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Actions Target Russian Govt. Botnet, Hydra Dark Market

The U.S. Federal Bureau of Investigation (FBI) says it has disrupted a giant botnet built and operated by a Russian government intelligence unit known for launching destructive cyberattacks against energy infrastructure in the United States and Ukraine. Separately, law enforcement agencies in the U.S. and Germany moved to decapitate “Hydra,” a billion-dollar Russian darknet drug bazaar that also helped to launder the profits of multiple Russian ransomware groups.

FBI officials said Wednesday they disrupted “Cyclops Blink,” a collection of compromised networking devices managed by hackers working with the Russian Federation’s Main Intelligence Directorate (GRU).

A statement from the U.S. Department of Justice (DOJ) says the GRU’s hackers built Cyclops Blink by exploiting previously undocumented security weaknesses in firewalls and routers made by both ASUS and WatchGuard Technologies. The DOJ said it did not seek to disinfect compromised devices; instead, it obtained court orders to remove the Cyclops Blink malware from its “command and control” servers — the hidden machines that allowed the attackers to orchestrate the activities of the botnet.

The FBI and other agencies warned in March that the Cyclops Blink malware was built to replace a threat called “VPNFilter,” an earlier malware platform that targeted vulnerabilities in a number of consumer-grade wireless and wired routers. In May 2018, the FBI executed a similar strategy to dismantle VPNFilter, which had spread to more than a half-million consumer devices.

On April 1, ASUS released updates to fix the security vulnerability in a range of its Wi-Fi routers. Meanwhile, WatchGuard appears to have silently fixed its vulnerability in an update shipped almost a year ago, according to Dan Goodin at Ars Technica.


Security experts say both VPNFilter and Cyclops Blink are the work of a hacking group known as Sandworm or Voodoo Bear, the same Russian team blamed for disrupting Ukraine’s electricity in 2015.

Sandworm also has been implicated in the “Industroyer” malware attacks on Ukraine’s power grid in December 2016, as well as the 2016 global malware contagion “NotPetya,” which crippled companies worldwide using an exploit believed to have been developed by and then stolen from the U.S. National Security Agency (NSA).

The action against Cyclops Blink came just weeks after the Justice Department unsealed indictments against four Russian men accused of launching cyberattacks on power utilities in the United States and abroad.

One of the indictments named three officers of Russia’s Federal Security Service (FSB) suspected of being members of Berserk Bear, a.k.a. Dragonfly 2.0, a.k.a. Havex, which has been blamed for targeting electrical utilities and other critical infrastructure worldwide and is widely believed to be working at the behest of the Russian government.

The other indictment named Russians affiliated with a skilled hacking group known as “Triton” or “Trisis,” which infected a Saudi oil refinery with destructive malware in 2017, and then attempted to do the same to U.S. energy facilities.

The Justice Department said that in Dragonfly’s first stage between 2012 and 2014, the defendants hacked into computer networks of industrial control systems (ICS) companies and software providers, and then hid malware inside legitimate software updates for such systems.

“After unsuspecting customers downloaded Havex-infected updates, the conspirators would use the malware to, among other things, create backdoors into infected systems and scan victims’ networks for additional ICS/SCADA devices,” the DOJ said. “Through these and other efforts, including spearphishing and “watering hole” attacks, the conspirators installed malware on more than 17,000 unique devices in the United States and abroad, including ICS/SCADA controllers used by power and energy companies.”

In Dragonfly’s second iteration between 2014 and 2017, the hacking group spear-phished more than 3,300 people at more than 500 U.S. and international companies and entities, including U.S. federal agencies like the Nuclear Regulatory Commission.

“In some cases, the spearphishing attacks were successful, including in the compromise of the business network (i.e., involving computers not directly connected to ICS/SCADA equipment) of the Wolf Creek Nuclear Operating Corporation (Wolf Creek) in Burlington, Kansas, which operates a nuclear power plant,” the DOJ’s account continues. “Moreover, after establishing an illegal foothold in a particular network, the conspirators typically used that foothold to penetrate further into the network by obtaining access to other computers and networks at the victim entity.”


Federation Tower, Moscow. Image: Evgeniy Vasilev.

Also this week, German authorities seized the server infrastructure for the Hydra Market, a bustling underground market for illegal narcotics, stolen data and money laundering that’s been operating since 2015. The German Federal Criminal Police Office (BKA) said Hydra had roughly 17 million customers, and over 19,000 vendors, with sales amounting to at least 1.23 billion euros in 2020 alone.

In a statement on the Hydra takedown, the U.S. Department of Treasury said blockchain researchers had determined that approximately 86 percent of the illicit Bitcoin received directly by Russian virtual currency exchanges in 2019 came from Hydra.

Treasury sanctioned a number of cryptocurrency wallets associated with Hydra and with a virtual currency exchange called “Garantex,” which the agency says processed more than $100 million in transactions associated with illicit actors and darknet markets. That amount included roughly $8 million in ransomware proceeds laundered through Hydra on behalf of multiple ransomware groups, including Ryuk and Conti.

“Today’s action against Hydra and Garantex builds upon recent sanctions against virtual currency exchanges SUEX and CHATEX, both of which, like Garantex, operated out of Federation Tower in Moscow, Russia,” the Treasury Department said.