The CEO of a South Carolina technology firm has pleaded guilty to 20 counts of wire fraud in connection with an elaborate network of phony companies set up to obtain more than 735,000 Internet Protocol (IP) addresses from the nonprofit organization that leases the digital real estate to entities in North America.

In 2018, the American Registry for Internet Numbers (ARIN), which oversees IP addresses assigned to entities in the U.S., Canada, and parts of the Caribbean, notified Charleston, S.C. based Micfo LLC that it intended to revoke 735,000 addresses.

ARIN said they wanted the addresses back because the company and its owner — 38-year-old Amir Golestan — had obtained them under false pretenses. A global shortage of IPv4 addresses has massively driven up the price of these resources over the years: At the time of this dispute, a single IP address could fetch between $15 and $25 on the open market.

Micfo responded by suing ARIN to try to stop the IP address seizure. Ultimately, ARIN and Micfo settled the dispute in arbitration, with Micfo returning most of the addresses that it hadn’t already sold.

But the legal tussle caught the attention of South Carolina U.S. Attorney Sherri Lydon, who in May 2019 filed criminal wire fraud charges against Golestan, alleging he’d orchestrated a network of shell companies and fake identities to prevent ARIN from knowing the addresses were all going to the same buyer.

Each of those shell companies involved the production of notarized affidavits in the names of people who didn’t exist. As a result, Lydon was able to charge Golestan with 20 counts of wire fraud — one for each payment made by the phony companies that bought the IP addresses from ARIN.

Amir Golestan, CEO of Micfo.

On Nov. 16, just two days into his trial, Golestan changed his “not guilty” plea, agreeing to plead guilty to all 20 wire fraud charges. KrebsOnSecurity interviewed Golestan about his case at length last year, but he has not responded to requests for comment on his plea change.

By 2013, a number of Micfo’s customers had landed on the radar of Spamhaus, a group that many network operators rely upon to help block junk email. But shortly after Spamhaus began blocking Micfo’s IP address ranges, Micfo shifted gears and began reselling IP addresses mainly to companies marketing “virtual private networking” or VPN services that help customers hide their real IP addresses online.

But in a 2020 interview, Golestan told KrebsOnSecurity that Micfo was at one point responsible for brokering roughly 40 percent of the IP addresses used by the world’s largest VPN providers. Throughout that conversation, Golestan maintained his innocence, even as he explained that the creation of the phony companies was necessary to prevent entities like Spamhaus from interfering with his business going forward.

Stephen Ryan, an attorney representing ARIN, said Golestan changed his plea after the court heard from a former Micfo employee and public notary who described being instructed by Golestan to knowingly certify false documents.

“Her testimony made him appear bullying and unsavory,” Ryan said. “Because it turned out he had also sued her to try to prevent her from disclosing the actions he’d directed.”

Golestan’s rather sparse plea agreement (first reported by The Wall Street Journal) does not specify any sort of leniency he might gain from prosecutors for agreeing to end the trial prematurely. But it’s worth noting that a conviction on a single act of wire fraud can result in fines and up to 20 years in prison.

The courtroom drama comes as ARIN’s counterpart in Africa is embroiled in a similar, albeit much larger dispute over millions of wayward African IP addresses. In July 2021, the African Network Information Centre (AFRINIC) confiscated more than six million IP addresses from Cloud Innovation, a company incorporated in the African offshore entity haven of Seychelles (pronounced, quite aptly — “say shells”).

AFRINIC revoked the addresses — valued at around USD $120 million — after an internal review found that most of them were being used outside of Africa by various entities in China and Hong Kong. Like ARIN, AFRINIC’s policies require those who are leasing IP addresses to demonstrate that the addresses are being used by entities within their geographic region.

But just weeks later, Cloud Innovation convinced a judge in AFRINIC’s home country of Mauritius to freeze $50 million in AFRINIC bank accounts, arguing that AFRINIC had “acted in bad faith and upon frivolous grounds to tarnish the reputation of Cloud Innovation,” and that it was obligated to protect its customers from disruption of service.

