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Iranian Hacking Of New York Dam Signals Wider Cyber Threat

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A classified incident where Iranian hackers infiltrated a dam less than 20 miles from New York City two years ago underscores a major threat to the U.S. power grid, factories, pipelines, bridges and dams, according to a front-page story in today’s Wall Street Journal. The story notes the incident occurred amidst concerns that the Iranians had attacked U.S. banks.

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The dam breach came a few years after U.S. spies damaged an Iranian nuclear facility using a computer worm.

Unlike a conventional war, a cyber attack can be hard to track. In the case of the New York dam, investigators first thought the intended target was a dam in Oregon.

Leon Panetta, then-U.S. Defense Secretary, warned in 2012 of Iran’s hacking capabilities.

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Industrial  Computers Unprotected

One problem facing the U.S. industrial sector is that many of its computers were built before the consumer Internet. Hacking gurus warned against deploying these outdated computer systems. In many cases, these systems connect directly to office networks that are typically easy to hack.

Now, such systems are controlling drawbridges and water releases from dams, in addition to water flow in pipelines. As a result, the dams are vulnerable to traffic jams, floods and explosions caused by hackers.

Shodan, a search engine that catalogs Internet-connected machines, notes the U.S. has over 57,000 Internet-connected industrial control systems, which is more than any country. These systems range from big pipelines to office air conditioning units to electrical control systems.

The companies employing these systems have done little to protect them from hackers, according to security specialists.

Hacker Expert Warns Industry

Cesar Cerrudo, an Argentina-based researcher and chief technology officer at the consultancy IOActive Labs, said it’s great that everything is being integrated, but security is lacking. He showed a hacker conference in Las Vegas last year how easily he can manipulate traffic lights in big U.S. cities.

The operators of these systems are not paying attention to security, Cerrudo said.
The German government last year reported that hackers accessed a domestic steel plant’s control system and caused major damage to a blast furnace.

Governments also use cyber weapons. Israel and the U.S. used a computer program to disable centrifuges at Iran’s Natanz nuclear facility early in President Obama’s term. The virus self-replicated unintentionally and infected other networks, including Chevron Corp. Company executives said there was no damage.

The U.S. Department of Homeland Security (DHS) has been warning industries since 2011 to watch how they connect their systems to the Internet. In 2014, a report noted that the devices are poorly protected, thereby increasing chances of targeted and opportunistic hack attacks.

The DHS said it responded to reports of 295 industrial control system hacking incidents for the 12 months ending Sept. 30, marking an increase over the 245 incidents in 2014. In June, it said a critical asset owner suspected a breach and did not have records of devices on its network, undermining the investigation.

Hackers usually appear to probe systems to learn how they are set up and where they are vulnerable, investigators said.

A Wake Up  Call

The New York dam incident was a wake-up call that demonstrated Iran has greater cyber warfare capability than many believed and that it is capable of inflicting damage.

James Clapper, director of national intelligence, told a Congressional hearing in February that Iranian hackers are motivated and unpredictable cyber war actors.

Officials in Iran did not respond to a request for comment.

The dam hack also pointed to another challenge facing digital defenses in the U.S.: the cyberwar’s “fog.” The rules governing domestic surveillance and unclear Internet addresses prevented U.S. officials from determining where the hackers infiltrated.

An unclassified DHS summary indicates the hackers gained access through a cellular modem. People familiar with the incident said the summary refers to a small structure used for flood control near Rye, N.Y. called Bowman Avenue Dam. The hackers probed the system but did not take control of it.

A DHS spokesperson said the department responds to threats, vulnerabilities and cyber incidents at critical infrastructure across the country but does not comment on specific incidents.

Also read: Ted Koppel writes book about dangerous power grid hackers

Intelligence Suspected The Wrong Dam

American intelligence agencies noticed the attack when they monitored computers they believed to be linked to Iranian hackers targeting U.S. firms, sources told The Wall Street Journal. U.S. officials linked these hackers to consumer banking website hackers, including SunTrust Banks Inc., Capital One Financial Corp. and PNC Financial Services Group.

