How Card Skimming Disproportionally Affects Those Most In Need

October 18, 2022
35 Comments

When people banking in the United States lose money because their payment card got skimmed at an ATM, gas pump or grocery store checkout terminal, they may face hassles or delays in recovering any lost funds, but they are almost always made whole by their financial institution. Yet, one class of Americans — those receiving food assistance benefits via state-issued prepaid debit cards — are particularly exposed to losses from skimming scams, and usually have little recourse to do anything about it.

California’s EBT card does not currently include a chip. That silver square is a hologram.

Over the past several months, authorities in multiple U.S. states have reported rapid increases in skimming losses tied to people who receive assistance via Electronic Benefits Transfer (EBT), which allows a Supplemental Nutrition Assistance Program (SNAP) participant to pay for food using SNAP benefits.

When a participant uses a SNAP payment card at an authorized retail store, their SNAP EBT account is debited to reimburse the store for food that was purchased. EBT is used in all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam.

EBT cards work just like regular debit cards, in that they can be used along with a personal identification number (PIN) to pay for goods at participating stores, and to withdraw cash from an ATM.

However, EBT cards differ from debit cards issued to most Americans in two important ways. First, most states do not equip EBT cards with smart chip technology, which can make payment cards much more difficult and expensive for skimming thieves to clone.

Alas, it is no accident that all of the states reporting recent spikes in fraud tied to EBT accounts — including California, Connecticut, Maryland, Pennsylvania, Tennessee, and Virginia appear to currently issue chip-less cards to their EBT recipients.

The Massachusetts SNAP benefits card looks more like a library card than a payment card.  Oddly enough, both are reliant on the same fundamentally insecure technology: The magnetic stripe, which stores cardholder data in plain text that can be easily copied.

In September, authorities in California arrested three men thought to be part of a skimming crew that specifically targeted EBT cards and balances. The men allegedly installed deep insert skimmers, and stole PINs using tiny hidden cameras.

“The arrests were the result of a joint investigation by the Sheriff’s Office and Bank of America corporate security,” reads a September 2022 story from The Sacramento Bee. “The investigation focused on illegal skimming, particularly the high-volume cash-out sequence at ATMs near the start of each month when Electronic Benefits Transfer accounts are funded by California.”

Armed with a victim’s PIN along with stolen card data, thieves can clone the card onto anything with a magnetic stripe and use it at ATMs to withdraw cash, or as a payment instrument at any establishment that accepts EBT cards.

Skimming gear seized from three suspects arrested by Sacramento authorities in September. Image: Sacramento County Sheriff’s Office.

Although it may be shocking that California — one of America’s wealthiest states — still treats EBT recipients as second-class citizens by issuing them chip-less debit cards, California behaves like most other states in this regard.

More critical, however, is the second way SNAP cards differ from regular debit cards: Recipients of SNAP benefits have little to no hope of recovering their funds when their EBT cards are copied by card-skimming devices and used for fraud.

That’s because in the SNAP program, federal law bars the states from replacing SNAP benefits using federal funds. And while some of these EBT cards have Visa or MasterCard logos on them, it is not up to those companies to replace funds in the event of fraud.

Victims are encouraged to report the theft to both their state agency and the local police, but many victims say they rarely receive updates on their cases from police, and, if they hear from the state, it’s usually the agency telling them it found no evidence of fraud. Continue reading →

Anti-Money Laundering Service AMLBot Cleans House

October 15, 2022
13 Comments

AMLBot, a service that helps businesses avoid transacting with cryptocurrency wallets that have been sanctioned for cybercrime activity, said an investigation published by KrebsOnSecurity last year helped it shut down three dark web services that secretly resold its technology to help cybercrooks avoid detection by anti-money laundering systems.

Antinalysis, as it existed in 2021.

In August 2021, KrebsOnSecurity published “New Anti Anti-Money Laundering Services for Crooks,” which examined Antinalysis, a service marketed on cybercrime forums that purported to offer a glimpse of how one’s payment activity might be flagged by law enforcement agencies and private companies that track and trace cryptocurrency transactions.

