The physical damage from Tropical Storm Harvey is expected to spread further in the coming week as the storm continues to move along the Gulf Coast. At least 10 people in Texas have been killed related to the storm, local officials said, and the continuing rainfall could total as much as 50 inches in some areas by the end of the week. On Monday, a day after Louisiana Gov. John Bel Edwards called on the federal government for assistance, President Donald Trump declared a state of emergency in Louisiana. Texas Gov. Greg Abbot described the storm as “one of the largest disasters America has ever faced,” and FEMA administrator Brock Long said the agency is gearing up for the years-long recovery process that will follow.
Naturally, people want to help the victims with that recovery process, and scammers are already capitalizing on that goodwill to defraud individuals and carry out other malicious activity, several agencies have warned.
The Better Business Bureau said it has already seen sketchy crowdfunding efforts and expects the coming months to see the usual flood of “storm chasers” — ranging from legitimate contractors looking for business to scammers attempting to take advantage of those who’ve already been victimized by the storm. In addition, US-CERT is warning users “to remain vigilant for malicious cyber activity seeking to capitalize on interest in Hurricane Harvey.”
SurfWatch Labs also noted in a recent customer alert that we have observed hundreds of new domains being registered containing “harvey,” many of which will likely be used for scams related to the storm.
Scams following national disasters like Harvey have come to be the norm, as malicious actors will attempt to exploit any event or news story that grabs the collective consciousness of a large group of people. For example, researchers recently discovered that the Chinese group APT 17 was leveraging the popularity of Game of Thrones in spear phishing emails designed to infect their targets with malware by teasing potential victims with the headline, “Wanna see the Game of Thrones in advance?”
Similar attack vectors leveraging users’ natural curiosity tend to follow nearly every major news story; however, with natural disasters people are more willing to hand over their payment information and make a donation, so there is more profit — and more incentive — for fraudsters to capitalize on such events. These attack vectors include:
email phishing designed to steal personal and financial information;
fake websites and crowdfunding pages impersonating legitimate charities;
in-person and phone scammers, such as fake contractors or government officials that offer services or aid with no intention of following through;
and social media posts designed to entice users to either visit a malicious site, download malware, provide personal information, or perform acts that will earn the fraudster money.
With the National Weather Service describing Harvey as “unprecedented” and “beyond anything experienced,” it is likely that relief efforts will continue for years into the future. As SurfWatch Labs noted after Hurricane Matthew, those who wish to help or are seeking aid should be cautious about who they provide information to in order to avoid falling victim to these social engineering scams. Some tips include:
Never click on links or open attachments unless you know who sent it and what it is. Malicious email attachments and links are among the most common ways for cybercriminals to spread malware and steal information.
Never reply to emails, text messages, or pop-ups that ask for personal information.
Cybercriminals may use a combination of fraudulent emails and phone numbers to increase their appearance of authority. Always verify that communication is valid by contacting the organization directly before providing any sensitive information.
A few weeks ago, our team at SurfWatch Labs released its mid-year threat intelligence report, which largely focused on how leaked exploits have helped to fuel cybercrime over the first half of the year. While the leak of exploits and hacking tools is not new — 2016’s surge of IoT-powered DDoS attacks were propelled by the release of the Mirai source code, for example — several high-profile global attacks leveraging leaked exploits in 2017 have helped to once again push the conversation to the forefront.
At the heart of that conversation is a group known as TheShadowBrokers. TheShadowBrokers is best known for its April 2017 release of stolen NSA exploits such as EternalBlue, an exploit that was leveraged, along with other leaked exploits, into May’s outbreak of WannaCry and June’s outbreak of NotPetya.
However, TheShadowBrokers first made headlines nearly a year ago when it announced that it was auctioning off a cache of tools stolen from the NSA’s Equation Group:
How much you pay for enemies cyber weapons? Not malware you find in networks. Both sides, RAT + LP, full state sponsor tool set? We find cyber weapons made by creators of stuxnet, duqu, flame. Kaspersky calls Equation Group. We follow Equation Group traffic. We find Equation Group source range. We hack Equation Group. We find many many Equation Group cyber weapons. …
At this point, it remains unclear exactly how the sensitive hacking tools and exploits were stolen from the NSA, although investigators are pursuing several theories. What is clear is that multiple individuals were in possession of that data — including NSA contractor Harold T. Martin III, who was arrested two weeks after TheShadowBrokers announced its auction of NSA tools.
