How Researchers Helped Cripple CryptoLocker

The big news this week that a global team of law enforcement agencies and security researchers has disrupted a sophisticated and infamous ransomware operation came as no surprise to Lance James.

James, head of cyber intelligence at Deloitte & Touche, had worked with the FBI on the case, providing intelligence from a sinkhole he and his team had built to capture CryptoLocker traffic. CryptoLocker has been on the radar screen of the law enforcement and security communities for some time, and the alliance of agencies and security researchers did some serious damage to the operation by disrupting the GameoverZeuS botnet that transports it, as well as by seizing the key command and control servers used with CryptoLocker.

CryptoLocker, which encrypts the victim's files on local drives' network shares using strong encryption, has dogged enterprises for months. The attack typically begins with a convincing-looking spearphishing email and attachment, which, installs the Zeus Trojan when opened. Zeus then grabs and installs CryptoLocker, and a victim gets locked out of his own machine before he knows he's got malware.

"It targets corporate... the first victim we found" was a high-level business executive, James says. "The value of your information [is] worth a lot more" than the ransom fee in most cases.

Faced with fessing up to the company for falling for the ransomware, some victims pay the ransom of $300 or so to get their data decrypted.

James says a coordinated effort to quash CryptoLocker occurred mainly due to worries that it could become an epidemic. "It would have been an epidemic" if no one had intervened. He will share details and insight into his team's research and sinkhole effort, as well as the coordination with law enforcement, in a presentation for Black Hat USA in August, "The New Scourge Of Ransomware: A Study Of CryptoLocker And Its Friends."

CryptoLocker marked a new generation of ransomware, where attackers demand payment to give users back control of their machines. It uses strong encryption, namely public key crypto. "They used the native Windows API library and actually did it correctly." The malware uses RSA 2048-bit keys and a private key on the command and control server. And attackers use AES 256-bit encryption to encrypt the victim's files.

"If you don't have access to the control server, you can't get those files back," James says. "In the old days, there would be a symmetric key in the malware you could find and decrypt. Some [ransomware] didn't even encrypt. They just locked" the machine.

The organization behind CryptoLocker is highly organized -- and making big bucks. According to James, the gang received about $100 million in ransom payments in its first year. Victims can end up paying hundreds of dollars to regain access to their data, but even paying up doesn't guarantee getting your data back. Also, the attackers could sell your files in the underground for profit.

Another big piece of the law enforcement crackdown this week was the indictment of the GameoverZeuS botnet administrator, a Russian national, on charges of conspiracy, hacking, wire fraud, bank fraud, and money laundering associated with the botnet, as well as other charges for his role in CryptoLocker. James says the indictment helps instill a little fear, whether the alleged cybercriminal is extradited to face his crimes or not.

Meanwhile, James's team has been stalking CryptoLocker via the sinkholes. "That blocks a lot of attacks. They generate about 1,000 domains a day." The researchers try to get ahead of the new domains, which are built via the Domain Generation Algorithm (DGA), by grabbing up the next ones in line and registering them.

"We start to register them ahead of time and get the sinkholes in place," he says. "This allows a lot of the [victims] to go to the sinkhole" server, which slows down the attackers and gives the defenders time to block them. "We started lowering the effect of CryptoLocker over time."

James says he knows what CryptoLocker's backend infrastructure looks like, and he plans to provide more detail on that in his Black Hat talk.

So if antivirus tools aren't catching CryptoLocker quickly enough or at all, what's the best defense? "Backup," he says. "The big message is about resiliency and business continuity. You have to assume you might get hit with something, and assume you're in a hostile environment."

Now that CryptoLocker has been thwarted, at least temporarily, the attackers may go to a peer-to-peer infrastructure and use the Tor anonymization service. "It would be hard to see the servers then."

James was the featured guest on yesterday's episode of Dark Reading Radio. The archive of the broadcast is available here.