That financial freeze has since been partially lifted, but the legal wrangling between AFRINIC and Cloud Innovation continues. The company’s CEO is also suing the CEO and board chair of AFRINIC in an $80 million defamation case.

Ron Guilmette is a security researcher who spent several years tracing how tens of millions of dollars worth of AFRINIC IP addresses were privately sold to address brokers by a former AFRINIC executive. Guilmette said Golestan’s guilty plea is a positive sign for AFRINIC, ARIN and the three other Regional Internet Registries (RIRs).

“It’s good news for the rule of law,” Guilmette said. “It has implications for the AFRINIC case because it reaffirms the authority of all RIRs, including AFRINIC and ARIN.”

Most of us have probably heard the term “smishing” — which is a portmanteau for traditional phishing scams sent through SMS text messages. Smishing messages usually include a link to a site that spoofs a popular bank and tries to siphon personal information. But increasingly, phishers are turning to a hybrid form of smishing — blasting out linkless text messages about suspicious bank transfers as a pretext for immediately calling and scamming anyone who responds via text.

KrebsOnSecurity recently heard from a reader who said his daughter received an SMS that said it was from her bank, and inquired whether she’d authorized a $5,000 payment from her account. The message said she should reply “Yes” or “No,” or 1 to decline future fraud alerts.

Since this seemed like a reasonable and simple request — and she indeed had an account at the bank in question — she responded, “NO.”

Seconds later, her mobile phone rang.

“When she replied ‘no,’ someone called immediately, and the caller ID said ‘JP Morgan Chase’,” reader Kris Stevens told KrebsOnSecurity. “The person on the phone said they were from the fraud department and they needed to help her secure her account but needed information from her to make sure they were talking to the account owner and not the scammer.”

Thankfully, Stevens said his daughter had honored the gold rule regarding incoming phone calls about fraud: When In Doubt, Hang up, Look up, and Call Back.

“She knows the drill so she hung up and called Chase, who confirmed they had not called her,” he said. “What was different about this was it was all very smooth. No foreign accents, the pairing of the call with the text message, and the fact that she does have a Chase account.”

The remarkable aspect of these phone-based phishing scams is typically the attackers never even try to log in to the victim’s bank account. The entirety of the scam takes place over the phone.

We don’t know what the fraudsters behind this clever hybrid SMS/voice phishing scam intended to do with the information they might have coaxed from Stevens’ daughter. But in previous stories and reporting on voice phishing schemes, the fraudsters used the phished information to set up new financial accounts in the victim’s name, which they then used to receive and forward large wire transfers of stolen funds.

Even many security-conscious people tend to focus on protecting their online selves, while perhaps discounting the threat from less technically sophisticated phone-based scams. In 2020 I told the story of “Mitch” — the tech-savvy Silicon Valley executive who got voice phished after he thought he’d turned the tables on the scammers.

Unlike Stevens’ daughter, Mitch didn’t hang up with the suspected scammers. Rather, he put them on hold. Then Mitch called his bank on the other line and asked if their customer support people were in fact engaged in a separate conversation with him over the phone.

The bank replied that they were indeed speaking to the same customer on a different line at that very moment. Feeling better, Mitch got back on the line with the scammers. What Mitch couldn’t have known at that point was that a member of the fraudster’s team simultaneously was impersonating him on the phone with the bank’s customer service people.

So don’t be Mitch. Don’t try to outsmart the crooks. Just remember this anti-fraud mantra, and maybe repeat it a few times in front of your friends and family: When in doubt, hang up, look up, and call back. If you believe the call might be legitimate, look up the number of the organization supposedly calling you, and call them back.

And I suppose the same time-honored advice about not replying to spam email goes doubly for unsolicited text messages: When in doubt, it’s best not to respond.