Although officials have not linked TheShadowBrokers and Martin, both of them were in possession of stolen NSA tools. Martin’s lawyer said that Martin’s intention was to use the data to get better at his job, not to ever release it. That is not true with TheShadowBrokers, who appear to enjoy toying with the media and have used the publicity around the WannaCry and NotPetya attacks to promote its new monthly exploit service.
What’s in TheShadowBrokers’ Monthly Exploit Service?
TheShadowBrokers claim to have released two sets of data dumps related to its monthly service so far — one for June and one for July — and each month they have continued to jack up the price of the data.
The June dump sold for 100 ZEC (Zcash) or 500 XMR (Monero).
The upcoming August dump is selling for 500 ZEC or 2000 XMR.
At today’s prices, that equates to more than $121,000 worth of Zcash or $101,000 worth of Monero for the August dump. Naturally, security researchers and organizations would like to know if the exploits and other data being released by the group is on par with EternalBlue, something less worrisome, or an elaborate troll job — but that’s a hefty price to pay a malicious actor just find out.
There was a brief crowdfunding effort by security researchers to purchase the exploits, but that was pulled after shortly after it was announced due to “legal reasons.”
TheShadowBrokers ripped me off. I paid 500 XMR for their “Wine of the Month Club” and only they sent me a single tool that already requires me to have a box exploited. A tool, not even an exploit! The tool also looks to be old, and not close to what theShadowBrokers said could be in their subscription service.
An anonymous researcher that has been attempting to track Monero transactions associated with TheShadowBrokers, who posts on Steemit under the name “wh1sks,” later verified that “fsyourmoms” did, in fact, send 500 XMR to TheShadowBrokers’ June monthly dump address.
“We know that TSB received no more than 2000 XMR [for its July dump],” the researcher wrote last week, although it is possible the group sent itself transactions to make it appear as though sales were occurring.
July is being good month for TheShadowBrokers Monthly Data Dump Service, make great benefit to theshadowbrokers. … Due to popular demand theshadowbrokers is raising prices for August to 500 ZEC or 2000 XMR.
TheShadowBrokers is also accepting Zcash, which cannot be tracked using the same methods as Monero. Therefore, it’s unclear how many transactions have been made using Zcash, and its possible that a larger number of users may have purchased the group’s data dumps.
If we take “fsyourmoms” at his or her word — who is the only individual to have publicly confirmed a purchase from TheShadowBrokers, as far as I can tell — we know that the June dump contained only one tool, but we don’t know what that tool even was. Was it worth more than $20,000 worth of cryptocurrency? At least one buyer says no. It remains unclear what was in the July dump, and what will be included in the upcoming August dump.
A lot remains unanswered when it comes to TheShadowBrokers, but it appears likely that other users have purchased or will purchase TheShadowBrokers’ data dumps. That means more dangerous tools and exploits could make their way into the hands of malicious actors in the near future, which is bad news for organizations. As we noted in our mid-year report, the impact of these leaked tools and exploits is often more dangerous and has a longer-lasting effect than perhaps any other type of cyber incident.
Leaked exploits and increased cybercrime-as-a-service offerings — along with the expanding digital footprints of organizations — helped to fuel cybercrime in the first half of 2017, according to a mid-year threat intelligence report from SurfWatch Labs.
The global outbreaks of WannaCry and NotPetya have dominated headlines so far this year. Although vastly different from the record-setting, Marai-powered DDoS attacks that disrupted services in the second half of 2016, the report noted that those events share a similar root cause: leaked exploits and source code.
“A year ago, our mid-year report showed the interconnectedness of cybercrime through extensive supply chain hacks and compromised IoT devices,” said Adam Meyer, chief security strategist, SurfWatch Labs. “Find one weak link and maximize it for all it’s worth was the name of the game then … and that still happens today with even more evidence of how the criminal ecosystem maximizes efforts through shared resources, skills for hire and, sometimes, outright theft.”