“Worried about dirty funds in your BTC address? Come check out Antinalysis, the new address risk analyzer,” read the service’s opening announcement. “This service is dedicated to individuals that have the need to possess complete privacy on the blockchain, offering a perspective from the opponent’s point of view in order for the user to comprehend the possibility of his/her funds getting flagged down under autocratic illegal charges.”

Antinalysis allows free lookups, but anyone wishing to conduct bulk look-ups has to pay at least USD $3, with a minimum $30 purchase. Other plans go for as high as $6,000 for 5,000 requests. Nick Bax, a security researcher who specializes in tracing cryptocurrency transactions, told KrebsOnSecurity at the time that Antinalysis was likely a clone of AMLBot because the two services generated near-identical results.

AMLBot shut down Antinalysis’s access just hours after last year’s story went live. However, Antinalysis[.]org remains online and accepting requests, as does the service’s Tor-based domain, and it is unclear how those services are sourcing their information.

AMLBot spokesperson Polina Smoliar said the company undertook a thorough review after that discovery, and in the process found two other services similar to Antinalysis that were reselling their application programming interface (API) access to cybercrooks.

Smoliar said that following the revelations about Antinalysis, AMLBot audited its entire client base, and implemented the ability to provide APIs only after a contract is signed and the client has been fully audited. AMLBot said it also instituted 24/7 monitoring of all client transactions.

“As a result of these actions, two more services with the name AML (the same as AMLBot has) were found to be involved in fraudulent schemes,” Smoliar said. “Information about the fraudsters was also sent to key market participants, and their transaction data was added to the tracking database to better combat money laundering.”

Experts say the founder of Antinalysis also runs a darknet market for narcotics.

The Antinalysis homepage and chatter on the cybercrime forums indicates the service was created by a group of coders known as the Incognito Team. Tom Robinson, co-founder of the blockchain intelligence firm Elliptic, said the creator of Antinalysis is also one of the developers of Incognito Market, a darknet marketplace specializing in the sale of narcotics.

“Incognito was launched in late 2020, and accepts payments in both Bitcoin and Monero, a cryptoasset offering heightened anonymity,” Robinson said. “The launch of Antinalysis likely reflects the difficulties faced by the market and its vendors in cashing out their Bitcoin proceeds.”

Advertisement

Microsoft Patch Tuesday, October 2022 Edition

October 11, 2022
13 Comments

Microsoft today released updates to fix at least 85 security holes in its Windows operating systems and related software, including a new zero-day vulnerability in all supported versions of Windows that is being actively exploited. However, noticeably absent from this month’s Patch Tuesday are any updates to address a pair of zero-day flaws being exploited this past month in Microsoft Exchange Server.

The new zero-day flaw– CVE-2022-41033 — is an “elevation of privilege” bug in the Windows COM+ event service, which provides system notifications when users logon or logoff. Microsoft says the flaw is being actively exploited, and that it was reported by an anonymous individual.

“Despite its relatively low score in comparison to other vulnerabilities patched today, this one should be at the top of everyone’s list to quickly patch,” said Kevin Breen, director of cyber threat research at Immersive Labs. “This specific vulnerability is a local privilege escalation, which means that an attacker would already need to have code execution on a host to use this exploit. Privilege escalation vulnerabilities are a common occurrence in almost every security compromise. Attackers will seek to gain SYSTEM or domain-level access in order to disable security tools, grab credentials with tools like Mimkatz and move laterally across the network.

Indeed, Satnam Narang, senior staff research engineer at Tenable, notes that almost half of the security flaws Microsoft patched this week are elevation of privilege bugs. Continue reading →

Report: Big U.S. Banks Are Stiffing Account Takeover Victims

October 7, 2022
72 Comments

When U.S. consumers have their online bank accounts hijacked and plundered by hackers, U.S. financial institutions are legally obligated to reverse any unauthorized transactions as long as the victim reports the fraud in a timely manner. But new data released this week suggests that for some of the nation’s largest banks, reimbursing account takeover victims has become more the exception than the rule.

The findings came in a report released by Sen. Elizabeth Warren (D-Mass.), who in April 2022 opened an investigation into fraud tied to Zelle, the “peer-to-peer” digital payment service used by many financial institutions that allows customers to quickly send cash to friends and family.