The U.S. Department of Justice today announced the arrest of Ukrainian man accused of deploying ransomware on behalf of the REvil ransomware gang, a Russian-speaking cybercriminal collective that has extorted hundreds of millions from victim organizations. The DOJ also said it had seized $6.1 million in cryptocurrency sent to another REvil affiliate, and that the U.S. Department of State is now offering up to $10 million for the name or location any key REvil leaders, and up to $5 million for information on REvil affiliates.

If it sounds unlikely that a normal Internet user could make millions of dollars unmasking the identities of REvil gang members, take heart and consider that the two men indicted as part this law enforcement action do not appear to have done much to separate their cybercriminal identities from their real-life selves.

Exhibit #1: Yaroslav Vasinskyi, the 22-year-old Ukrainian national accused of being REvil Affiliate #22. Vasinskyi was arrested Oct. 8 in Poland, which maintains an extradition treaty with the United States. Prosecutors say Vasinskyi was involved in a number of REvil ransomware attacks, including the July 2021 attack against Kaseya, Miami-based company whose products help system administrators manage large networks remotely.

Yaroslav Vasinksyi’s Vkontakte profile reads “If they tell you nasty things about me, believe every word.”

According to his indictment (PDF), Vasinskyi used a variety of hacker handles, including “Profcomserv” — the nickname behind an online service that floods phone numbers with junk calls for a fee. Prosecutors say Vasinskyi also used the monikers  “Yarik45,” and “Yaroslav2468.”

These last two nicknames correspond to accounts on several top cybercrime forums way back in 2013, where a user named “Yaroslav2468” registered using the email address yarik45@gmail.com.

That email address was used to register an account at Vkontakte (the Russian version of Facebook/Meta) under the profile name of “Yaroslav ‘sell the blood of css’ Vasinskyi.” Vasinskyi’s Vkontakte profile says his current city as of Oct. 3 was Lublin, Poland. Perhaps tauntingly, Vasinskyi’s profile page also lists the FBI’s 1-800 tip line as his contact phone number. He’s now in custody in Poland, awaiting extradition to the United States.

Exhibit #2: Yevgeniy Igorevich Polyanin, the 28-year-old Russian national who is alleged to be REvil Affiliate #23. The DOJ said it seized $6.1 million in funds traceable to alleged ransom payments received by Polyanin, and that the defendant had been involved in REvil ransomware attacks on multiple U.S. victim organizations.

The FBI’s wanted poster for Polyanin.

Polyanin’s indictment (PDF) says he also favored numerous hacker handles, including LK4D4, Damnating, Damn2life, Noolleds, and Antunpitre. Some of these nicknames go back more than a decade on Russian cybercrime forums, many of which have been hacked and relieved of their user databases over the years.

Among those was carder[.]su, and that forum’s database says a user by the name “Damnating” registered with the forum in 2008 using the email address damnating@yandex.ru. Sure enough, there is a Vkontakte profile tied to that email address under the name “Yevgeniy ‘damn’ Polyanin” from Barnaul, a city in the southern Siberian region of Russia.

The apparent lack of any real operational security by either of the accused here is so common that it is hardly remarkable. As exhibited by countless investigations in my Breadcrumbs story series, I have found that if a cybercriminal is active on multiple forums over more than 10 years, it is extremely likely that person has made multiple mistakes that make it relatively easy to connect his forum persona to his real-life identity.

As I explained earlier this year in The Wages of Password Re-use: Your Money or Your Life, it’s possible in many cases to make that connection thanks to two factors. The biggest is password re-use by cybercriminals (yes, crooks are lazy, too). The other is that cybercriminal forums, services, etc. get hacked just about as much as everyone else on the Internet, and when they do their user databases can reveal some very valuable secrets and connections.

In conjunction with today’s REvil action, the U.S. Department of State said it was offering a reward of up to $10 million for information leading to the identification or location of any individual holding a key leadership position in the REvil ransomware group. The department said it was also offering a reward of up to $5 million for information leading to the arrest and/or conviction in any country of any individual conspiring to participate in or attempting to participate in a REvil ransomware incident.