The leaked exploits and data from the NSA and CIA have received the most attention, but there was a wide range of other malware and source code leaks that could have consequences for organizations moving forward, such as:
the sale of the Kraken source code used in MongoDB and ElasticSearch extortion attacks;
the release of the Nuclear Bot (NukeBot) banking Trojan’s source code;
the creation of the Android BankBot Trojan from a commercial Trojan’s leaked source code;
and reports that claimed various malicious actors used tools leaked from surveillance company HackingTeam or created by Israeli cyber arms dealer the NSO Group in targeted attacks.
Just last week researchers reported that attackers were using modifying versions of NukeBot to target banks in France and the U.S.
“Much like leaked personal data, once those vulnerabilities, exploits, and tools are exposed, they forever remain in the cybercriminal public domain,” SurfWatch Labs’ report noted. “[Events such as WannaCry and NotPetya] reaffirmed that the most dangerous data breaches often involve the theft of such tools and exploits – and the impact of that type of information being leaked can spread further, wider, and be more long-lasting than perhaps any other type of cyber incident.”
SurfWatch Labs collected cyber threat data from thousands of open and dark web sources and then categorized, normalized and measured it for impact based on our CyberFact information model.
Some notable takeaways from the mid-year threat intelligence report include:
WannaCry ransomware was the most talked about malware out of nearly 1,200 tags, accounting for 8.6% of all malware tags, followed by the Industroyer malware at 4.8%.
Crimeware trade was the most prevalent tag related to cybercrime practices as malicious actors continued to buy, sell, and trade tools on dark web markets and cybercriminal forums, as well as develop more cybercrime-as-a-service options.
The percentage of extortion-related activity observed in 2017 has more than doubled from 2015 levels and increased by more than 40% when compared to 2016 levels. More industry targets were publicly tied to ransomware and extortion over just the first half of 2017 than in all of either 2014, 2015, or 2016.
Cybercriminals expanded upon successful business email compromise (BEC) scams to implement more attacks. For example, more than 200 organizations reported W-2 data breaches due to phishing messages in the first half of 2017 – a rise from the 175 reported in 2016.
The percent of government cybercrime-related threat data collected by SurfWatch Labs more than doubled from the previous two periods (from 13% to nearly 27%), and government was the top trending overall sector for the time frame (followed by IT at 25% and consumer goods at 17%).
The CIA was the top trending cybercrime target of the period due a nearly weekly series of data dumps from WikiLeaks (followed by Microsoft, the NSA, Twitter, and England’s National Health Service).
“As we’ve repeatedly seen over the past few years, a major breach is rarely isolated, and information stolen or leaked from one organization can be leveraged to attack numerous other organizations,” Meyer said. “Whether it is personal information, credentials, intellectual property, or vulnerabilities and exploits, actors will build off of that hard work and the previous success of other actors by incorporating that information into new campaigns.”
On Thursday morning, the Department of Justice, Europol, and Dutch authorities announced a coordinated law enforcement takedown of AlphaBay and Hansa Market, two of the three largest dark web marketplaces used to buy and sell illicit goods and services.
AlphaBay has been offline since July 5, the same day that founder Alexander Cazes was arrested in Bangkok and a week before his apparent suicide. With the dark web’s most popular marketplace suddenly unavailable, many users turned to Hansa, a market that touted its security-focused approach. Unfortunately for those users, Dutch law enforcement had seized control of Hansa on June 20 following the arrest of two administrators in Germany, and law enforcement has been covertly monitoring the market’s activity over the past month.
As Europol noted, this joint effort against the two markets helped to “magnify the disruptive impact” of the operation.
“It meant the Dutch police could identify and disrupt the regular criminal activity on Hansa but then also sweep up all those new users displaced from AlphaBay who were looking for a new trading platform,” Europol wrote in its press release. “In fact they flocked to Hansa in their droves, with an eight-fold increase in the number of new members of Hansa recorded immediately following the shutdown of AlphaBay.”
With both AlphaBay and Hansa Market now out of the picture, Dream Market is the reigning leader, according to SurfWatch Labs’ threat intelligence data.
How Cazes was Caught and AlphaBay Taken Down
Cazes, who was also known as “Alpha02” or “Admin” on the market, founded AlphaBay in 2014 and ran the site along with a team of eight to 10 individuals, according the unsealed indictment. Over the two-and-a-half-year period the site was operational, AlphaBay grew to become the largest dark web market in history and collected tens of millions of dollars in commissions.