Analysts noticed a machine crawling the Internet seeking out vulnerable U.S. industrial control systems. The hackers were apparently focusing on specific Internet addresses, sources said. National Security Agency analysts advised counterparts at Homeland Security about these addresses.

Investigators were able to link an address to a “Bowman” dam. There are 31 U.S. dams that include that word in their name, however.

Officials feared the hackers accessed systems at Oregon’s Arthur R. Bowman Dam, which irrigates agriculture and prevents flooding in Prineville, Ore. Officials notified the White House that the digital conflict with Iran was escalating.

Asked to comment, the White House referred the Wall Street Journal to Homeland Security.

The trail eventually led to the Rye Brook, N.Y. dam. The manager of Rye, N.Y. said FBI agents came to the city offices to talk to the IT manager about a hacking incident but said there was very little discussion.

The FBI declined to comment.

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4.8 stars on average, based on 4 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




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Breaches

Skepticism Grows Over BitGrail’s Supposed $167 Million Hack

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A relatively unknown cryptocurrency exchange by the name of BitGrail has informed its users of a coordinated cyber attack targeting Nano (XRB) tokens. However, the incident does not appear to be holding up to scrutiny after the founder of the exchange made an odd request to the developers of Nano shortly after discovering the alleged theft.

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BitGrail Exchange Allegedly Compromised

The Italian exchange issued a notice to its clients last week informing them that 17 million XRB tokens were compromised in a cyber attack. The XRB token, formerly known known as Raiblocks, is valued at $9.80 at the time of writing for a total market cap of $1.3 billion. That puts the total monetary loss of the supposed heist at nearly $167 million.

Parts of the notice have been translated into English from the original Italian by Tech Crunch, a media company dedicated to startups and technology news. According to the agency,  BitGrail has stated the following:

“… Internal checks revealed unauthorized transactions which led to a 17 million Nano shortfall, an amount forming part of the wallet managed by BitGrail… Today a charge about those fraudulent activities has been submitted to the competent authorities and now is under police investigation.”

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The notice indicated that all transactions have been put on hold until authorities complete their investigation.

Very little is known about BitGrail, as it is not listed among the 183 exchanges whose volume is ranked by CoinMarketCap.

Suspicion Grows

Unlike other crypto heists, the circumstances surrounding the alleged BitGrail attack have been met with widespread suspicion. As David Z. Morris of Fortune rightly notes, this isn’t the first time BitGrail has suspended Nano withdrawals. The same thing happened in early January when the exchange halted not only Nano, but Lisk and CryptoForecast transactions as well.

The suspension was followed by an announcement that the exchange was taking measured steps to verify users and enforce anti-money laundering requirements. It was around this time that users became suspicious that BitGrail was going to cut and run with their tokens.

BitGrail founder Francesco Firano made an unusual request to the developers of Nano following the alleged attack: he asked them to fork their record, a move that would essentially restore the stolen funds.

Nano officially rejected the request on Friday, the day after Firano supposedly discovered the stolen coins. In a post that appeared on the Nano Medium page, the team said:

“We now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.”

Last month, hackers made off with more than $400 million worth of NEM tokens stolen from Coincheck, a Japan-based cryptocurrency exchange. The coins have yet to be recovered and the perpetrators remain at large. In 2014, a cyber heist brought down Mt Gox, which was the world’s largest exchange.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 153 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Coincheck Hackers Are Trying to Sell Their Stolen NEM Coins

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The hackers behind the biggest crypto heist of all time are attempting to sell their stolen coins, according to an executive at the NEM Foundation. The revelations are the latest in a four-day saga that has authorities still struggling to identify perpetrators or locate the account in receipt of the stolen funds.

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Hackers Try to Profit

Jeff McDonald, Vice President of the NEM Foundation, said Tuesday that his organization had traced stolen XEM coins to an unidentified address. It was here that the thief tried to unload the stolen funds onto six online exchanges for the purpose of selling them. McDonald said the exchanges have since been notified.