I really like this bounty offer and I hope we see more just like it for other ransomware groups. Because as we can see from the prosecutions of both Polyanin and Vasinskyi a lot of these guys simply aren’t too hard to find. Let the games begin.

A number of publications in September warned about the emergence of “Groove,” a new ransomware group that called on competing extortion gangs to unite in attacking U.S. government interests online. It now appears that Groove was all a big hoax designed to toy with security firms and journalists.

“An appeal to business brothers!” reads the Oct. 22 post from Groove calling for attacks on the United States government sector.

Groove was first announced Aug. 22 on RAMP, a new and fairly exclusive Russian-language darknet cybercrime forum.

“GROOVE is first and foremost an aggressive financially motivated criminal organization dealing in industrial espionage for about two years,” wrote RAMP’s administrator “Orange” in a post asking forum members to compete in a contest for designing a website for the new group. “Let’s make it clear that we don’t do anything without a reason, so at the end of the day, it’s us who will benefit most from this contest.”

According to a report published by McAfee, Orange launched RAMP to appeal to ransomware-related threat actors who were were ousted from major cybercrime forums for being too toxic, or to cybercriminals who complained of being short-changed or stiffed altogether by different ransomware affiliate programs.

The report said RAMP was the product of a dispute between members of the Babuk ransomware gang, and that its members likely had connections to another ransomware group called BlackMatter.

“[McAfee] believes, with high confidence, that the Groove gang is a former affiliate or subgroup of the Babuk gang, who are willing to collaborate with other parties, as long as there is financial gain for them,” the report said. “Thus, an affiliation with the BlackMatter gang is likely.”

In the first week of September, Groove posted on its darknet blog nearly 500,000 login credentials for customers of Fortinet VPN products, usernames and passwords that could be used to remotely connect to vulnerable systems. Fortinet said the credentials were collected from systems that hadn’t yet implemented a patch issued in May 2019.

Some security experts said the post of the Fortinet VPN usernames and passwords was aimed at drawing new affiliates to Groove. But it seems more likely the credentials were posted to garner the attention of security researchers and journalists.

Sometime in the last week, Groove’s darknet blog disappeared. In a post on the Russian cybercrime forum XSS, an established cybercrook using the handle “Boriselcin” explained that Groove was little more than a pet project to screw with the media and security industry.

“For those who don’t understand what’s going on: I set up a fake Groove Gang and named myself a gang,” Boriselcin wrote. The rest of the post reads:

“They ate it up, I dumped 500k old Fortinet [access credentials] that no one needed and they ate it up. I say that I am going to target the U.S. government sector and they eat it up. Few journalists realized that this was all a show, a fake, and a scam! And my respect goes out to those who figured it out. I don’t even know what to do now with this blog with a ton of traffic. Maybe sell it? Now I just need to start writing [the article], but I can’t start writing it without checking everything.”

A review of Boriselcin’s recent postings on XSS indicate he has been planning this scheme for several months. On Sept. 13, Boriselcin posted that “several topics are ripening,” and that he intended to publish an article about duping the media and security firms.

“Manipulation of large information security companies and the media through a ransom blog,” he wrote. “It’s so funny to read Twitter and the news these days But the result is great so far. Triggering the directors of information security companies. We fuck the supply chain of the information security office.”

Image: @nokae8

Throughout its short existence, Groove listed only a handful of victims on its darknet victim shaming blog, leading some to conclude the group wasn’t much of a threat.

“I wouldn’t take this call too seriously,” tweeted The Record’s Catalin Cimpanu in response to tweets about Groove’s rallying cry to attack U.S. government interests. “Groove are low-tier actors with few skills.”

Normally, when a cybercriminal forum or enterprise turns out to be fake or a scam, we learn the whole thing was a sting operation by federal investigators from the United States and/or other countries. Perhaps the main reason we don’t see more scams like Boricelcin’s is because there’s not really any money in it.

But that’s not to say his cynical ploy fails to serve a larger purpose. Over the past few years, we’ve seen multiple ransomware gangs reinvent themselves and rebrand to evade prosecution or economic sanctions. From that vantage point, anything which sows confusion and diverts the media and security industry’s time and attention away from real threats is a net plus for the cybercriminal community.

