Bitcoin cyber-attack a warning for virtual currency’s users: Experts

A massive cyber-attack from unknown sources that has been spamming Bitcoin exchanges is highlighting some of the dangers people can encounter when they exchange cash for digital currencies like the Bitcoin, experts said on Wednesday.

The attack, which is technically known as a distributed denial of service attack, involved thousands of phantom transactions, forcing at least three of the online platforms that store Bitcoins and trade them for traditional currencies to halt withdrawals of Bitcoins until they can determine which transactions were real.

It showed that Bitcoin, which exists solely in cyberspace and operates on a software code written by an unknown programmer or group of programmers, is as vulnerable to such an assault as any other Internet-based business. It exposes the higher risks involved in owning and trading the instrument compared with the dollar and other traditional currencies. Bitcoins slumped in value as a result of the disruptions.

“Bitcoin is still an experimental protocol in its infancy,” said Micky Malka, a venture capitalist who is on the board of Bitcoin’s trade group, the Bitcoin Foundation.

“It will grow and mature over time,” he added. “No one should be investing an amount they cannot afford to lose.”

This week’s attack was not the first, said Andreas Antonopoulos, chief security officer for blockchain.info, a website that tracks Bitcoin activity and provides online storage services for Bitcoin users.

Antonopoulos is also a member of a group of core Bitcoin programmers and is part of an emergency response team of programmers who have been working to fix the flaws in the code governing some Bitcoin transactions that the attackers were exploiting. He said that work that should be completed by the middle of next week, echoing an estimate provided by a spokeswoman for the Bitcoin Foundationwho said its core developers were all participating in the effort to fix the code.

Bitcoin is a decentralized digital system of value transfers that is not governed by any central bank, company or government. No assets back the Bitcoin, whose value has fluctuated widely as its visibility has increased. Last September, a Bitcoin was worth around $150. By late December the value was near the $1,000 mark.

Regulators around the world are struggling how to categorize the Bitcoin. Some want to call it an asset class, others a commodity. Bitcoin users call it a currency and many advocate for its mass adoption, claiming it can help solve problems created by expensive and time-consuming bank transactions.

Early adopters also liked the anonymity Bitcoin has offered, since it can be transferred between users without any exchange of personal identification information. However, moves by various authorities to pursue Bitcoin users who they say have laundered money using the currency and attempts to regulateBitcoin exchanges could soon lower the level of anonymity in transactions.

On Tuesday, Slovenia-based Bitstamp became the second major Bitcoin exchange to halt customer withdrawals in the past several days, citing “inconsistent results” and blaming a denial-of-service attack.

That was a day after Mt. Gox, based in Tokyo and the best-known digital marketplace operator, said a halt on withdrawals would continue indefinitely. Traders reacted to the halt by sending the Bitcoin value to its lowest level in nearly two months.

A Bulgaria-based Bitcoin exchange also had to halt withdrawals, Antonopoulos said.

The price of Bitcoins, which have gained wider acceptance in recent months, dropped in the wake of the attacks from around $850 late last month. On Wednesday, they were quoted down nearly 2 percent for the day at $656 per coin on the Bitcoin tracking website CoinDesk.

“Anyone who plays in this space, you better have a plan for when an attack happens because it’s going to be a when, not an if,” said Brian Krebs, a Washington-based cyber security expert who runs the blog KrebsOnSecurity.com.

The lesson for investors was that the Bitcoin wasn’t as liquid as initially advertised, said Jason Scharfman, a financial due diligence expert and managing partner at consulting firm Corgentum.

“These types of attacks, they’re effectively freezing some of the accounts because the exchanges don’t want to pay out to the wrong person,” he said. “If something’s frozen or there’s a question about me being able to redeem my Bitcoins, the value of them drops.”

“Does this spook financial investors?” he added. “The answer is yes.”

Scharfman said one way to mitigate the risks of such attacks would be to spread holdings of Bitcoins out among several different online storage facilities. That way if one were attacked the other might still have a chance at being safe.