Zelle is run by Early Warning Services LLC (EWS), a private financial services company which is jointly owned by Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo. Zelle is enabled by default for customers at over 1,000 different financial institutions, even if a great many customers still don’t know it’s there.

Sen. Warren said several of the EWS owner banks — including Capital One, JPMorgan and Wells Fargo — failed to provide all of the requested data. But Warren did get the requested information from PNC, Truist and U.S. Bank.

“Overall, the three banks that provided complete data sets reported 35,848 cases of scams, involving over $25.9 million of payments in 2021 and the first half of 2022,” the report summarized. “In the vast majority of these cases, the banks did not repay the customers that reported being scammed. Overall these three banks reported repaying customers in only 3,473 cases (representing nearly 10% of scam claims) and repaid only $2.9 million.”

Importantly, the report distinguishes between cases that involve straight up bank account takeovers and unauthorized transfers (fraud), and those losses that stem from “fraudulently induced payments,” where the victim is tricked into authorizing the transfer of funds to scammers (scams).

A common example of the latter is the Zelle Fraud Scam, which uses an ever-shifting set of come-ons to trick people into transferring money to fraudsters. The Zelle Fraud Scam often employs text messages and phone calls spoofed to look like they came from your bank, and the scam usually relates to fooling the customer into thinking they’re sending money to themselves when they’re really sending it to the crooks.

Here’s the rub: When a customer issues a payment order to their bank, the bank is obligated to honor that order so long as it passes a two-stage test. The first question asks, Did the request actually come from an authorized owner or signer on the account? In the case of Zelle scams, the answer is yes.

Trace Fooshee, a strategic advisor in the anti money laundering practice at Aite-Novarica, said the second stage requires banks to give the customer’s transfer order a kind of “sniff test” using “commercially reasonable” fraud controls that generally are not designed to detect patterns involving social engineering.

Fooshee said the legal phrase “commercially reasonable” is the primary reason why no bank has much — if anything — in the way of controlling for scam detection.

“In order for them to deploy something that would detect a good chunk of fraud on something so hard to detect they would generate egregiously high rates of false positives which would also make consumers (and, then, regulators) very unhappy,” Fooshee said. “This would tank the business case for the service as a whole rendering it something that the bank can claim to NOT be commercially reasonable.”

Sen. Warren’s report makes clear that banks generally do not pay consumers back if they are fraudulently induced into making Zelle payments.

“In simple terms, Zelle indicated that it would provide redress for users in cases of unauthorized transfers in which a user’s account is accessed by a bad actor and used to transfer a payment,” the report continued. “However, EWS’ response also indicated that neither Zelle nor its parent bank owners would reimburse users fraudulently induced by a bad actor into making a payment on the platform.”

Still, the data suggest banks did repay at least some of the funds stolen from scam victims about 10 percent of the time. Fooshee said he’s surprised that number is so high.

“That banks are paying victims of authorized payment fraud scams anything at all is noteworthy,” he said. “That’s money that they’re paying for out of pocket almost entirely for goodwill. You could argue that repaying all victims is a sound strategy especially in the climate we’re in but to say that it should be what all banks do remains an opinion until Congress changes the law.”

UNAUTHORIZED FRAUD

However, when it comes to reimbursing victims of fraud and account takeovers, the report suggests banks are stiffing their customers whenever they can get away with it. “Overall, the four banks that provided complete data sets indicated that they reimbursed only 47% of the dollar amount of fraud claims they received,” the report notes.

How did the banks behave individually? From the report:

-In 2021 and the first six months of 2022, PNC Bank indicated that its customers reported 10,683 cases of unauthorized payments totaling over $10.6 million, of which only 1,495 cases totaling $1.46 were refunded to consumers. PNC Bank left 86% of its customers that reported cases of fraud without recourse for fraudulent activity that occurred on Zelle.

-Over this same time period, U.S. Bank customers reported a total of 28,642 cases of unauthorized transactions totaling over $16.2 million, while only refunding 8,242 cases totaling less than $4.7 million.