Tom Hoffman, senior vice president of intelligence at Flashpoint, said mocking Western media outlets and reporters is a constant fixture of the conversation on top-tier cybercrime forums. ”

“It is clear the criminal actors read all the press releases and Twitter claims about them,” Hoffman said. “We know some of them just want to inflict pain on the West, so this type of trolling is likely to continue. With the high level of attention this one got, I would assume we will see some other copycats pretty soon.”

Cyber intelligence firm Intel471 said while it’s possible that a single actor concocted Groove as a way to troll security researchers and the media, they believe it’s more likely that the actor’s attempt to create their own ransomware group didn’t work out as they had planned.

“It’s also important to remember that the true identity and nature of any Ransomware-as-a-Service gang is not always clear and the membership makeup or affiliates of these gangs can be fluid,” Intel 471 wrote. “Despite that and based on our research from multiple sources, which includes but isn’t limited to observations of shared infrastructure and victimology, we believe “boriselcin” operated the Groove blog and the RAMP forum. This individual is a well-known member of the Russian-language cybercrime community with ties to a number of ransomware gangs and in August offered $1000 for someone to design a ransomware victim shaming blog for Groove. We are skeptical of the claims raised by the actor that Groove was an elaborate hoax from the beginning although we wouldn’t be surprised to see further claims by the actor claiming this in future.”

Update, 5:56 p.m. ET: Included perspective from Intel 471.

In December 2018, bling vendor Signet Jewelers fixed a weakness in their Kay Jewelers and Jared websites that exposed the order information for all of their online customers. This week, Signet subsidiary Zales.com updated its website to remediate a nearly identical customer data exposure.

Last week, KrebsOnSecurity heard from a reader who was browsing Zales.com and suddenly found they were looking at someone else’s order information on the website, including their name, billing address, shipping address, phone number, email address, items and total amount purchased, delivery date, tracking link, and the last four digits of the customer’s credit card number.

The reader noticed that the link for the order information she’d stumbled on included a lengthy numeric combination that — when altered — would produce yet another customer’s order information.

When the reader failed to get an immediate response from Signet, KrebsOnSecurity contacted the company. In a written response, Signet said, “A concern was brought to our attention by an IT professional. We addressed it swiftly, and upon review we found no misuse or negative impact to any systems or customer data.”

Their statement continues:

“As a business principle we make consumer information protection the highest priority, and proactively initiate independent and industry-leading security testing. As a result, we exceed industry benchmarks on data protection maturity. We always appreciate it when consumers reach out to us with feedback, and have committed to further our efforts on data protection maturity.”

When Signet fixed similar weaknesses with its Jared and Kay websites back in 2018, the reader who found and reported that data exposure said his mind quickly turned to the various ways crooks might exploit access to customer order information.

“My first thought was they could track a package of jewelry to someone’s door and swipe it off their doorstep,” said Brandon Sheehy, a Dallas-based Web developer. “My second thought was that someone could call Jared’s customers and pretend to be Jared, reading the last four digits of the customer’s card and saying there’d been a problem with the order, and if they could get a different card for the customer they could run it right away and get the order out quickly. That would be a pretty convincing scam. Or just targeted phishing attacks.”

In the grand scheme of many other, far more horrible things going on in information security right now, this Zales customer data exposure is small potatoes. And this type of data exposure is unbelievably common today: KrebsOnSecurity could probably run one story each day for several months just based on examples I’ve seen at dozens of other places online.

But I do think one key reason we continue to see companies make these easily avoidable mistakes with their customer data is that there are hardly ever any real consequences for organizations that fail to take more care. Meanwhile, their customers’ data is free to be hoovered up by anyone or anything that cares to look for it.

“Being a Web developer, the only thing I can chalk this up to is complete incompetence, and being very lazy and indifferent to your customers’ data,” Sheehy said. “This isn’t novel stuff, it’s basic Web site security.”