However, Cazes made numerous mistakes while running AlphaBay that other malicious actors will be paying close attention to, said SurfWatch Labs chief security strategist Adam Meyer.
“As I read the indictment detailing the AlphaBay takedown in particular, I see a list of mistakes being disclosed by the operators of the market that will certainly be scrutinized by criminal elements in order to ensure they are not repeated in future efforts,” Meyer said. “In similar ways that malware instances are shared, tweaked and reused, those who operate illegal marketplaces — or have the desire to due to its profitability — are certainly taking detailed notes for future efforts.”
Cazes’ personal email, “Pimp_Alex_91@hotmail.com,” was included in the header of an AlphaBay welcome email that was sent to new users in December 2014. The email was also included in the header of AlphaBay password recovery emails sent in late 2014.
Law enforcement then discovered the email address belonged to a Canadian-born man named Alexandre Cazes with a birthdate of October 19, 1991.
A December 2008 post on the online tech forum “http://www.commentcamarche.com” was subsequently found in which a user going by the name “Alpha02” posted information in French on how to properly remove a virus from a digital photo. That post included both the name “Alexandre Cazes” and the email “Pimp_Alex_91@hotmail.com.”
The email addresses was also tied to a PayPal account registered in Cazes’ name.
When Cazes was arrested, law enforcement discovered his laptop open and in an unencrypted state, as well as logged into the server that hosted the AlphaBay site. While searching the computer they found several open text files with passwords for the AlphaBay site and servers, which allowed law enforcement to seize all the information and cryptocurrency on those servers.
At the time of his arrest, a financial statement on Cazes’ computer put his net worth at $23,033,975. Cazes attempted to justify his wealth through a front company called EBX Technologies, but the indictment noted that the company’s website “is barely functional” and that the company’s bank records show “little to no business income or banking activity.”
What’s Next for the Dark Web?
Dark web market takedowns are significant, Meyer said, but they’re also a part of the now-established cycle of popular markets being disrupted by law enforcement or exit scams only to have new markets rise in their absence.
“While the law enforcement take down of AlphaBay and Hansa are certainly heavily impactful to underground merchants, rest assured new marketplaces will be established and new protocols will be implemented,” Meyer said.
It was just a little over a year ago that the then-number-two most popular market, Nucleus Market, suddenly went offline in an apparent exit scam, helping to bolster both AlphaBay’s and Hansa’s user base. With those two markets now gone, Dream Market has become the temporary king, but that will likely change in the coming months as new markets and new operators step in to fill the void — until the cycle repeats again.
On Monday, the extortion group known as TheDarkOverlord released the first eight episodes of ABC’s soon-to-be-aired television show “Steve Harvey’s Funderdome” on the torrent site The Pirate Bay.
The leak of the ABC show follows a similar failed extortion attempt and subsequent leak of the first ten episodes of Netflix’s upcoming season of “Orange is the New Black” on April 28. At the time of the Netflix leak, TheDarkOverlord claimed to have stolen hundreds of gigabytes of unreleased and non-public media from a studio — including a total of 37 different film and TV titles. That leak was then tied to Larson Studios, an award-winning audio post-production studio in Hollywood.
As a result, Monday’s leak was likely not a surprise to ABC. TheDarkOverlord has been tweeting about the theft since late April and The New York Times reported that the FBI began notifying the affected companies of the theft a month before that.
Who is TheDarkOverlord?
There isn’t much known about TheDarkOverlord as the group is very careful about exposing information that could relate to its members’ identities. This actor is smart and calculated but also has become bolder and more arrogant as evidenced in communication with recent victims — as well as very recently even setting up a help desk like hotline.
“Time to play another round,” the group wrote in a Pastebin post announcing the leak on Monday. “We’re following through on our threats as we always do. We firmly believe that honesty and determination are the two most important factors of any business.”
The tone used by the group — both dismay that the “business” arrangement didn’t work out and a veiled threat to future victims — has become more prominent since TheDarkOverlord first began targeting healthcare organizations in June 2016.
Communication with TheDarkOverlord has shown that there is likely more than one member of the group; however, the language utilized on the group’s accounts suggests that a single member is responsible for the managing the Twitter promotions as it has a common syntax. Generally, healthcare organizations (the group’s primary targets) are under-secured and TheDarkOverlord is taking full advantage.
