New And Improved Storm Botnet Morphing Valentine's Malware

The botnet formerly known as Storm is ramping up its ability to evade detection by automatically generating thousands of different variants of its malware each day as it spreads and recruit more bots.

Waledac -- the new and improved Storm -- is using its favorite holiday, Valentine's Day, to spread the love with signature phony greeting cards and romance-themed email that Storm so infamously spread in the past. "Over the last 24 hours, we've seen over 1,000 new variants [of Waledac code]," says Pierre-Marc Bureau, a senior researcher with Eset, which expects Waledac to eventually pump out thousands of variants a day. "It was a bit lower than what we are expecting. It may not have reached many of our clients yet." That said, it's still a big jump from the around 10 new versions a day Eset had seen the botnet creating, he adds.

One of Waledac's latest attacks comes in the form of a puppy love e-card with a Valentine's-related link, as well as other warm and fuzzy-looking email. Subject lines include the usual "a Valentine card from a friend" and "you have received a Valentine E-card," but once you click the URL to retrieve the message, Waledac's malware is downloaded onto your machine. Another attack uses a phony pop-up that appears to be from Microsoft stating the machine is infected with spyware. That leads to a fake antispyware site that not only infects the machine, but also tries to sell the victim its scareware, according to Patrick Murray, director of product management for Marshal8e6.

"The authors have started adding supposed magazine endorsements and other elements that one would see on a reputable anti-malware site. The graphics within the pop-ups themselves seem to be professionally designed at this point, so it is very critical for users to treat email from unknown persons with extreme caution," says Ryan Sherstobitoff, a vice president with Panda Labs.

Meanwhile, constantly changing the look and feel of its malware is consistent with the new and improved Storm's M.O.: to avoid attracting too much attention like it used to do. Researchers last month confirmed that Waledac was basically Storm reincarnated, but with all-new malware and a more sustainable architecture that's less likely to get infiltrated and shut down. The notorious botnet Storm went MIA last fall, and researchers started to write it off. But the operators of Storm made a comeback this year with new binary bot code and stronger encryption, plus it replaced its peer-to-peer communications among its machines to HTTP, which helps camouflage its activity among other Web traffic. HTTP also makes it tough to distinguish a bot from a command and control server.

Joe Stewart, director of malware research for SecureWorks, says Storm and Waledac are completely different, however, when it comes to code and files. "It's definitely not the same programmers," he says. But the botnet's overall behavior and strategy is generally the same, he says.

Other researchers agree that the botnet's operators are taking a lower-key approach so far, while employing some of the same tactics they did with Storm -- using traditional social engineering lures of phony events and holiday email, as well as trying to mask the malware by changing it regularly.

Despite the Valentine's rush, however, Waledac's spam volume hasn't increased greatly, Stewart says. "It's curious why not," he says. One theory is the botnet operators are mainly focused for now on building out their infrastructure, which, according to different bot-hunters, is anywhere from 10,000 to 35,000 bots -- nowhere near its heyday of multiple hundreds of thousands of zombies.

So what is Waledac after? "Once it gets on a PC, it starts searching the hard drive for email addresses and default passwords. And it sends that information back to the C&C server using HTTP," Eset's Bureau says.

"Our gut is it's mostly a spam operation similar to what Storm was doing," he says. "And it can use as much as it can from the infected computers, stealing usernames and passwords."

Waledac isn't the only botnet running Valentine's Day spam scams. So far, it's not pumping out anywhere near the volume of Valentine's spam as the Cutwail botnet, for example, which is sending 6.5 percent of all Valentine-related spam now, according to Symantec's MessageLabs, which reports that Valentine's spam accounts for nearly 10 percent of all spam as of this week.

Eset's Bureau says Waledac so far has registered 115 domain names this month, most of which are Valentine's Day-related.

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