It was not immediately apparent how many of the stolen coins were spent or even the whereabouts of the account. A spokeswoman at the NEM Foundation later said the attacker sent the cryptocurrency to several random accounts in 100-token increments.

Last Friday, the attackers made off with more than $400 million worth of NEM tokens from Japanese cryptocurrency exchange Coincheck. The monetary value of the heist has fluctuated several times over the past four days, reflecting regular price moves in NEM’s native XEM token. However, Coincheck said it would reimburse account holders at a rate of 81 U.S. cents per token, which reflects the average price between Jan. 26 and 27.

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Coincheck has been fined administrative penalties for failing to secure client funds. It was later revealed by the executive management team that the exchange failed to implement basic security features, such as multi-signature capability and cold storage. Rather, the XEM tokens were held in accounts connected to the internet.

Although the NEM Foundation is trying to prevent the liquidation of stolen funds, MacDonald said the attackers will likely get away with some of the money. However, the likelihood that they spend all of it is virtually zero given the market’s underlying liquidity constraints.

NEM Price Volatility

News of the heist on Friday triggered significant volatility in the price of XEM and the broader cryptocurrency market. Following a brief recovery, XEM has declined steadily over the past three days, with prices reaching new six-week lows on Tuesday. The coin touched a session low of 79 cents on volumes of more than $32 million. At press time, the coin was worth a little more than 80 cents.

Even with the decline, NEM held on to tenth spot in the global cryptocurrency rankings based on market cap. The coin’s overall value remains well north of $7 billion, according to CCN.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 153 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Coincheck Update: Exchange Announces Plan to Compensate 260,000 NEM Holders

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Japanese digital currency exchange Coincheck has announced plans to compensate hundreds of thousands of traders exposed to the recent theft of NEM (XEM) cryptocurrency. Roughly 523 million units of NEM were illegally redirected from the exchange early Friday, forcing management to suspend trading activity for all digital assets except bitcoin.

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Calculating Losses

Coincheck announced Saturday that 260,000 XEM holders were affected by the theft. The exchange plans to compensate them for their loss using a weighted average of volume, according to CCN. Volumes were calculated based on trading activity between 12:09 on Jan. 26 and 23:00 on Jan. 27 (Japan time). Based on this calculation method, the compensation amount for each unit of XEM will be 88.549 yen (81 US cents) multiplied by the number of units held.

Given the compensation amount, it can be assumed that the total loss of the heist was roughly $423 million.

Coincheck, which has apologized for the ordeal, says it is still investigating the matter further. During a press conference on Friday, the management team revealed several details about the exchange’s underlying infrastructure. According to media sources present at the conference, Coincheck admitted it had not integrated multi-signature technology or cold storage security, which would have held the tokens offline in a secure location. These capabilities are key selling points for most major exchanges keen on touting their security features. They are also considered necessary, albeit insufficient, in combating the growing threat of cyber criminals.

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The company’s management team has vowed to continue services once it concludes initial investigations. The exchange also said it will pursue registration with Japan’s Financial Services Agency (FSA), something it neglected to do prior to the hack.

Biggest of All Time

The heist of Coincheck has been described as the biggest the cryptocurrency market has ever seen, even surpassing the implosion of Mt Gox back in 2014. At the time, the theft of 85,000 bitcoins from the world’s biggest crypto exchange was a wake up call for regulators, market participants and service providers.

Unlike other modern-day cryptocurrency exchanges, Coincheck had severe security flaws that made it a prime target of hackers. According to analysts, storing the funds in a hot wallet connected to the Internet was the most serious flaw in the exchange’s setup.

The hack initially sent shock waves throughout the cryptocurrency market, with NEM and several coins suffering broad declines. As Hacked reported earlier, the value of NEM’s native token rebounded sharply on Saturday to trade well above $1.00. At press time, XEM was up more than 22% to $1.02.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 153 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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