Microsoft Hands Off Nitol Botnet Sinkhole Operation To Chinese CERT

Microsoft has dropped its lawsuit filed last month against a notorious domain provider that was hosting a large portion of the so-called Nitol botnet and other malicious activities, which were sinkholed by Microsoft last month in another of the software giant's botnet takedown operations.

Richard Domingues Boscovich, assistant general counsel for the Microsoft Digital Crimes Unit, announced today in a blog post that Microsoft has dismissed its lawsuit against 3322.org due to an agreement struck with Peng Yon, the operator of the domain. "As part of the settlement, the operator of 3322.org, Peng Yong, has agreed to work in cooperation with Microsoft and the Chinese Computer Emergency Response Team (CN-CERT)," Boscovich said.

Under the agreement, Yon will again run 3322.org and block all connections that are identified in a blacklist provided by CN-CERT, as well as add subdomains identified by Microsoft and CN-CERT to be associated with malware. That traffic will be redirected to a sinkhole operated by CN-CERT. And Yon will "Cooperate, to the extent necessary, in all reasonable and appropriate steps to identify the owners of infected computers in China and assist those individuals in removing malware infection from their computers," according to Boscovich.

Microsoft is handing over all evidence and discovery from its investigation to CN-CERT, which, along with Yon, will work to identify the offenders behind the malicious subdomains. "We're very pleased by this outcome, which will help guarantee that the 70,000 malicious subdomains associated with 3322.org will never again be used for cybercrime," Microsoft's Boscovich said.

During the 16 days when Microsoft was running the sinkhole for the 70,000 malicious subdomains, it blocked more than 609 million connections from more than 7,650,000 unique IP addresses to the bad 3322.org subdomains. Legitimate subdomains were provided DNS service. "For example, on Sept. 25, we successfully processed 34,954,795 DNS requests for 3322.org subdomains that were not on our block list," he said.

The action against the 3322.org came out of a sinkhole operation Microsoft executed last month to stop the Nitol botnet out of China that was also spread via counterfeit software secretly embedded with the malware. Microsoft won a court order to host 3322.org, out of which the Nitol botnet operated. The domain also hosted some 500 different strains of malware, including Nitol.

The U.S. District Court for the Eastern District of Virginia had granted Microsoft's request for an ex parte restraining order against Peng Yong, his company, and other John Does.

"We believe the action against the Nitol botnet was particularly effective because it disrupted more than 500 different strains of malware -- potentially impacting several cybercriminal operations," Boscovich said.

He also expanded on Microsoft's findings about malware-ridden computers being sold to consumers. Microsoft discovered Nitol while investigating how cybercriminals are abusing the third-party software supply chain with counterfeit software rigged with malware -- one of the vectors Nitol used to spread its bot malware. "While there have been some reports that the malware in this case was being installed on computers at the factory, we have no evidence to support this claim. Our study showed that the malware was more likely than not being pre-installed on computers after they had left the factory but before they were delivered to the consumer," he said.

"Cybercriminals did and continue to do this by having disreputable distributors or resellers load malware-infected counterfeit software onto computers that have shipped from the PC manufacturer without an operating system, or in some cases, with an operating system that a customer doesn't want. Those infected computers are then loaded with a desired operating system that is often laden with malware and then sold to unassuming customers," Boscovich said.

A copy of the court filings is available here.

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