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Ukraine Power Grid Hack, All May Not be What it Seems

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Reports are coming out on The Register that challenge the current finger pointing by Ukraine’s SBU state security service implicating Russia as the protagonist behind hacks on western Ukraine’s utility companies. This is not the first twist in the December Ukrainian power utility hacking story covered by Hacked.

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It all started shortly after the December attack. iSIGHT Partners, a global cyber threat intelligence company, reported that malicious code had affected at least three regional Ukrainian operators. The media, picking up on this, heralded the first known instance of malware causing a power outage.

The original suggestion that malware was the cause of the power outages is now unravelling. It is believed to have been the means by which the hackers established a bridgehead on targeted utility internal systems. From this backdoor, the perpetrators were free to coordinate a sequence of manoeuvres that would not only ensure widespread power outages but also be calculated for maximum impact. These were:

  1. Disconnect breakers for 30 substations, denying power to over 80,000 customers.
  2. Caused monitoring stations at Prykarpattyaoblenergo to go “suddenly blind.” Possibly by freezing the refresh on screens so they gave false information on the developing situation.
  3. Executing a form of Denial of Service (DoS) against the regional call centres to deny customers calling to report power outages.

Consequently, this is likely to be a malware enabled but NOT malware caused incident, quoting the SANS ICS Director:

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The attackers demonstrated planning, coordination, and the ability to use malware and possible direct remote access to blind system dispatchers, cause undesirable state changes to the distribution electricity infrastructure, and attempt to delay the restoration by wiping SCADA servers after they caused the outage…….. Or in other words, the attack was enabled via malware but consisted of at least three distinct efforts.

We are now seeing the second twist in the story, challenging the implication of Russian state sponsored hackers. The implication of Russian state-sponsored hackers in this case has been on circumstantial evidence at best. It was seeded from the findings of ESET, an antivirus provider, who confirmed multiple power authorities suffered the “BlackEnergy” infection. BlackEnergy was discovered in 2007 and attributed by iSIGHT to a Russian hacking group dubbed the Sandworm gang a.k.a. Quedagh.

There is a problem with isolating a perpetrator by malware alone. Malware is often commercialised and picked up by more than one hacking group. Furthermore, malware is software open to being reverse engineered and repurposed, akin to firing a missile into enemy territory with the blueprints to its construction attached. We have seen this in the past with Stuxnet, Duqu and Flame.

Prophetically iSIGHT researchers caution against accrediting governments or specific groups with the hacking attacks and so it may transpire. The Register report states that Ukrainian telecoms engineer Illia raised doubts about the link between BlackEnergy Russian connected attacks and power outages in Ukraine. Illin challenges the key facts of the incident:

  1. Reports of energy distribution utilities and blackouts are at odds with what he’s seeing on the ground. “First of all, there [weren’t] any blackouts in Boryspil (KBP),” says Illia.
  2. That only one workstation had been infected by a Russian Server. However according to CERT-UA news, the server had NO Russian IP addresses.
  3. Illia also has doubts about the DoS attacks against energy firm call centres. “I think the call centre had been overloaded simply because of quantity of callers. At the official site of energy company I have found, that 103 townships had [suffered] blackout[s] during the attack, and 183 townships had [suffered] blackout[s] partially,” he said. “Of course, the quantity of calls was catastrophic.”

The suggestion that this is a Ukrainian government propaganda campaign against Russia would come as no surprise, there has been a complex Information War going on for some time between the two.

If true, this could mean that this is not the acclaimed ‘first known instance of malware causing a power outage’. Instead, we may have an example of a highly successful manipulation of some facts salting a larger fiction. Could this be a Ukrainian social engineering exercise, corralling the world’s media into a torrent of coverage implicating Russia in an ongoing Information War?

Featured image from Shutterstock.

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Ethereum Notches Two-Month High as Bitcoin Offspring Triggers Volatility

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Digital currency Ethereum climbed to a two-month high on Monday, taking some of the heat off Bitcoin and Bitcoin Cash, which have slumped since the weekend.

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Ethereum Forges Higher Path

Concerns over Bitcoin created a favourable tailwind for Ethereum (ETH/USD), which is the world’s No. 2 digital currency by total assets. Ether’s price topped $340.00 on Monday and later settled at $323.54. That was the highest since June 20.

At its peak, ether was up 10% on the day and 70% for the month of August.

The ETH/USD was last down 2.2% at $315.02, according to Bitfinex. Prices are due for a brisk recovery, based on the daily momentum indicators.

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Fractured Bitcoin Community

Bitcoin and its offshoot, Bitcoin Cash, retreated on Monday following a volatile weekend. The BTC/USD slumped at the start of the week and was down more than 3% on Tuesday, with prices falling below $3,900.00. Just last week, Bitcoin was trading at new records near $4,500.00.

Bitcoin Cash, which emerged after the Aug. 1 hard fork, climbed to new records on Saturday, but has been in free-fall ever since. The BTH was down another 20% on Tuesday to $594.49, according to CoinMarketCap. Its total market value has dropped by several billion over the past two days.