How TheDarkOverlord Attacks Organizations
TheDarkOverlord favors exploits that allow remote desktop control of a network. The group has also taken data acquired by other actors and exploited the clients found in these breached databases. This shows that TheDarkOverlord is not only proactive with its own targeting, but also opportunistic with regards to the sensitive data of any organization that the group comes across and can and take advantage of — as evidenced by the recent pivot from targeting healthcare organizations to those in the entertainment industry.
In regards to the targeting of entertainment brands, TheDarkOverlord discovered what may have been a softer target in the form of the post-production company Larson Studios, which is part of several major entertainment brands’ supply chain. TheDarkOverlord claims that it was able to exfiltrate numerous unreleased (still under production) media to use as leverage, although the group has only leaked two shows thus far.
As TheDarkOverlord moves from entertainment brand to entertainment brand with its extortion efforts, the actor is learning what impacted brands are willing to pay (if anything), and the group is then releasing the media publicly in order to harm the targeted brand financially for not giving into demands. “Orange is the New Black” was leaked a full six weeks before its June 9 premiere data, and “Steve Harvey’s Funderdome” was leaked six days before its June 11 premiere. Targeted brands are likely following the impact of releasing the unaired shows very closely.
Furthermore, TheDarkOverlord has a unique relationship with the media. By garnering media attention, the group builds its reputation and applies pressure to the organizations it wishes to extort. There have been reports that TheDarkOverlord first contacts its exploited entity and demands a ransom. Once the entity refuses, the actor then lists the heathcare database on TheRealDeal Marketplace or releases entertainment media publicly and alerts the media to its presence.
Past activity has shown a slight shift in tactics as TheDarkOverlord has breached an organization and followed that up by sending the victim, along with particular media figures who request it, a sample of the data. By involving security reporters and bloggers, TheDarkOverlord lends credibility to its work while causing panic in consumers who might be associated with the breach. Consumers’ dissatisfaction will also add pressure to the extorted entities to provide ransom payment to the actor for the stolen data.
Businesses across the world are still recovering from last Friday’s outbreak of the WannaCry ransomware. On Monday, White House homeland security adviser Tom Bossert said that the ransomware had hit more than 300,000 computers, and security researchers have since detected several new versions of the malware — at least one of which doesn’t have the widely reported “kill switch” built in that has been used to slow the malware’s spread.
Much has been written about the effects of the ransomware on patients at NHS facilities, on downtime at factories, and on disrupted services at numerous other organizations. Various groups have estimated that the potential costs from the WannaCry outbreak may total between several hundred million and $4 billion.
The attention on WannaCry is deserved; however, there is a much smaller piece of ransomware news that emerged last month that highlights the devastating impact ransomware can have on a single organization. In a complaint filed in April against its insurer, the law firm Moses Afonso Ryan Ltd. (MAR) claims that a ransomware infection took more than three months to resolve, costing the firm more than $700,000 in lost billings.
“During the three months that the documents and information of MAR was held captive by the perpetrators of the ransomware attack, the attorneys of the firm were unproductive and unable to work at a reasonable efficiency,” the firm wrote in its complaint. “Year to year billing comparisons reveal a reduction of over $700,000 of billings for the three months of interruption.”
Dispute Over Insurance Policy Coverage
MAR is suing its insurer, Sentinel Insurance Company, claiming that the policy it purchased “is designed to protect MAR against precisely the type of loss it has now incurred as a result of the ransomware attack and interruption of its business.”
Sentinel countered that it did, in fact, pay $20,000 in damages, but it denied the additional claim for the alleged lost “business income” as it exceeded what Sentinel believes are the limits of the policy.
Like the other insurance-related lawsuits — such as the Fourth Circuit ruling against Travelers Insurance in August 2016 — the dispute appears to revolve around the language of the policy and what specifically the policy covers when it comes to cybercrime.
“Sentinel admits that it has not paid for all of the losses MAR has claimed resulted from the ransomware attack it suffered, as certain of the losses claimed are not covered by the policy,” Sentinel argued in court documents. “The only coverage under the policy for loss or damage caused by a computer virus is under the Computers and Media Endorsement [section], which changes the policy to provide additional coverage [up to $20,000] for certain computer-related losses.”
Three Months to Resolve the Ransomware?
