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OPM Breach: How Officials Missed a Second Hacker

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US officials were too focused on purging a hacker from government’s computers after closely monitoring the hacker’s online movements for months and were about to expel him that they failed to realize that there was another hacker entirely.

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This is according to a congressional report referenced in a Guardian publication which provided previously undisclosed details of missed opportunities before the break-in at the Office of Personnel Management to expose security clearances, background checks and fingerprint records.

A privacy and information security expert,  Michael Adams, described the OPM data breach as involving the greatest theft of sensitive personnel data in history.

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The intrusion, which was earlier blamed on the Chinese government, compromised personal information of more than 21 million current, former and prospective federal employees. It also led to the resignation of the OPM director, Katherine Archuleta.

The report by the House committee on oversight and government reform blamed the personnel agency for failing to secure sensitive data despite warnings for years that it was vulnerable to hackers. It concluded that the hacking could have been prevented if the agency had put basic security controls in place and acted accordingly after the previous break-in March 2014 when a Department of Homeland Security team noticed suspicious streams of data leaving its network at odd hours.

Also read: The CIA Pulled Spies from Beijing after OPM Breach

After the first hack, the OPM worked with the FBI, National Security Agency and others to monitor the hacker to better understand his movements. They developed a plan to expel the hacker in May 2014 through several means including resetting administrative accounts, building new accounts for users who had been compromised and taking offline compromised systems.

But unknown to them, a second intruder posing as an employee of a federal contractor had infiltrated the system weeks before the planned expulsion. The hacker used a contractor’s credentials to log into the system, install malicious software and create a backdoor to the network. This allowed him to move unchecked through the system for months and stole sensitive security clearance background investigation files, personnel files and, ultimately, fingerprint data.

The breach was detected in April 2015.

Though the congressional report said OPM officials misled the public about the scope of the breach and also by saying the two breaches were unrelated, the agency’s acting director, Beth Cobert, said in a statement that OPM disagrees with much of the report, which she said “does not fully reflect where this agency stands today”.

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Samburaj is the contributing editor at Hacked and keeps tabs on science, technology and cyber security.




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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 145 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 145 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 145 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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