How Attackers Used Look-Alike Domains to Steal $1 Million From a Chinese VC

Some cyberattacks involve extremely sophisticated tools and cutting-edge exploits. Others, not so much.

A case in point is an incident involving a Chinese venture capital firm and an Israeli startup that it had agreed to fund. Nearly all it took for scammers to walk away with a cool $1 million in cash — meant for the startup from the investment firm — was two Web domains and 32 emails.

Check Point Software, which investigated the scam on behalf of the Israeli firm, this week described the incident as starting with a compromise of the Israeli startup's email server. A few months before the transaction was scheduled to happen, the attackers noticed an email thread containing information about a multimillion-dollar seeding fund from the Chinese VC.

Rather than simply monitoring the thread and having emails forwarded to them, the attackers registered two domains. One of the domains was a look-alike of the Chinese investment company's domain; the other was a spoof of the Israeli firm's domain. In both instances, the threat actors simply added an "s" to the end of the original domain name.

The next phase of the scam involved the attackers sending two emails with the same subject header as the original email thread about the planned seed funding.

The attackers used the Israeli firm's look-alike domain to send an email to the Chinese VC firm that appeared to be from the startup's CEO. They also used the Chinese firm's look-alike domain to send an email to the Israeli company that purported to be from the email account of the manager in charge of the transaction at the investment firm.

"This infrastructure gave the attacker the ability to conduct the ultimate Man-In-The-Middle (MITM) attack," Check Point said in a blog describing the incident.

Thus, all email communication that both sides carried out in response to those two initial emails were being sent directly to the attackers first. The threat actors would review each email, make whatever changes they felt they needed to make, and then forward the messages from the look-alike domains to the original destination.

In total, the attacker sent 14 emails to the Israeli side and 18 to the Chinese VC firm using the look-alike domains. Over the course of these communications, the attackers managed to change the bank account information for the VC firm and replace it with their own, so any money that the VC firm sent to the Israeli firm would end up with the attackers instead.

Brazen Scam
According to Check Point, the attackers were so brazen they even managed to cancel a scheduled meeting in Shanghai between the CEO of the Israeli company and the Chinese VC firm. They basically sent emails with different excuses to both sides using the rogue domains. The goal in thwarting the meeting apparently was to minimize the risk of the bank account number switch being discovered.

"This operation was unique because the threat actor successfully spoofed both sides of the transaction and was able to disrupt physical meetings between the parties involved," says Tim Otis, team leader, incident response operations at Check Point.

Such scams highlight the need for organizations to have a capability in place to scan for look-alike domains, Otis says. They also show why secondary protection mechanisms — like verbal confirmation — are necessary when making high-value transactions, he says.

Look-alike domains have become an increasingly popular tactic among online scammers and those seeking to pull off impersonation schemes. In many cases, attackers set up look-alike domains for well-known brands and use the domains to try and trick users into sharing passwords, payment card info, and other sensitive data. The trend is especially noticeable during the holiday shopping season.

Security vendor Venafi recently looked into the explosion of such sites and discovered over 100,000 lookalike domains for just the top 20 retailers in the US, UK, France, Germany, and Australia.

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