-In the period between January 2021 and September 2022, Bank of America customers reported 81,797 cases of unauthorized transactions, totaling $125 million. Bank of America refunded only $56.1 million in fraud claims – less than 45% of the overall dollar value of claims made in that time.

–Truist indicated that the bank had a much better record of reimbursing defrauded customers over this same time period. During 2021 and the first half of 2022, Truist customers filed 24,752 unauthorized transaction claims amounting to $24.4 million. Truist reimbursed 20,349 of those claims, totaling $20.8 million – 82% of Truist claims were reimbursed over this period. Overall, however, the four banks that provided complete data sets indicated that they reimbursed only 47% of the dollar amount of fraud claims they received.

Fooshee said there has long been a great deal of inconsistency in how banks reimburse unauthorized fraud claims — even after the Consumer Financial Protection Bureau (CPFB) came out with guidance on what qualifies as an unauthorized fraud claim.

“Many banks reported that they were still not living up to those standards,” he said. “As a result, I imagine that the CFPB will come down hard on those with fines and we’ll see a correction.” Continue reading →

Glut of Fake LinkedIn Profiles Pits HR Against the Bots

October 5, 2022
35 Comments

A recent proliferation of phony executive profiles on LinkedIn is creating something of an identity crisis for the business networking site, and for companies that rely on it to hire and screen prospective employees. The fabricated LinkedIn identities — which pair AI-generated profile photos with text lifted from legitimate accounts — are creating major headaches for corporate HR departments and for those managing invite-only LinkedIn groups.

Some of the fake profiles flagged by the co-administrator of a popular sustainability group on LinkedIn.

Last week, KrebsOnSecurity examined a flood of inauthentic LinkedIn profiles all claiming Chief Information Security Officer (CISO) roles at various Fortune 500 companies, including Biogen, Chevron, ExxonMobil, and Hewlett Packard.

Since then, the response from LinkedIn users and readers has made clear that these phony profiles are showing up en masse for virtually all executive roles — but particularly for jobs and industries that are adjacent to recent global events and news trends.

Hamish Taylor runs the Sustainability Professionals group on LinkedIn, which has more than 300,000 members. Together with the group’s co-owner, Taylor said they’ve blocked more than 12,700 suspected fake profiles so far this year, including dozens of recent accounts that Taylor describes as “cynical attempts to exploit Humanitarian Relief and Crisis Relief experts.”

“We receive over 500 fake profile requests to join on a weekly basis,” Taylor said. “It’s hit like hell since about January of this year. Prior to that we did not get the swarms of fakes that we now experience.”

The opening slide for a plea by Taylor’s group to LinkedIn.

Taylor recently posted an entry on LinkedIn titled, “The Fake ID Crisis on LinkedIn,” which lampooned the “60 Least Wanted ‘Crisis Relief Experts’ — fake profiles that claimed to be experts in disaster recovery efforts in the wake of recent hurricanes. The images above and below show just one such swarm of profiles the group flagged as inauthentic. Virtually all of these profiles were removed from LinkedIn after KrebsOnSecurity tweeted about them last week.

Another “swarm” of LinkedIn bot accounts flagged by Taylor’s group.

Mark Miller is the owner of the DevOps group on LinkedIn, and says he deals with fake profiles on a daily basis — often hundreds per day. What Taylor called “swarms” of fake accounts Miller described instead as “waves” of incoming requests from phony accounts.

“When a bot tries to infiltrate the group, it does so in waves,” Miller said. “We’ll see 20-30 requests come in with the same type of information in the profiles.”

After screenshotting the waves of suspected fake profile requests, Miller started sending the images to LinkedIn’s abuse teams, which told him they would review his request but that he may never be notified of any action taken.

Some of the bot profiles identified by Mark Miller that were seeking access to his DevOps LinkedIn group. Miller said these profiles are all listed in the order they appeared.

Miller said that after months of complaining and sharing fake profile information with LinkedIn, the social media network appeared to do something which caused the volume of group membership requests from phony accounts to drop precipitously.

“I wrote our LinkedIn rep and said we were considering closing the group down the bots were so bad,” Miller said. “I said, ‘You guys should be doing something on the backend to block this.”

