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Shadow Brokers’ NSA Hacking Raises Questions about Government Disclosure of Leaks

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The hacking of the National Security Agency (NSA) security tools by the Shadow Brokers raises some serious questions about what information the NSA should be releasing, according to eweek.com.

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The balance between the NSA’s need to protect its hacking capabilities and the need to protect U.S. computers has to be addressed in light of the recent breach, several security observors have noted. The NSA did not notify the software vendors of the recent Shadow Brokers hacking.

The Shadow Brokers announced on Twitter on Aug. 13 they would auction off cyber-espionage tools taken from the Equation Group, which is widely considered part of the U.S. National Security Agency (NSA).

Hacking Under Investigation

James Clapper, director of national intelligence, said on Aug. 24 the event was still under investigation and that he did not know the full extent of what happened.

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The leak contained encrypted files weighing more than 250MB of data, and these files included the encryption key for a folder of files labeled “Firewall.” The Shadow Brokers said the key to unlock the main body of data will only be released if it received 1 million bitcoin, about $580 million. The group is believed to be linked to Russia.

Security experts claim the NSA, known for its offensive capabilities, should be considering its defensive role more seriously.

Experts Call For Disclosure

Logan Brown, president of threat intelligence and vulnerability acquisition firm Exodus Intelligence, said it is in everyone’s interest for the government entity behind the Equation Group to advise security vendors of such a breach so that other nations do not use Equation’s IP against their citizens.

The outing of the NSA-linked framework is the most recent leak of cyber tools that indicate governments are active in cyber operations against individuals, non-government groups and other nations.

Lookout, a mobile security firm, and the University of Toronto’s Citizen Lab, noted on Aug. 25, that an attacker – believed to be government connected – used espionage tools the NSO Group allegedly created, against Ahmed Mansour, a known Middle Eastern activist targeted by previous attempts.

The question about the proper use of such technology by government agencies increases with each such revelation.

What The Files Contained

The leaked “Firewall” files included names of tools such as “SecondDate” and a passcode that marks the data as a match for the information leaked by Edward Snowden, the former NSA contractor. The tools in the teaser data target vulnerabilities in major firewalls.

Cisco, which is currently patching one issue, noted another vulnerability targeted by the Equation Group tools was patched in 2011.

Fortinet examined the files and found the attacks only impacted its software versions prior to 2012.

Juniper has found no exploitable vulnerabilities in the data.

NSA Policy Under Question

Nicholas Weaver, senior staff researcher at the International Computer Science Institute in Berkeley, Calif., says the NSA leak sheds light on the arrangement between agency’s mission to protect U.S. computer systems and its wish to exploit capabilities.

Previous calculations relied on the likelihood that another party would exploit the vulnerability, Weaver noted in a Lawfare blog. This calculation changes when NSA’s own tools can be stolen without detection. He questioned if there is a policy governing what NSA does when it knows its tools are compromised.

If NSA failed to notify Fortinet and Cisco of the breach of its tools, it represents a “serious dereliction” of the NSA information assurance mission since the government used both products which NSA is charged with protecting.

The U.S. government has said it would disclose vulnerabilities when there is a clear need to protect the nation’s computer systems and the Internet. Following disclosure of a widespread flaw in OpenSSL known as Heartbleed, the White House said it did not know about the issue, and if it did, it would have notified the public.

Also read: Hacking group claims it dumped National Security Agency files, demands one million BTC

Spokesman: Decisions Not Easy

Michael Daniel, special assistant to the president and cyber-security coordinator who wrote the White House statement, said that the decision is not always easy. He said there are legitimate arguments on both sides of the decision to disclose.

The trade-offs between withholding information about vulnerabilities and prompt disclosure can have serious consequences. Disclosing such information can involve losing an opportunity to gather intelligence and undermine a terrorist attack, halt the theft of intellectual property, or find more dangerous vulnerabilities being used by adversaries to exploit networks.

Companies have largely remained silent on the issue. Juniper, Fortinet and Cisco chose not to comment.

The NSA did not return requests for comment.

Brown of Exodus Intelligence said the choice to disclose might not rest with the agency. If the Equation Group is a private firm employed by the NSA, the intellectual property and the decisions about it belong to the firm.

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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 155 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 155 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 155 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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