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Judge Suspends Order Requiring Apple To Help FBI Unlock iPhone, But At A Cost

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Apple's Lightning Connector Reverse Engineered

A U.S. Magistrate Judge suspended her Feb. 16 order that Apple help investigators unlock the iPhone used in the San Bernardino terror attack, according to The Wall Street Journal. The hearing was scheduled for Tuesday and has been indefinitely suspended. This decision defuses the conflict between the government and Apple, but it comes at a cost to Apple since it suggests there is a gap in its software. Apple had said there is no way to unlock the phone.

Since 2014, Apple has claimed it had no way to break into phones with the most recent versions of its software. In arguing against the government’s order to create a way to access the phone’s data, the company said doing so would endanger its customers’ privacy.
The court postponed the case Monday, saying it was investigating a way to get the information without help from Apple.

Edward McAndrew, a partner at the Ballard Spahr law firm and a former federal prosecutor, said the postponement suggests that what Apple feared already exists in some form, and it exists outside of the company.

Judge Suspends Order

U.S. Magistrate Judge Sherri Pym suspended her Feb. 16 order for Apple to assist investigators in unlocking the iPhone used by Syed Rizwan Farook, who with his wife killed 14 people in the Dec. 2 attack in San Bernardino, Calif.

The judge postponed the hearing indefinitely, defusing the conflict between the Justice Department and Apple that pitted security against privacy.

The FBI’s method for accessing the phone was not clear Tuesday. The government said an “outside party” brought the information. A government official said it was still testing the method but is hopeful it will be able to unlock the phone without assistance from Apple.

Theodore Boutros, Apple’s lawyer, urged the judge to revoke or suspend the order. He said the government indicated Apple did something wrong in creating its encryption and in objecting to the government’s order to unlock the phone.

Vacating the order would be premature since the new method might fail, said Tracy Wilkinson, an assistant U.S. Attorney. She said many people have offered assistance with alternate methods to unlock the phone, but none have succeeded.

FBI Could Gain A New Tool

Law enforcement has an interest to not only exploit vulnerabilities in the phone but to keep the information it uncovers out of Apple’s hands.

Casey Ellis, chief executive and co-founder of Bugcrowd, a cybersecurity firm, said the information will become another tool in the FBI’s surveillance arsenal until the vulnerability is fixed.

The government said it knows there is a possible gap in the software protecting the iPhones, but it isn’t saying anything more about it at present.

The main question in the case has been whether or not Apple has a responsibility to help law enforcement unlock the phone or whether law enforcement should help Apple protect its customers from iPhone vulnerabilities.

How To Breach The Phone

Security experts have hypothesized on how the iPhone could be breached. One possibility is that there is an undisclosed vulnerability in the software that the government can exploit, such as a “boot loader” code the iPhone uses to activate its iOS operating system.

Another possibility is that technicians could de-solder the encrypted memory chip, insert a test socket in place of the memory, then copy the encrypted data to memory chips, slide them into the test socked and guess Farook’s passcode. Guessing the passcode would take up to 10,000 guesses. The iPhone only allows 10 attempts, but the FBI could repeatedly load the data onto a flash chip to reset the counter. This system would cost $50,000 in equipment and take as little as two days, according to Daniel Kahn Gillmor, a technology fellow at the American Civil Liberties Union.

Another scenario would focus on an ion beam to probe the phone’s microprocessor, extract cryptographic information and use it to decrypt the phone’s data. This method would cost between $500,000 and $1 million and require several months.

Congressman Criticizes FBI

Rep. Ted Lieu, D-Calif., called the FBI’s actions extremely disconcerting since it filed the case against Apple before exhausting all its options, then asking to delay the hearing before knowing if the new method would work.

Lieu said there was a lack of due diligence, or the agency was not really interested in the iPhone and was using the tragedy to set a precedent.

A Justice Department official said the FBI continuously sought to access the phone’s data without Apple’s help but asked for the delay to test the newly proposed method.