Jason Lathrop is vice president of technology and operations at ISOutsource, a Seattle-based consulting firm with roughly 100 employees. Like Miller, Lathrop’s experience in fighting bot profiles on LinkedIn suggests the social networking giant will eventually respond to complaints about inauthentic accounts. That is, if affected users complain loudly enough (posting about it publicly on LinkedIn seems to help).

Lathrop said that about two months ago his employer noticed waves of new followers, and identified more than 3,000 followers that all shared various elements, such as profile photos or text descriptions.

“Then I noticed that they all claim to work for us at some random title within the organization,” Lathrop said in an interview with KrebsOnSecurity. “When we complained to LinkedIn, they’d tell us these profiles didn’t violate their community guidelines. But like heck they don’t! These people don’t exist, and they’re claiming they work for us!”

Lathrop said that after his company’s third complaint, a LinkedIn representative responded by asking ISOutsource to send a spreadsheet listing every legitimate employee in the company, and their corresponding profile links.

Not long after that, the phony profiles that were not on the company’s list were deleted from LinkedIn. Lathrop said he’s still not sure how they’re going to handle getting new employees allowed into their company on LinkedIn going forward. Continue reading →

Microsoft: Two New 0-Day Flaws in Exchange Server

September 30, 2022
11 Comments

Microsoft Corp. is investigating reports that attackers are exploiting two previously unknown vulnerabilities in Exchange Server, a technology many organizations rely on to send and receive email. Microsoft says it is expediting work on software patches to plug the security holes. In the meantime, it is urging a subset of Exchange customers to enable a setting that could help mitigate ongoing attacks.

In customer guidance released Thursday, Microsoft said it is investigating two reported zero-day flaws affecting Microsoft Exchange Server 2013, 2016, and 2019. CVE-2022-41040, is a Server-Side Request Forgery (SSRF) vulnerability that can enable an authenticated attacker to remotely trigger the second zero-day vulnerability — CVE-2022-41082 — which allows remote code execution (RCE) when PowerShell is accessible to the attacker.

Microsoft said Exchange Online has detections and mitigation in place to protect customers. Customers using on-premises Microsoft Exchange servers are urged to review the mitigations suggested in the security advisory, which Microsoft says should block the known attack patterns.

Vietnamese security firm GTSC on Thursday published a writeup on the two Exchange zero-day flaws, saying it first observed the attacks in early August being used to drop “webshells.” These web-based backdoors offer attackers an easy-to-use, password-protected hacking tool that can be accessed over the Internet from any browser.

“We detected webshells, mostly obfuscated, being dropped to Exchange servers,” GTSC wrote. “Using the user-agent, we detected that the attacker uses Antsword, an active Chinese-based opensource cross-platform website administration tool that supports webshell management. We suspect that these come from a Chinese attack group because the webshell codepage is 936, which is a Microsoft character encoding for simplified Chinese.”

GTSC’s advisory includes details about post-compromise activity and related malware, as well as steps it took to help customers respond to active compromises of their Exchange Server environment. But the company said it would withhold more technical details of the vulnerabilities for now.

In March 2021, hundreds of thousands of organizations worldwide had their email stolen and multiple backdoor webshells installed, all thanks to four zero-day vulnerabilities in Exchange Server.

Granted, the zero-day flaws that powered that debacle were far more critical than the two detailed this week, and there are no signs yet that exploit code has been publicly released (that will likely change soon). But part of what made last year’s Exchange Server mass hack so pervasive was that vulnerable organizations had little or no advance notice on what to look for before their Exchange Server environments were completely owned by multiple attackers.

Microsoft is quick to point out that these zero-day flaws require an attacker to have a valid username and password for an Exchange user, but this may not be such a tall order for the hackers behind these latest exploits against Exchange Server.

Steven Adair is president of Volexity, the Virginia-based cybersecurity firm that was among the first to sound the alarm about the Exchange zero-days targeted in the 2021 mass hack. Adair said GTSC’s writeup includes an Internet address used by the attackers that Volexity has tied with high confidence to a China-based hacking group that has recently been observed phishing Exchange users for their credentials.

