities can gain access to mobile phone and many email records without a court-issued warrant. In this post, I’ll explain what federal lawmakers and readers can do to help change the status quo [tl;dr: if you’d rather skip the explanation and go right to the What Can You Do? section, click here]

The Center for Democracy & Technology, a policy think-tank based in Washington, D.C., has a concise and informative primer on the Electronic Communications Privacy Act (ECPA), the 1986 statute that was originally designed to protect Americans from Big Brother and from government overreach. Unfortunately, the law is now so outdated that it actually provides legal cover for the very sort of overreach it was designed to prevent.

Online messaging was something of a novelty when lawmakers were crafting the ECPA, which gave email moving over the network essentially the same protection as a phone call or postal letter. In short, it required the government to obtain a court-approved warrant to gain access to that information. But the Justice Department wanted different treatment for stored electronic communications. (Bear in mind that this was way before anyone was talking about “cloud” storage; indeed CDT notes that electronic storage of digital communications in 1986 was quite expensive, and it wasn’t unusual for email providers to delete messages that were more than a few months old).

CDT explains the bargain that was struck to accommodate the government’s concerns:

“Congress said that after 180 days email would no longer be protected by the warrant standard and instead would be available to the government with a subpoena, issued by a prosecutor or FBI agent without the approval of a judge,” CDT wrote. “At the same time, Congress concluded that, while the contents of communications must be highly protected in transit, the ‘transactional data’ associated with communications, such as dialing information showing what numbers you are calling, was less sensitive. ECPA allowed the government to use something less than a warrant to obtain this routing and signaling information.”

Fast-forward to almost 2014, and we find of course that most people store their entire digital lives “in the cloud.” This includes not only email, but calendar data, photos and other sensitive information. Big cloud providers like Google, Microsoft and Yahoo! have given users so much free storage space that hardly anyone has cause to delete their stuff anymore. Not only that, but pretty much everyone is carrying a mobile phone that can be used to track them and paint a fairly detailed account of their daily activities.

But here’s the thing that’s screwy about ECPA: If you’re the kind of person who stores all that information on your laptop, the government can’t get at it without a court-ordered warrant. Leave it in the hands of email, mobile and cloud data providers, however, and it’s relatively easy pickings for investigators.

“There has been an interpretation of the law from the government that says any document stored in the cloud can be accessed with a subpoena, regardless of how old it is,” said Mark Stanley, a communications strategist with CDT. “The government can access emails over 180 days old with just a subpoena. “We also know that the [Justice Department] has interpreted the law to say that any emails that are opened — regardless of how old they are — can be accessed without a warrant.”

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Zero-Day Fixes From Adobe, Microsoft

December 10, 2013

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Adobe and Microsoft today each separately released security updates to remedy zero-day bugs and other critical vulnerabilities in their software. Adobe issued fixes for its Flash and Shockwave players, while Microsoft pushed out 11 updates addressing at least two dozen flaws in Windows and other software.

Five of today’s 11 update bundles earned Microsoft’s “critical” rating, meaning that the vulnerabilities those patches fix can be exploited remotely by malware or miscreants without any help from users. At the top of the priority list for Windows users should be MS13-096, a patch that plugs a critical zero-day security hole in certain versions of Windows and Office. Microsoft first warned about this flaw on Nov. 5.

Microsoft also is urging customers and system administrators to prioritize two other critical fixes: MS13-097, a cumulative patch for Internet Explorer (all versions), and MS13-099, which fixes a dangerous scripting issue in Windows. All three of these patches fix bugs that Microsoft says are likely to be exploited by attackers in the near future.

Ross Barrett, senior manager of security engineering at Rapid7, points out a noteworthy patch (MS13-104) for users of Microsoft Office 2013’s “cloud” services, which apparently fixes another vulnerability that is actively being exploited. “This information disclosure issue affects the Office ‘client’ and could allow an attacker to hijack an authentication token and gain access to documents stored in cloud resources,” Barrett said.

For more information on today’s updates, see the roundups at Microsoft’s Technet Blog, the SANS Internet Storm Center Diary, and the Qualys blog.

ADOBE FLASH AND SHOCKWAVE UPDATES

Adobe has issued a patch for its Flash Player software that addresses at least two security holes, including a vulnerability that is already under active attack. Adobe said it is aware of reports of an exploit designed to trick the user into opening a Microsoft Word document with malicious Flash (.swf) content. The company credits researcher Attila Suszter for reporting the flaw; more information about this bug is available at Suszter’s blog.

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Who Is Paunch?

December 9, 2013

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Last week, the world got the first glimpses of a man Russian authorities have accused of being “Paunch,” a computer crime kingpin whose “Blackhole” crimeware package has fueled an explosion of cybercrime over the past several years. So far, few details about the 27-year-old defendant have been released, save for some pictures of a portly lad and a list of his alleged transgressions. Today’s post follows a few clues from recent media coverage that all point to one very likely identity for this young man.

Dmitry Fedotov from Togliatti, Russia.

The first story in the Western media about Paunch’s arrest came on Oct. 8, 2013 from Reuters, which quoted an anonymous former Russian police detective. But the initial news of Paunch’s arrest appears to have broken on Russian news blogs several days earlier. On Oct. 5, Russian news outlet neslushi.info posted that a hacker by the name of Dmitry Fedotov had been arrested the night before in Togliatti, a city in Samara Oblast, Russia. The story noted that Fedotov was wanted for creating a program that was used by various organized crime groups to siphon roughly 26 billion rubles (USD $866 million) from unnamed banks. Another story from local news site Samara.ru on Oct. 8 references a Dmitry F. from Togliatti.