The lawsuit is yet another reminder that organizations need to ensure they know what their insurance policies cover in regards to cyber-attacks, but that is not the only cyber risk management lesson worth noting from the lawsuit. The court documents also revealed that it took several months for MAR to recover from the single ransomware incident — far more than the average of 42 hours that Ponemon found most ransomware victims spend.
The long recovery time was due to a variety of reasons, which the law firm outlined in its complaint:
In May 2016, a ransomware infection led to all of the documents and information stored on the MAR computer network being disabled and the computer network losing all functionality. MAR then hired security experts to fix the problem, but those experts were unable to gain access to the files.
In June 2016, the firm made contact with the attacker and negotiated a 13 bitcoin ransom. It took several days to purchase the bitcoins and pay the extortionist because the firm said they were unaware that new account holders could only purchase 2 bitcoins per day.
In July 2016, the firm had to re-establish communication with the attacker after discovering the decryption keys and tools it purchased did not work. A second bitcoin ransom was then negotiated and paid.
In August 2016, MAR had to recreate documents after discovering that it could not recover documents saved on a temporary server during the three months of business interruption.
All of this resulted due to a combination of events: an attorney at MAR clicking on an email attachment from an unknown source, a lack of proper backups and incident response plan to address a well-known security issue, and a malicious actor that took advantage of the situation by demanding multiple ransom payments.
MAR is just one example of a business that was unprepared for a ransomware attack, and numerous other organizations are likely experiencing similar issues this week. As Elliptic noted, WannaCry has generated over $80,000 in ransom payments since Friday.
However, organizations that decided to pay the WannaCry ransom were lucky that it only required a $300 or $600 payment depending on how quickly they acted. In addition, multiple researchers have reported that organizations were able to successfully restore their files after payment, even as law enforcement agencies have advised there are no guarantees when dealing with cybercriminals.
This is not the case for many ransomware victims. Some recent ransomware campaigns have been observed charging a full two bitcoin in ransom (around $3,700) for any infections, and some organizations have received targeted ransom demands totaling tens of thousands of dollars — and, in cases like MAR, the decryption keys purchased at those inflated prices may not even work.
Hopefully, WannaCry will help push organizations towards better understanding, preparation, and incident response around ransomware since the problem is not going away any time soon.
On Friday, 32-year-old Russian hacker Roman Seleznev was sentenced to 27 years in prison for running a cybercriminal operation that stole millions of payment cards, resulting in at least $169 million in damages to small business and financial institutions. It’s the longest sentence ever issued in the U.S. for cybercrime, and the court documents and testimony that led to the sentence revealed the inner workings of a decade-long operation that helped to grow and evolve payment card fraud into what it is today.
Earlier this month, in documents urging the judge to issue a lengthy sentence, the prosecution said Seleznev may have harmed more victims and caused more financial losses than any other defendant that ever appeared before the court:
“Seleznev is the highest profile long-term cybercriminal ever convicted by an American jury. His criminal conduct spanned over a decade and he became one of the most revered point-of-sale hackers in the criminal underworld. … Unlike smaller players in the carding community, Seleznev was a pioneer in the industry. He was not simply a market participant – he was a market maker whose automated vending sites and tutorials helped grow the market for stolen card data.”
In total, the government was able to identify 2,950,468 unique credit card numbers that Seleznev stole, possessed, or sold related to more than 500 U.S. business, subsequently affecting 3,700 financial institutions around the world. And — as the government pointed out — that is just the known losses.
Driving Small Businesses to Bankruptcy
As we wrote when Seleznev was convicted on 38 of the 40 counts he faced last year, many of the organizations he targeted were small businesses, and the testimony of seven of those businesses were heard in the court case.
Seattle’s Broadway Grill has perhaps been the most publicized of the point-of-sale breaches. Owner CJ Saretto testified that bad publicity from the breach instantly reduced the restaurant’s revenue by 40 percent and eventually forced him to “walk away from the business, shutter the doors, [and file] personal bankruptcy.” Other owners testified that the effect on business was “horrendous,” that the breach forced them into heavy debt, and that business “has never been the same” since the incident.
It’s no coincidence those that testified in the case against Seleznev were small business owners. Seleznev tended to target small businesses in the restaurant and hospitality industry, particularly if they had poor password security around their point-of-sale devices.