In February 2022, Volexity warned that this same Chinese hacking group was behind the mass exploitation of a zero-day vulnerability in the Zimbra Collaboration Suite, which is a competitor to Microsoft Exchange that many enterprises use to manage email and other forms of messaging.

If your organization runs Exchange Server, please consider reviewing the Microsoft mitigations and the GTSC post-mortem on their investigations.

Fake CISO Profiles on LinkedIn Target Fortune 500s

September 29, 2022
46 Comments

Someone has recently created a large number of fake LinkedIn profiles for Chief Information Security Officer (CISO) roles at some of the world’s largest corporations. It’s not clear who’s behind this network of fake CISOs or what their intentions may be. But the fabricated LinkedIn identities are confusing search engine results for CISO roles at major companies, and they are being indexed as gospel by various downstream data-scraping sources.

If one searches LinkedIn for the CISO of the energy giant Chevron, one might find the profile for a Victor Sites, who says he’s from Westerville, Ohio and is a graduate of Texas A&M University.

The LinkedIn profile for Victor Sites, who is most certainly NOT the CISO of Chevron.

Of course, Sites is not the real CISO of Chevron. That role is currently occupied by Christopher Lukas of Danville, Calif. If you were confused at this point, you might ask Google who it thinks is the current Chief Information Security Officer of Chevron. When KrebsOnSecurity did that earlier this morning, the fake CISO profile was the very first search result returned (followed by the LinkedIn profile for the real Chevron CISO).

Helpfully, LinkedIn seems to be able to detect something in common about all these fake CISO profiles, because it suggested I view a number of them in the “People Also Viewed” column seen in the image above. There are two fake CISO profiles suggested there, including one for a Maryann Robles, who claims to be the CISO of another energy giant — ExxonMobil.

Maryann’s profile says she’s from Tupelo, Miss., and includes this detail about how she became a self-described “old-school geek.”

“Since playing Tradewars on my Tandy 1000 with a 300 baud modem in the early ’90s, I’ve had a lifelong passion for technology, which I’ve carried with me as Deputy CISO of the world’s largest health plan,” her profile reads.

However, this description appears to have been lifted from the profile for the real CISO at the Centers for Medicare & Medicaid Services in Baltimore, Md. Continue reading →

Accused Russian RSOCKS Botmaster Arrested, Requests Extradition to U.S.

September 23, 2022
29 Comments

A 36-year-old Russian man recently identified by KrebsOnSecurity as the likely proprietor of the massive RSOCKS botnet has been arrested in Bulgaria at the request of U.S. authorities. At a court hearing in Bulgaria this month, the accused hacker requested and was granted extradition to the United States, reportedly telling the judge, “America is looking for me because I have enormous information and they need it.”

A copy of the passport for Denis Kloster, as posted to his Vkontakte page in 2019.

On June 22, KrebsOnSecurity published Meet the Administrators of the RSOCKS Proxy Botnet, which identified Denis Kloster, a.k.a. Denis Emelyantsev, as the apparent owner of RSOCKS, a collection of millions of hacked devices that were sold as “proxies” to cybercriminals looking for ways to route their malicious traffic through someone else’s computer.

A native of Omsk, Russia, Kloster came into focus after KrebsOnSecurity followed clues from the RSOCKS botnet master’s identity on the cybercrime forums to Kloster’s personal blog, which featured musings on the challenges of running a company that sells “security and anonymity services to customers around the world.” Kloster’s blog even included a group photo of RSOCKS employees.

“Thanks to you, we are now developing in the field of information security and anonymity!,” Kloster’s blog enthused. “We make products that are used by thousands of people around the world, and this is very cool! And this is just the beginning!!! We don’t just work together and we’re not just friends, we’re Family.”

The Bulgarian news outlet 24Chasa.bg reports that Kloster was arrested in June at a co-working space in the southwestern ski resort town of Bansko, and that the accused asked to be handed over to the American authorities.

“I have hired a lawyer there and I want you to send me as quickly as possible to clear these baseless charges,” Kloster reportedly told the Bulgarian court this week. “I am not a criminal and I will prove it in an American court.”

