http://rt.com/usa/us-hacking-exploits-millions-104/
By Joseph Menn | Reuters – Fri, May 10, 2013
The US government might be the biggest hacker in the world
Published time: May 10, 2013 17:08
Reuters/Kacper Pempel
The United States government is investing tens of millions of dollars each year on offensive hacking operations in order to exploit vulnerabilities in the computers of its adversaries, Reuters reports.
According to an in-depth article published Friday by journalist Joseph Menn, the US and its Department of Defense contractors are increasingly pursuing efforts to hack the computers of foreign competitors, in turn exposing a rarely discussed aspect of the nation’s clandestine cyber operations.
In a time when the government continues to prosecute alleged domestic computer criminals — so much so that demands for technology law reform have been rampant as of late — Menn says the US is guilty of spending millions on discovering, identifying and exploiting previously unknown security flaws, often gaining unfettered access to the systems and networks of international targets.
As a result, the US has become one of the world’s top players in regards to wreaking havoc over the Internet — even as calls to investigate foreign hackers increase in Congress.
On Tuesday, a bipartisan supported proposal was introduced in Congress specifically to protect US commercial data from being compromised by foreign hackers. According to Menn, however, the American government is just as guilty of cybercrimes as the countries it warns against in introducing the “Deter Cyber Theft Act.”
“Even as the US government confronts rival powers over widespread Internet espionage, it has become the biggest buyer in a burgeoning gray market where hackers and security firms sell tools for breaking into computers,” Menn wrote.
In his report, Menn explained that a large chunk of the country’s current cyber endeavors does not rely on defensive strategy as one might imagine, but instead involves offensive operations launched with the intent of causing harm on the computers of adversaries.
Menn wrote defense contractors “spend at least tens of millions of dollars a year” on simply researching exploits that, if pursued, could put the eyes and ears of the American intelligence company essentially anywhere in the world.
And although the US has not officially gone on the record to acknowledge these shadowy operations, Menn wrote that the nation’s most well-known cyber endeavor — the Stuxnet worm that targeted Iranian nuclear plants — is just one example of the budding attempts to attack foreign entities.
“Computer researchers in the public and private sectors say the US government, acting mainly through defense contractors, has become the dominant player in fostering the shadowy but large-scale commercial market for tools known as exploits, which burrow into hidden computer vulnerabilities,” he wrote.
“In their most common use, exploits are critical but interchangeable components inside bigger programs. Those programs can steal financial account passwords, turn an iPhone into a listening device or, in the case of Stuxnet, sabotage a nuclear facility.”
Menn cited several defense contractors and government officials — many speaking on condition of anonymity — who admitted the increasingly dominant role the US government has in pursuing research on these exploits and using them to attack rival networks.
According to the report, “Reuters reviewed a product catalogue from one large contractor, which was made available on condition the vendor not be named. Scores of programs were listed. Among them was a means to turn any iPhone into a room-wide eavesdropping device. Another was a system for installing spyware on a printer or other device and moving that malware to a nearby computer via radio waves, even when the machines aren't connected to anything.”
These contractors, he wrote, spend upwards of $100,000 on licensing single operations to governments, including the US. The result has been the development of a thriving industry, largely underground, where exploits are bought and sold before patches are developed to protect against intrusions. These “zero-day exploits”— labeled as such because developers are unaware of the flaw until it’s announced — fetch big bucks from contractors, governments and hackers.
And as the demand for these exploits increases, so do the players in the game. One example cited by Menn is Atlanta-based Endgame Inc., which recently brought in $23 million in funding courtesy of Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. But as early as 2011, Endgame and similar entities have been on the radar of hacktivists hell-bent on exposing the largely unknown doings of defense contractors.
When the loose-knit hacking collective Anonymous investigated security consultants HBGary in 2011, they uncovered only the tip of an intricate iceberg made up of former federal employees and other intelligence workers being paid boatloads to give governments exploits that could be used to their advantage. Project PM, the open-source online think tank started by former Anonymous collaborator Barrett Brown, discussed Endgame and its associates in great detail.
From a Business Week article cited by Brown:
“Endgame executives will bring up maps of airports, parliament buildings and corporate offices. The executives then create a list of the computers running inside the facilities, including what software the computers run, and a menu of attacks that could work against those particular systems. Endgame weaponry comes customized by region — the Middle East, Russia, Latin America and China — with manuals, testing software and ‘demo instructions.’ There are even target packs for democratic countries in Europe and other US allies.”