Analysts say that a “fractured” Bitcoin community has made Ethereum a more attractive bet this week. The ether token has shown remarkable poise over the past seven days, despite trading well shy of a new record.

Other drivers behind Ethereum’s advance are steady demand from South Korean investors and growing confidence in a smooth upgrade for the the ETH network. The upgrade, which has been dubbed “Metropolis,” is expected in the next several weeks. Its key benefits include tighter transaction privacy and greater efficiency.

Ethereum Prices Unaffected by ICO Heist

Fin-tech developer Enigma was on the receiving end of a cyber-heist on Monday after hackers took over the company’s website, mailing list and instant messaging platforms. The hack occurred three weeks before Enigma’s planned Initial Coin Offering (ICO) for September 11.

In addition to defacing the company’s website, the hackers pushed a special “pre-sale” ahead of the ICO. While many users realized it was a scam, 1,492 ether tokens – valued at $495,000 – were directed into the hackers’ cryptocurrency wallet by unsuspecting backers.

The irony in all this is that Engima is a cryptography company that prides itself on top-notch security protocols. The company issued a statement that its servers had not been compromised.

ETH/USD (Bitfinex)

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Ethereum Prices on Track for 35% Monthly Drop

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It has been a difficult month for ethereum. The world’s No. 2 digital currency has lost a third of its value over the past 30 days following a series of cyber breaches targeting vulnerable wallets and ICOs.

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Ethereum Struggles to Regain Momentum

Ethereum (ETH/USD) was trading near $197.00 Sunday at 6:30 BST, according to Bitfinex. That represents a decline of around 5%. At current values, ethereum’s market cap was $18.4 billion.

The ETH/USD exchange rate has struggled throughout July, with prices briefly falling below $160.00. The decline, which amounted to a 60-day low, lured bargain-hunters back into the market. After surging back toward $250.00, the ETH/USD has consolidated below the $220-mark, which continues to offer strong resistance. On the opposite side of the spectrum, major support is located at $180.00.

A price recovery may prove elusive in the short-term, with the Relative Strength Index (RSI) and Stochastic indicator signalling weak underlying momentum.

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Despite its recent decline, ethereum’s value has surged more than 2,200% this year.

Cyber Attacks, SEC Weigh on Market

The ethereum network suffered a large-scale cyber breach earlier this month resulting in the loss of tens of millions of dollars. A community of ethical hackers quickly banded together to “rescue” hundreds of millions of dollars worth of tokens.

Blockchain-based trading platform Coindash was also hijacked during an initial coin offering (ICO). The breach exposed Coindash’s ether wallet address, resulting in the loss of $7 million worth of ether.

The Securities and Exchange Commission (SEC) has also taken an interest in the ethereum-based ICO market. Last week, the regulator concluded that a certain multi-million dollar token sale last year violated securities law. Although ICOs have been compared to crowd-sourcing, the SEC maintained that some tokens were in fact securities.

Analysts say the SEC ruling could impact the future of ICOs, although it remains unclear how the regulator is pursuing this market. The SEC’s July 25 press release cautions investors about ICOs in general.

ETH/USD (Bitfinex)


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Coders Safeguard Vulnerable Ethereum Wallets Following Security Breach

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Ethereum suffered large-scale security breaches last week after anonymous hackers targeted vulnerable wallets in the network, resulting in the loss of tens of millions of dollars. However, it didn’t take long for a volunteer group of coders to “rescue” the funds in 500 at-risk wallets before the same attackers could get to them too.

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White Hat Group Takes Charge

The so-called White Hat Group showed initiative by “rescuing” the funds using the same techniques the thieves employed to compromise $32 million USD worth of ether from three multi-signature wallets. As of Monday, the White Hat Group of ethical hackers was in possession of $86 million worth of ether and an additional $122 million in tokens.

Tokens are digital assets that are sold during an Initial Coin Offering (ICO) fundraising event. They have proven to be extremely popular.

Tens of millions of dollars worth of ether and tokens have already been returned to their owners. The White Hat Group says it will issue full refunds by the end of July.

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Blockchain-based trading platform Coindash was also breached last week, resulting in the loss of more than $7 million worth of ether.

Security Breaches Nothing New in Crypto World

For all its benefits, cryptocurrency has been vulnerable to several high-profile security breaches. Last summer, Hong Kong-based Bitfinex was the target of a major attack that resulted in the theft of around $70 million worth of bitcoins. In response, the exchange announced a controversial plans to “socialize” its losses among all users. Each Bitfinex trader was docked 36% as a result.

Bitcoin prices declined sharply following the attack, stopping what had been a blistering summer of gains.

Ethereum Enterprise Alliance

For anyone doubting the potential of the ether, take a look at the list of companies participating in the Enterprise Ethereum Alliance (EEA). The EEA is a forum that connects Fortune 500 companies, startups and academics with ethereum subject matter experts.  The EEA is made up of multinational banks and some of the world’s biggest technology companies.

The forum has made cyber security a top priority, according to a May 22 press release. In the release, companies like Infosys, Mitsubishi UFJ Financial Group, Synechron and others expressed their intent to contribute to the future of ethereum’s security.

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