Launched in 2013, RSOCKS was shut down in June 2022 as part of an international investigation into the cybercrime service. According to the Justice Department, the RSOCKS botnet initially targeted Internet of Things (IoT) devices, including industrial control systems, time clocks, routers, audio/video streaming devices, and smart garage door openers; later in its existence, the RSOCKS botnet expanded into compromising additional types of devices, including Android devices and conventional computers, the DOJ said.

The Justice Department’s June 2022 statement about that takedown cited a search warrant from the U.S. Attorney’s Office for the Southern District of California, which also was named by Bulgarian news outlets this month as the source of Kloster’s arrest warrant.

When asked about the existence of an arrest warrant or criminal charges against Kloster, a spokesperson for the Southern District said, “no comment.”

Update, Sept. 24, 9:00 a.m. ET: Kloster was named in a 2019 indictment (PDF) unsealed Sept. 23 by the Southern District court.

The employees who kept things running for RSOCKS, circa 2016. Notice that nobody seems to be wearing shoes.

24Chasa said the defendant’s surname is Emelyantsev and that he only recently adopted the last name Kloster, which is his mother’s maiden name.

As KrebsOnSecurity reported in June, Kloster also appears to be a major player in the Russian email spam industry. In several private exchanges on cybercrime forums, the RSOCKS administrator claimed ownership of the RUSdot spam forum. RUSdot is the successor forum to Spamdot, a far more secretive and restricted forum where most of the world’s top spammers, virus writers and cybercriminals collaborated for years before the community’s implosion in 2010. Continue reading →

SIM Swapper Abducted, Beaten, Held for $200k Ransom

September 21, 2022
37 Comments

A Florida teenager who served as a lackey for a cybercriminal group that specializes in cryptocurrency thefts was beaten and kidnapped last week by a rival cybercrime gang. The teen’s captives held guns to his head while forcing him to record a video message pleading with his crew to fork over a $200,000 ransom in exchange for his life. The youth is now reportedly cooperating with U.S. federal investigators, who are responding to an alarming number of reports of physical violence tied to certain online crime communities.

The grisly kidnapping video has been circulating on a number of Telegram chat channels dedicated to SIM-swapping — the practice of tricking or bribing mobile phone store employees into diverting a target’s phone number, text messages and calls to a device the attackers control.

The teen, known to the SIM-swapping community by the handle “Foreshadow,” appears to have served as a “holder” — a term used to describe a low-level member of any SIM-swapping group who agrees to carry out the riskiest and least rewarding role of the crime: Physically keeping and managing the various mobile devices and SIM cards that are used in SIM-swapping scams.

“Yo, Dan, please bro send the 200k,” Foreshadow said in the video, which was shot on Sept. 15 in the backseat of a moving car. Bleeding from a swollen mouth with two handguns pointed at his head, Foreshadow pleaded for his life. A still shot from that video is available here [Warning: the image is quite graphic].

“They’re going to kill me if you don’t,” Foreshadow continued, offering to get a job as a complicit mobile store employee or “plug” to help with future SIM-swaps. “I’ll pay you back. Just let me know what you need. I got you, for real. Any work for free. Whatever. However long you need me, too. I’ll apply to any store you need me to apply to. I can be a plug. I don’t care if I get caught by the cops or anything. I’ll get that money back for you. I used to do that work.”

It’s not clear where in the world the hostage video was recorded. But at one point in the video, the vehicle’s radio can be heard in the background mentioning WMIB, which is a hip-hop station in South Florida that serves both Ft. Lauderdale and Miami.

As Foreshadow’s hostage video began making the rounds on SIM-swapping Telegram channels, a rumor surfaced that Foreshadow had died after being shot in the leg. It soon emerged that Foreshadow had not died, and that he was cooperating with the Federal Bureau of Investigation (FBI). Members of the SIM-swapping community were then warned to delete any messages to or from Foreshadow. One of those messages read:

JUST IN: FORESHADOW IS NOT DEAD!!!!

