'Pump and dump' scheme shows growing level of sophistication
The recent surge in e-mail spam hawking penny stocks and penis enlargement pills is the handiwork of Russian hackers running a botnet powered by tens of thousands of hijacked computers.
Internet security researchers and law enforcement authorities have traced the operation to a well--organized hacking gang controlling a 70,000-s-trong peer-to-peer botnet seeded with the SpamThru Trojan, which targets computers running Microsoft Windows.
According to Joe Stewart, senior security researcher at SecureWorks, in Atlanta, the gang functions with a level of sophistication rarely seen in the hacking underworld.
For starters, the Trojan comes with its own anti-virus scannera pirated copy of Kaspersky Labs security softwarethat removes competing malware files from the hijacked machine. Once a Windows machine is infected, it becomes a peer in a P2P botnet controlled by a central server. If the control server is disabled by botnet hunters, the spammer simply has to control a single peer to retain control of all the bots and send instructions on the location of a new control server.
The bots are segmented into different server ports, determined by the variant of the Trojan installed and further segmented into peer groups of no more than 512 bots. This allows the hackers to keep the overhead involved in exchanging information about other peers to a minimum, Stewart said.
Stewart, a reverse-engineering expert with a particular expertise in deconstructing malware samples, gained access to files from a SpamThru control server and found evidence that the attackers are meticulous about keeping statistics on bot infections around the world.
For example, the SpamThru controller keeps statistics on the country of origin of all bots in the botnet. In all, computers in 166 countries are part of the botnet, with the United States accounting for more than half of the infections.
The botnet statistics tracker even logs the version of Windows the infected client is running, down to the service pack level. One chart commandeered by Stewart showed that Windows XP Service Pack 2 machines dominate the makeup of the botnet, a clear indicator that the latest version of Microsofts operating system is falling prey to attacks.
Another sign of the complexity of the operation, Stewart found, was a database hacking component that signaled the ability of the spammers to target their "pump and dump" scams at victims most likely to be associated with stock trading.
Stewart said about 20 small investment and financial news sites have been breached for the express purpose of downloading user databases with e-mail addresses matched to names and other site registration data. On the bot herders control server, Stewart found a MySQL database dump of e-mail addresses associated with an online shop.
"Theyre breaking into sites that are somewhat related to the stock market and stealing e-mail addresses from those databases. The thinking is, if they get an e-mail address for someone reading stock market and investment news, thats a perfect target for these penny stock scams," Stewart said in an interview with eWeek.
The SpamThru spammer also controls lists of millions of e-mail addresses harvested from the hard drives of computers already in the botnet.
"This gives the spammer the ability to reach individuals who have never published their e-mail address online or given it to anyone other than personal contacts," Stewart said.
"Its a very enterprising operation, and its interesting that theyre only doing pump and dump and penis enlargement spam. Thats probably because those are the most lucrative," Stewart said.
Even the spam messages come with a unique component. The messages are both text- and image-based, and a lot of effort has been put into evading spam filters. For example, each SpamThru client works as its own spam engine, downloading a template containing the spam and random phrases to use as hash busters, random "from" names and a list of several hundred e-mail addresses to send to.
Stewart discovered that the image files in the templates are modified with every e-mail message sent, allowing the spammer to change the width and height. The image-based spam also includes random pixels at the bottom, specifically to defeat anti-spam technologies that reject mail based on a static image.
All SpamThru botsthe botnet controls about 73,000 infected clientsalso are capable of using a list of proxy servers maintained by the controller to evade blacklisting of the bot IP addresses by anti-spam services. Stewart said this allows the Trojan to act as a "massive distributed engine for sending spam" without the cost of maintaining static servers.
With a botnet of this size, the group is theoretically capable of sending a billion spam e-mails in a single day.
"This number assumes one recipient per message, [but] in reality, most spams are delivered in a single message with multiple recipients at the same domain, so the actual number of separate spams landing in different in-boxes could be even higher," Stewart said.
According to data from Barracuda Networks, an enterprise security appliance vendor in Mountain View, Calif., there has been a 67 percent increase in overall spam volume and a 500 percent increase in image spam since August (see related story, Page 18).
Stephen Pao, vice president of product management at Barracuda Networks, echoed Stewarts findings, noting that the bulk of the spam is linked to the trading of penny stocks.
"Across the board, we are observing more spam and more sophistication in sending the spam," Pao said.
Postini, in San Carlos, Calif., also is reporting a huge spike in spam volumea 59 percent increase from September 2006 to November 2006. A company spokesperson said SMTP connections for October jumped by 10 billionfrom 29 billion to 39 billionfrom the previous month. In October alone, Postini blocked 77 unwanted e-mails for the average user, compared with seven valid e-mails.