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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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3.9 stars on average, based on 8 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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  1. jon sebastiani

    March 26, 2016 at 4:36 am

    This is much ado about nothing. In my not so humble opinion I believe that the issue was that the FBI was coercing Apple to make a backdoor key usable on any iPhone. I would expect the the FBI to use some brute force methods to get at the data on the phones in question.

    I think Apple should have taken the phone, retrieved the data and given it to the FBI. The spirit of the request would have been met, Apple would not have provided a one size fits all key. Problem solved.

    Does anyone believe that the average hacker is going to steal your phone, remove parts, and then return the phone to hack their phone? Hacking the phone with hardware is always an option.

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Breaches

MyEtherWallet Compromised in Security Breach; Users Urged to Move Tokens

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Popular cryptocurrency service MyEtherWallet (MEW) is urging users to move their tokens after the platform succumbed to its second cyber attack of the year. As the company reported earlier, hackers targeted MEW’s popular VPN service in an attempt to steal cryptocurrency.

Hola VPN Users Compromised

Rather than target MEW directly, hackers took control of the Hola VPN service, which claims nearly 50 million users. For the next five hours, MEW users who had the Hola chrome extension installed and running on their computer were exposed.

MEW took to Twitter to urge users to move their funds immediately.

“Urgent! If you have Hola chrome extension installed and used MEW within the last 24 hrs, please transfer your funds immediately to a brand new account!” the company said. It added the following message shortly thereafter:”We received a report that suggest Hola chrome extension was hacked for approximately 5 hrs and the attack was logging your activity on MEW.”

At the time of writing, MEW’s Twitter feed had no further updates.

MyEtherWallet is used to access cryptocurrency wallets, where users can send and receive tokens from other people.

The company reportedly told TechCrunch that the attack originated from a Russian-based IP address.

“The safety and security of MEW users is our priority. We’d like to remind our users that we do not hold their personal data, including passwords so they can be assured that the hackers would not get their hands on that information if they have not interacted with the Hola chrome extension in the past day,” MEW said, as quoted by TechCrunch.

It’s not yet clear how many users were compromised in the attack or how much, if any, was stolen from their wallets. MEW suffered a similar incident in February after a DNS attack wiped out $365,000 worth of cryptocurrency from users’ accounts.

Cyber Attacks on the Rise

The attack on MEW came less than 24 hours after Hacked reported another major cyber breach involving Bancor, a decentralized cryptocurrency exchange. The security breach compromised roughly $23.5 million worth of digital currency, including Ethereum, NPXS and BNT, Bancor’s native token.

Last month, a pair of South Korean exchanges fell prey to cyber criminals, prompting local regulators to expedite their approval of new cryptocurrency laws.

It has been estimated that a total of $761 million has been stolen from cryptocurrency exchanges in the first half of the year, up from $266 million in all of 2017. That figure is expected to rise to $1.5 billion this year.

CipherTrace, the company behind the estimates, told Reuters last week that stolen cryptocurrencies are mainly used to launder money and aid criminals in concealing their identities.

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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4.6 stars on average, based on 614 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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Mt. Gox vs. Bithumb: That Was Then, This Is Now

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Bithumb now shares something in common with the Tokyo-based shuttered bitcoin exchange Mt. Gox — both suffered a hack on about the same date, June 19. It’s a club that no exchange wants to belong to and that Bithumb happened on the seven-year anniversary of Mt. Gox’s maiden attack has to be more than an eerie coincidence.

It’s a stark reminder of the risks involved with keeping funds on an unregulated exchange, vulnerabilities that cost South Korea’s Bithumb some $36.6 million in digital cash and Mt. Gox $450 million in hacked bitcoin and its future. The Mt. Gox theft unfolded over a series of hacks that culminated in 2014. Though it’s still early on in the Bithumb hack, it appears the South Korean exchange will recover from the security breach. So what do we know now that we didn’t on June 19, 2011?

Then vs. Now

Former Coinbase official Nick Tomaino, who is also the founder of crypto fund 1 confirmation, reflected on the Mt. Gox hack in what proved to be a prescient tweet given the Bithumb attack that was about to surface.