HES CURRENTLY CO-OPERATING WITH THE FBI DUE TO HIM BEING KIDNAPPED AND AN ATTEMPT TO EXTORT HIM FOR 200K

IF YOU HAVE CHATS WITH HIM CLEAR THEM

Foreshadow appears to be a teenager from Florida whose first name is Justin. Foreshadow’s main Telegram account was converted from a user profile into a channel on Sept. 15 — the same day he was assaulted and kidnapped — and it is not currently responding to messages.

Foreshadow’s erstwhile boss Jarik told KrebsOnSecurity that the youth was indeed shot by his captors, and blamed the kidnapping on a rival SIM-swapper from Australia who was angry over getting shortchanged of the profits from a previous SIM-swapping escapade.

The FBI did not immediately respond to requests for comment.

Reached via Telegram, the alleged mastermind of the kidnapping — a SIM-swapper who uses the handle “Gus” — confirmed that he ordered the attack on Foreshadow because the holder had held back some of his stolen funds. In the same breath, Gus said Jarik was “gonna get done in next” for sharing Gus’ real name and address with KrebsOnSecurity.

“No1 cared about that nigga anyway, he snaked targs [targets] and flaunted it everywhere,” Gus said of Foreshadow. “I’ve been fucked over so many times I’ve lost millions. I am just a guy trying to make more money.”

Foreshadow’s experience is the latest example of a rapidly escalating cycle of physical violence that is taking hold of criminal SIM-swapping communities online. Earlier this month, KrebsOnSecurity detailed how multiple SIM-swapping Telegram channels are now replete with “violence-as-a-service” offerings, wherein denizens of the underground hire themselves out to perform various forms of physical violence — from slashing tires and throwing a brick through someone’s window, to conducting drive-by shootings, firebombings and home invasions. Continue reading →

Botched Crypto Mugging Lands Three U.K. Men in Jail

September 16, 2022
29 Comments

Three men in the United Kingdom were arrested this month for attempting to assault a local man and steal his virtual currencies. The incident is the latest example of how certain cybercriminal communities are increasingly turning to physical violence to settle scores and disputes.

Shortly after 11 p.m. on September 6, a resident in the Spalding Common area in the district of Lincolnshire, U.K. phoned police to say three men were acting suspiciously, and had jumped a nearby fence.

“The three men made off in a VW Golf and were shortly stopped nearby,” reads a statement by the Lincolnshire Police. “The car was searched by officers who found an imitation firearm, taser, a baseball bat and police uniform in the boot.”

Thomas Green, 23, Rayhan Miah, 23, and Leonardo Sapiano, 24 were all charged with possession of the weapons, and “with intent to cause loss to another to make an unwarranted demand of Crypto Currency from a person.”

KrebsOnSecurity has learned that the defendants were in Spalding Common to pay a surprise visit to a 19-year-old hacker known by the handles “Discoli,” “Disco Dog,” and “Chinese.” In December 2020, Discoli took credit for hacking and leaking the user database for OGUsers, a forum overrun with people looking to buy, sell and trade access to compromised social media accounts.

Reached via Telegram, Discoli confirmed that police believe the trio was trying to force their way into his home in Spalding Common, and that one of them was wearing a police uniform when they approached his residence.

“They were obvious about being fake police, so much so that one of our neighbours called,” Discoli said in an instant message chat. “That call led to the arrests. Their intent was for robbery/blackmail of crypto, I just happened to not be home at the time.”

The Lincolnshire Police declined to comment for this story, citing an ongoing investigation.

Discoli said he didn’t know any of the men charged, but believes they were hired by one of his enemies. And he said his would-be assailants didn’t just target him specifically.

“They had a list of people they wanted to hit consecutively as far as I know,” he said.

The foiled robbery is the latest drama tied to members of certain criminal hacking communities who are targeting one another with physical violence, by making a standing offer to pay thousands of dollars to anyone in the target’s region who agrees to carry out the assaults.

Last month, a 21-year-old New Jersey man was arrested and charged with stalking in connection with a federal investigation into groups of cybercriminals who are settling scores by hiring people to carry out physical attacks on their rivals.

Prosecutors say Patrick McGovern-Allen recently participated in several of these schemes — including firing a handgun into a Pennsylvania home and torching a residence in another part of the state with a Molotov Cocktail. Continue reading →