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Stung by file-encrypting malware, researchers fight back

Jeremy Kirk | April 10, 2014
Jose Vildoza's 62-year-old father was using his old Windows computer when a warning in broken English flashed on the screen: your files have been encrypted.

Jose Vildoza's 62-year-old father was using his old Windows computer when a warning in broken English flashed on the screen: your files have been encrypted.

Vildoza's father, who speaks Spanish, didn't understand the warning, which demanded payment in order to decrypt the files. When Vildoza looked at it, he knew it was bad. And he became angry.

"I became upset with that," said Vildoza, who lives in the small town of Bella Vista, Argentina, and works for Tucma Games, a video game developer. "I didn't want to pay."

Vildoza's machine had become just one of the latest victims of a long-running scam that has seen a surprising resurgence over the last year. For around a decade, cybercriminals have been hacking people's computers and encrypting their files.

It's one of the more insidious schemes on the Internet. The type of encryption is virtually unbreakable, and unless users have a backup of their files on an uninfected machine, the data — absent payment — is gone for good.

In its latest Internet Security Threat Report released on Tuesday, security vendor Symantec said it saw a 500 percent increase in the number of attempts across its customer base in 2013 to install encrypting malware, under names including CryptoLocker, CryptorBit and HowDecrypt.

The hackers typically demand US$100 to $500, payable in bitcoin or other Web-based payment services. The ransom may increase the longer the victim waits.

Kevin Haley, director of Symantec's security response team, said Wednesday "it's the perfect kind of criminal scam. You get people scared and not thinking, and you can make a lot of money out of it."

Ransomware schemes may be rising due to the sheer profitability and declining effectiveness of Web-based scams such as bogus security programs. Haley said Symantec estimates ransomware perpetrators on an average achieve a 3 percent response rate, and demand payment that is much higher than those peddling fake AV software, typically $50.

But Vildoza, an enthusiastic 25-year-old, wasn't about to give up. He launched his own investigation, discovering that his machine had first been infected with Sefnit, which is a malware behind a botnet, or a network of compromised computers, by the same name.

He believes that whoever controls Sefnit likely sold access to his computer to other cybercriminals who then installed CryptoDefense, a type of ransomware that emerged last month.

Diving into CryptoDefense's code, he found its developers had made a crucial mistake. CryptoDefense used Microsoft's Data Protection API (application programming interface), a tool in the Windows operating system to encrypt a user's data.

CryptoDefense sent the plain-text private key to unlock the data back to its own server, and the cybercriminals would only release it upon payment. But they apparently didn't know that the Data Protection API stored a copy of the encryption keys on a victim's computer.


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