This is an interesting lead; last week’s story on Paunch cited information released by Russian forensics firm Group-IB, which did not include Paunch’s real name but said that he resided in Togliatti.

Fast-forward to this past week, and we see out of the Russian publication Vedomosti.ru a story stating that Paunch owned his own Web-development company. That story also cited Group-IB saying that Paunch had experience as an advertising manager. This Yandex profile includes a resume for a Dmitry Fedotov from Togliatti who specializes in Web programming and advertising, and lists “hack money” under his “professional goals” section. It also states that Fedotov attended the Volga State University of Service from 2003-2005.

That Yandex profile for Fedotov says his company is a site called “neting.ru,” a Web development firm. The current Web site registration records for that domain do not include an owner’s name, but a historic WHOIS record ordered from domaintools.com shows that neting.ru was originally registered in 2004 by a Dmitry E. Fedotov, using the email addresses box@neting.ru and tolst86@mail.ru.

A cached contact page for neting.ru at archive.org shows the same box@neting.ru email address and includes an ICQ instant messenger address, 360022. According to ICQ.com, that address belongs to a user who picked the nickname “tolst,” which roughly translates to “fatty.”

A user who picked the nickname “tolst” or “fatty” posted this image of his new Porsche Cayenne in March 2013

This brings up something I want to address from last week’s story: Some readers said they thought it was insensitive of me to point out that Paunch himself called attention to his most obvious physical trait. But this seems to be a very important detail: Paunch had a habit of picking self-effacing nicknames.

The pictures of Paunch released by Group-IB show a heavyset young man, and Paunch seems to have picked nicknames that called attention to his size. One email address known to have been used by the Blackhole author was “paunchik@googlemail.com” (“paunchik” means “doughnut” in Russian). Blackhole exploit kit users who wished to place their advertisements in the crimeware kit itself so that other customers would see the ads were instructed to pay for the advertisements by sending funds to a Webmoney purse Z356971281174, which is tied to the Webmoney ID 561656619879; that Webmoney ID uses the alias “puzan,” a variant of the Russian word пузо, or “potbelly.”

Turns out, “tolst” was a common nickname picked by Paunch. We can see a user who picked that same “tolst” nickname posting in a Russian car forum in March 2013 about his new ride: a white Porsche Cayenne. According to this photo released by Group-IB, Paunch also owned a white Porsche Cayenne. Tolst posted pictures of the interior of his Porsche here.

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Meet Paunch: The Accused Author of the BlackHole Exploit Kit

December 6, 2013

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In early October, news leaked out of Russia that authorities there had arrested and charged the malware kingpin known as “Paunch,” the alleged creator and distributor of the Blackhole exploit kit. Today, Russian police and computer security experts released additional details about this individual, revealing a much more vivid picture of the cybercrime underworld today.

Paunch, the accused creator of the Blackhole Exploit Kit, stands in front of his Porsche Cayenne.

A statement released by the Russian Interior Ministry (MVD) — the entity which runs the police departments in each Russian city — doesn’t include Paunch’s real name, but it says the Blackhole exploit kit creator was arrested in October along with a dozen other individuals who allegedly worked to sell, develop and profit from the crimeware package.

Russian security and forensics firm Group-IB, which assisted in the investigation, released additional details, including several pictures of the 27-year-old accused malware author. According to Group-IB, Paunch had more than 1,000 customers and was earning $50,000 per month from his illegal activity. The image at right shows Paunch standing in front of his personal car, a Porsche Cayenne.

First spotted in 2010, BlackHole is commercial crimeware designed to be stitched into hacked or malicious sites and exploit a variety of Web-browser vulnerabilities for the purposes of installing malware of the customer’s choosing. The price of renting the kit ran from $500 to $700 each month. For an extra $50 a month, Paunch also rented customers “crypting” services; cryptors are designed to obfuscate malicious software so that it remains undetectable by antivirus software.

If the 27-year-old pictured here truly is Paunch, he certainly lived up to his nickname.

Paunch worked with several other cybercriminals to purchase new exploits and security vulnerabilities that could be rolled into Blackhole and help increase the success of the software. Paunch bought the exploits to fund a pricier ($10,000/month) and more exclusive exploit pack called “Cool Exploit Kit.”

As documented on this blog in January 2013 (see Crimeware Author Funds Exploit Buying Spree), Paunch contracted with a third-party exploit broker who announced that he had a $100,000 budget for buying new, previously undocumented “zero-day” vulnerabilities.

Not long after that story, the individual with whom Paunch worked to purchase those exclusive exploits — a miscreant who uses the nickname “J.P. Morgan” — posted a message to the Darkode[dot]com crime forum, stating that he was doubling his exploit-buying budget to $200,000.

In October, shortly after news of Paunch’s arrest leaked to the media, J.P. Morgan posted to Darkode again, this time more than doubling his previous budget — to $450,000.

“Dear ladies and gentlemen! In light of recent events, we look to build a new exploit kit framework. We have budgeted $450,000 to buy vulnerabilities of a browser and its plugins, which will be used only by us afterwards! ”

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