Last year Brown was arrested on unrelated counts and remains in custody six months later with an eventual trial still a ways before him. The US government has since subpoenaed Internet host Cloudflare for records pertaining to Project PM, and has equated the website as a criminal enterprise.
“Project PM served as a forum through which defendant Brown and other individuals sought to discuss their joint and separate activities and engage in, encourage, or facilitate the commission of criminal conduct online,” the government alleged when it fought back attempts from the current Project PM administrator to quash that subpoena.
Brown fired back from prison: “It makes it much more obvious that this investigation and the charges against me has to do with our successful research into what may be criminal activities by firms close to the government.”
If convicted on all counts — more than one dozen including threatening a federal agent and sharing a hyperlink — Brown could be sentenced to 100 years in prison.
“It is virtually impossible to conclude that the obscenely excessive prosecution he now faces is unrelated to that journalism and his related activism,” Glenn Greenwald wrote earlier this year for The Guardian.
Meanwhile, Menn admitted that other investigative computer work — specifically discovering exploits like the one Endgame thrives off of — is an endeavor that discourages people outside of the government and defense industry from entertaining.
“Most companies, including Microsoft, Apple Inc. and Adobe Systems Inc, on principle won't pay researchers who report flaws, saying they don't want to encourage hackers,” he wrote. “Those that do offer ‘bounties,’ including Google Inc. and Facebook Inc., say they are hard-pressed to compete financially with defense-industry spending.”
Andrew Auernheimer, a 26-year-old independent security researcher, was recently sentenced to 41 months in prison for identifying and disclosing a harmless exploit on the servers of AT&T that allowed anyone with the know-how to collect the email addresses of thousands of Apple iPad users. After he was convicted, Auernheimer wrote for Wired that the selective prosecution of some security researchers will deter future hackers from ever disclosing exploits, even critical ones that effect national security.
“In an age of rampant cyber espionage and crackdowns on dissidents, the only ethical place to take your zero-day is to someone who will use it in the interests of social justice. And that’s not the vendor, the governments, or the corporations — it’s the individuals,” he wrote. “In a few cases, that individual might be a journalist who can facilitate the public shaming of a web application operator. However, in many cases the harm of disclosure to the un-patched masses (and the loss of the exploit’s potential as a tool against oppressive governments) greatly outweighs any benefit that comes from shaming vendors. In these cases, the antisec philosophy shines as morally superior and you shouldn’t disclose to anyone.”
http://news.yahoo.com/booming-zero-day-trade-washington-cyber-experts-worried-110218926.html
Booming 'zero-day' trade has Washington cyber experts worried
By Joseph Menn | Reuters – Fri, May 10, 2013- Associated Press/Brennan Linsley - In this Feb. 20, 2013 photo, a cadet works at a computer inside a classroom at the Center for Cyberspace Research, where cyber warfare is taught, at the U.S. Air Force Academy,
By Joseph Menn
WASHINGTON (Reuters) - The proliferation of hacking tools known as zero-day exploits is raising concerns at the highest levels in Washington, even as U.S. agencies and defense contractors have become the biggest buyers of such products.
White House cybersecurity policy coordinator Michael Daniel said the trend was "very worrisome to us."
Asked if U.S. government buying in the offensive market was adding to the problem, Daniel said more study was needed. "There is a lot more work to be done in that space to look at the economic questions...so we can do a better job on the cost-benefit analysis," he said.
Some security experts say the government's purchasing power could help instead of hurt. They argue the U.S. government should bring the market into the open by announcing it will pay top dollar for zero-days and then disclosing all vulnerabilities to the companies concerned and their customers.
"Given that people are now buying vulnerabilities, the U.S. should simply announce that it is cornering the market, that they will pay 10 times anyone else," said Dan Geer, chief information security officer at In-Q-Tel, the U.S. intelligence community's venture capital firm. He said he was speaking outside of his official capacity.
Richard Clarke, who served as counter-terrorism chief in the White House before becoming a cybersecurity advisor there a decade ago, said the government should at least review the exploits it has and disclose the vast majority.
"In some rare cases, perhaps the government could briefly withhold that information in order to run a high-priority collection mission," he said. "Even then, however, the government should closely monitor to see if anyone else has discovered the vulnerability and begun to use it."
Howard Schmidt, who served as White House cybersecurity czar under Obama, said he agreed with Clarke's approach. Asked if he had made the same argument during his recent two and a half years in the White House, he said he couldn't betray confidences by going into detail.
But Schmidt added: "The entire discussion on cascading effects and the sort of unintended consequences of any type of malware was had more than once...That's the discussion that needs to continue to take place."
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