Source: The
Associated Press, Richard Lardner
A customer
in Shenzhen, China, took a new laptop out of its box and booted it up for the
first time. But as the screen lit up, the computer began taking on a life of
its own. The machine, triggered by a virus hidden in its hard drive, began
searching across the Internet for another computer.
The laptop,
supposedly in pristine, super-fast, direct-from-the-factory condition, had
instantly become part of an illegal, global network capable of attacking
websites, looting bank accounts and stealing personal data.
For years,
online investigators have warned consumers about the dangers of opening or
downloading emailed files from unknown or suspicious sources. Now, they say
malicious software and computer code could be lurking on computers before the
bubble wrap even comes off.
The shopper
in this case was part of a team of Microsoft researchers in China investigating
the sale of counterfeit software. They received a sudden introduction to malware
called Nitol. The incident was revealed in court documents unsealed in a
federal court in Virginia. The records describe a new front in a legal campaign
against cybercrime being waged by the maker of the Windows operating system,
which is the biggest target for viruses.
The
documents are part of a computer fraud lawsuit filed by Microsoft against a web
domain registered to a Chinese businessman named Peng Yong. The company says
the domain is a major hub for illicit Internet activity, home base for Nitol
and more than 500 other types of malware, which makes it the largest single
repository of infected software that Microsoft officials have encountered.
Peng, the
owner of an Internet services firm, said he was not aware of the Microsoft
suit. He denied the allegations and said his company does not tolerate improper
conduct on the domain, 3322.org. Three other unidentified individuals accused
by Microsoft of establishing and operating the Nitol network are also named in
the suit.
What emerges
most vividly from the court records and interviews with Microsoft officials is
a disturbing picture of how vulnerable Internet users have become, in part
because of weaknesses in computer supply chains. To increase their profit
margins, less reputable computer manufacturers and retailers may use
counterfeit copies of popular software products to build machines more cheaply.
Plugging the holes is nearly impossible, especially in less regulated markets
such as China, and that leaves openings for cybercriminals.
"They're
really changing the ways they try to attack you," said Richard Boscovich,
a former federal prosecutor and a senior attorney in Microsoft's digital crimes
unit.
Distance
doesn't equal safety. Nitol, for example, is an aggressive virus found on
computers in China, the United States, Russia, Australia and Germany. Microsoft
has even identified servers in the Cayman Islands controlling Nitol-infected
machines. All these compromised computers become part of a botnet, or
collection of compromised computers; it's one of the most invasive and
persistent forms of cybercrime.
Nitol
appears poised to strike. Infection rates have peaked, according to Patrick
Stratton, a senior manager in Microsoft's digital crimes unit who filed a
document in the court case explaining Nitol and its connection to the 3322.org
domain.
For
Microsoft, pursuing cybercriminals is a smart business. Its Windows operating
system runs most of the computers connected to the Internet. Victims of malware
are likely to believe their problems stem from Windows instead of a virus they
are unaware of, and that damages the company's brand and reputation.
But more
than Microsoft's image is stake when counterfeit products are tainted by
malware that spreads so rapidly, Boscovich said. "It's more than simply a
traditional intellectual property issue," Boscovich said. "It's now
become a security issue."
The
investigation by Microsoft's digital crimes unit began in August 2011 as a
study into the sale and distribution of counterfeit versions of Windows.
Microsoft employees in China bought 20 new computers from retailers and took
them back to a home with an Internet connection.
They found
forged versions of Windows on all the machines and malware already installed on
four. The one with Nitol, however, was the most alarming because the malware
was active.
"As
soon as we powered on this particular computer, of its own accord without any
instruction from us, it began reaching out across the Internet, attempting to
contact a computer unfamiliar to us," Stratton said in the document filed
with the court.
The laptop
was made by Hedy, a computer manufacturer in Guangzhou, China, according to the
court records. The company, reached by phone, declined to answer questions.
Stratton and
his colleagues also found Nitol to be highly contagious. They inserted a thumb
drive into the computer and the virus immediately copied itself onto it. When
the drive was inserted into a separate machine, Nitol quickly copied itself on
to it.
Microsoft
examined thousands of samples of Nitol, which has several variants, and all of
them connected to command-and-control servers associated with the 3322.org
domain, according to the court records.
"In
short, 3322.org is a major hub of illegal Internet activity, used by criminals
every minute of every day to pump malware and instructions to the computers of
innocent people worldwide," Microsoft said in its lawsuit.
Peng, the
registered owner of 3322.org, said he has "zero tolerance" for the
misuse of domain names and works with Chinese law enforcement whenever there
are complaints. Still, he said, his huge customer base makes policing
difficult.
"Our
policy unequivocally opposes the use of any of our domain names for malicious
purposes," Peng said in a private chat via Sina Weibo, a service like
Twitter that's very popular in China. "We currently have 2.85 million
domain names and cannot exclude that individual users might be using domain
names for malicious purposes."
Peng is the
founder and chief executive of Bitcomm, a company he and his wife own. They
founded an earlier company, which started 3322.org in 2001. Bitcomm took over
the domain in 2007.
Past
warnings by other online security firms have been ignored by Peng, according to
Boscovich. 3322.org accounted for more than 17 percent of the world's malicious
web transactions in 2009, according to Zscaler, a computer security firm in San
Jose, Calif. In 2008, Russian security company Kaspersky Lab reported that 40
percent of all malware programs, at one point or another, connected to
3322.org.
U.S.
District Judge Gerald Bruce Lee, who is presiding in the case, granted a
request from Microsoft to begin steering Internet traffic from 3322.org that has
been infected by Nitol and other malwares to a special site called a sinkhole.
From there, Microsoft can alert affected computer users to update their
anti-virus protection and remove Nitol from their machines.
Since Lee
issued the order, more than 37 million malware connections have been blocked
from 3322.org, according to Microsoft.
Associated
Press researcher Fu Ting in Shanghai contributed to this report.