Seleznev “developed and used automated techniques, such as port scanning, to identify retail point of sale computer systems … that were connected to the Internet, that were dedicated to or involved with credit card processing, and that would be vulnerable to criminal hacks,” the indictment stated.
“He quickly learned that many of these businesses’ point of sale systems were remotely maintained by vendors with poor password security,” the government said in its sentencing memorandum. “Because most of his victims were small businesses, they were unlikely to have in-house IT or security personnel. As a result, these companies made extremely attractive targets for someone with Seleznev’s skills as a hacker.”
Track2, Bulba, 2Pac, and POS Dumps
However, Seleznev went far beyond merely stealing payment card information, he also helped to develop and operate websites to market the stolen data and promote more individuals to get into payment card fraud. Seleznev was 18 years old when he began participating in the Russian underground “carding” community under the alias “nCuX,” and seven years later, in 2009 when the U.S. Secret Service tried and failed to coordinate his arrest, he had become a major provider of stolen credit card data, according to court documents.
Just three months after being tipped off to the potential arrest by contacts inside the FSB and retiring his “nCuX” alias, Seleznev was back in the game under the name “Track2.” He soon unveiled two new automated vending websites, “Track2” and “Bulba,” which allowed buyers to to automatically search and purchase his stolen credit card data by using filters such as a particular financial institution or card brand.
Those features have become commonplace now, but as the prosecution noted, it was “a major innovation” at the time and the “Track2 and Bulba websites achieved instant success.”
“[The sites] made it possible for criminals to efficiently search for and purchase stolen credit card data through a process as easy as buying a book on Amazon,” the prosecution wrote. “Automated vending sites increased the efficiency [of] credit card data trafficking, and remain the gold standard for credit card trafficking to this day.”
In April 2011, Seleznev was injured in a terrorist bombing in Marrakesh, Morocco, and hospitalized for several months. His co-conspirators ran the Track2 and Bulba websites in his absence until they closed up shop in January 2012 citing no new dumps to sell.
Once again, Seleznev choose to return to cybercrime by innovating his operations. Switching monikers to “2Pac,” he launched a new automated vending site that would not only sell his stolen data but would offer stolen cards from “the best sellers in one place.” Seleznev would take a portion of the proceeds for each sale, and he used this model to resell credit data stolen in popular breaches such as Target, Michaels, and Nieman Marcus on the 2Pac site.
In addition, Seleznev needed a continuous stream of dumps and customers to fuel his 2Pac site, so he began teaching others the basics of payment card fraud via a sister site, called “POS Dumps.”
The POS Dumps website contained four categories to teach amateurs how to successfully commit payment card fraud:
Choosing and buying equipment
Choosing and buying dumps
How to generate Track1 and why it is needed
Writing the dumps onto cards
The website even had links to eBay to purchase the necessary equipment (an MSR206 manual swipe magnetic card reader/writer) and custom malware to help write the stolen payment card data onto other cards.
The prosecution wrote that the POS Dumps website “trained thousands of new criminals in the basics of how to use the data to commit fraud.” Similar types of tutorials related to fraud and cybercrime remain among the most commonly listed items on dark web markets today, according to SurfWatch Labs’ data.
A Record 27-Year Prison Sentence
Court documents from the defense called the long prison sentence “draconian.” However, Seleznev clearly knew his actions could have serious consequences. He monitored the U.S. court’s PACER system for any criminal indictments against him, and when agents arrested him in the Maldives as he attempted to board a plane in 2014, he immediately asked if the U.S. had an extradition treaty. The U.S. did not have a formal treaty with the Maldives, but an agreement was obtained in the days prior to take custody of Seleznev.
The prosecution described Seleznev’s sentencing guideline calculation as “literally off the charts.” A score of 43 recommends a life sentence, and Seleznev scored 16 points above that — a 59.
The judge agreed with the prosecution and sentenced Seleznev to 27 years in prison last Friday.
“The notion that the Internet is a Wild West where anything goes is a thing of the past,” said U.S. Attorney Annette L. Hayes. “As Mr. Seleznev has now learned, and others should take note – we are working closely with our law enforcement partners around the world to find, apprehend, and bring to justice those who use the internet to steal and destroy our peace of mind. Whether the victims are multi-national banks or small pizza joints, we are all victims when our day-to-day transactions result in millions of dollars ending up in the wrong hands.”