The thing to note about Mt. Gox is that the Japan-based exchange in 2011 controlled most of the BTC trading volume, approximately three-quarters of it by average estimates — more if you ask Tomaino. Since bitcoin fever caught on in 2017, there are more than 500 cryptocurrency exchanges on which trading volume is shared. Binance boasts the highest trading volume and captures nearly 15% of bitcoin trading. It’s much less than Mt. Gox days but still a little high.

The other thing to note is that the Mt. Gox hack or actually hacks, as there were multiple attacks on the exchange over several years, was a mysterious event that was shrouded in controversy and mistrust of a key executive. Bithumb, on the other hand, confronted the hack seemingly right away on Twitter and has not let any grass grow under its feet in the interim, which is a key difference in the way Mt. Gox was handled.

Also, the bitcoin price didn’t tank in response to the Bithumb hack. It traded lower for a while, but less than 24 hours it was back in the green, which is a reflection of the fact that bitcoin trading is no longer dependent on a single exchange.

Charlie Lee, creator of Litecoin (LTC), the No. 6 cryptocurrency by market cap, was among the first to respond to the Bithumb hack. He tweeted:

Indeed, Bithumb does expect to be able to cover the losses via their reserves.

Crypto Security

It’s still early on in Bithumb’s security breach, and more details are sure to emerge in time. In the meantime, it’s a good idea to use the hack as an opportunity to examine the security of your cryptocurrency investment portfolio. There are several hardware wallet options out there for you to choose from — whether it’s Trezor or Ledger Nano S, to name a couple — and as Charlie Lee advised, “only keep on exchange coins that you are actively 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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4.6 stars on average, based on 62 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Bithumb Hack Prompts South Korea to Hasten Cryptocurrency Regulation

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South Korea’s second-largest cryptocurrency exchange suffered a security breach on Wednesday, prompting local authorities to hasten their adoption of stricter regulations.

Bithumb Hack

Bithumb confirmed Wednesday that cyber criminals “seized” 35 billion won ($31.6 million) worth of digital cash in an apparent attack targeting user accounts. The exchange halted deposits at approximately 00:53 UTC and began a wholesale transfer of funds to cold storage to prevent further theft.

“We checked that some of cryptocurrencies valued about $30,000,000 was stolen,” Bithumb tweeted Wednesday. “Those stolen cryptocurrencies will be covered from Bithumb and all of assets are being transferring to cold wallet.”

The exchange has confirmed that it will fully compensate affected users.

An earlier update on Bithumb’s Twitter account reveals that a security upgrade was being carried out last week where it transferred to a cold wallet for safe storage. However, it is unclear whether the upgrade is linked to the theft.

In terms of trade volume, Bithumb is the world’s sixth-largest cryptocurrency exchange. The platform processed more than $355 million worth of digital currency transactions in the last 24 hours, according to data provided by CoinMarketCap.

Bithumb is the second South Korean exchange this month to have been hacked. Less than two weeks ago, more than $37 million was compromised in a coordinated attack on Coinrail. The attackers went after the exchange’s coins and lesser-known ERC-20 tokens.

South Korea to Boost Regulation

South Korea’s financial regulators have announced plans to implement stricter guidelines for virtual exchanges, and to do so more expeditiously than previously planned. The announcement, which came on the heels of the Bitthumb attack, follows months of deliberation about whether to regulate cryptocurrency exchanges like banks and other financial institutions.

As CCN notes, cryptocurrency exchanges are presently regulated as “communication vendors,” which means virtually anyone can launch an online trading platform. This designation prevents direct oversight of digital currency exchanges by financial regulators.

New crypto regulations are expected to be rolled out in the coming months, which will put South Korea’s financial authorities on par with their counterparts in the United States and Japan. In those countries, cryptocurrency exchanges must comply with laws pertaining to security and consumer protection.

Park Yong-kin, a committee member of the National Assembly, has championed stricter regulations since last year. According to local media, his views are now being echoed by other government officials.

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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4.6 stars on average, based on 614 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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