Scharfman said the more regulatory scrutiny that Bitcoin exchanges received, the safer they were likely to be.
“Regulation will sort of normalize which exchanges are the most secure. They’ll mandate security measures and smaller exchanges just won’t be able to afford it,” he said.

Internet Explorer 10 flaw used to attack French aerospace employees, veterans

A flaw in recent versions of Internet Explorer was used to attack visitors to a website for U.S. military veterans, and also appears to have been used earlier against French aerospace industry employees, researchers said Friday.
The flaw in Microsoft Corp’s IE 10 Web browser was reported on Thursday, days after it was used inside the Web page of nonprofit U.S. group Veterans of Foreign Wars. The VFW said Friday that an unspecified federal law enforcement agency is investigating and that the malicious code on its site had been removed.

Security firm Websense Inc said it found similar attack code on a page set up on January 20 with a Web address nearly identical to one used by a French aerospace association.

That suggests the attacks using the flaw have been going on for at least three weeks, but might have succeeded earlier against higher-value targets and escaped discovery, said Websense Director of Security Research Alexander Watson.

FireEye Inc , which discovered the VFW attack, said it appeared connected to previous attacks against the Japanese financial sector, security firm Bit9 and others that Symantec Corp security researchers attributed to a large and well-organized group in China.

The latest attacks are considered to be sophisticated as they rely on a previously unknown flaw of a sort that can cost $50,000 or more when sold by shadowy brokers to government agencies or contractors. The industry calls these flaws “zero-day vulnerabilities.”

They also seem part of a multistage operation, with the attackers seeking to break into the computers of U.S. veterans or French defense contractors in the future. Once there, they could look for military plans or designs or passwords that would enable them to impersonate the individuals electronically. Assuming those victims’ identities in emails sent to more prominent targets would make it more likely that the recipients would click on baited links or unwitting install more spying software.

Although the initial report in the new campaign mentioned only IE 10, Microsoft said it had determined that IE 9 is also vulnerable.

“We recommend customers upgrade to Internet Explorer 11 for added protection,” said Adrienne Hall, general manager of Microsoft’s Trustworthy Computing Group.

Despite the use of the unknown flaw, Websense’s Watson said the attacks were not that hard to spot. For one thing, a program that exploited the flaw was submitted on January 20 to Virus Total, a free Google Inc service that shows whether any major antivirus provider would block the sample. In this case, none did. In addition, the programming language operated in the open, without complicated obfuscation that can deter analysis.

Watson said that was why he felt the attacks could prove to be by a new group, or even two different new groups. As an example, the exploit code might have been written elsewhere, and used with more success, then passed along to a new group with less expertise.

The French page that was imitated is GIFAS, which claims more than 300 members, including contractors making satellites, missiles and other arms, as well as helicopters, military planes and engines.

Links to the fake page might have been sent via email to industry officials.

In the VFW’s case, the hackers broke into the real Web page and inserted code shown to visitors that would lead to infection if they were using the right version of IE. FireEye said hundreds or thousands of infections occurred.

VFW spokeswoman Randi K. Law said the nonprofit group was working with law enforcement and private security incident responders.

“At this point, there is no indication that any member or donor data was compromised,” she said in an email.

It was unclear whether that statement referred to the computers of website visitors or merely data stored by the VFW itself, and she did not respond to follow-up questions.

The FBI did not return a call seeking comment.

Bitstamp to resume withdrawals, steadying nervous Bitcoin market

One of the Bitcoin exchanges that recently suspended withdrawals of the digital currency on Friday said it planned to allow redemptions to resume later in the day, restoring some confidence to the shaken market.
Slovenia-based Bitstamp, among the largest Bitcoin exchanges, said on its website that developers had come up with a solution to thwart the cyber attacks against its platform that had forced the hiatus. It suspended withdrawals on Tuesday, days after one of the best known exchanges, Mt. Gox, suspended withdrawals indefinitely.

“After additional testing, we plan to enable Bitcoin withdrawals later today,” Bitstamp’s statement said.

Mt. Gox has not yet resumed withdrawals and has not issued a public update on the matter since Monday.The first Silk Road site, which like its successor was accessible only using a special program that hides users’ physical locations, was shut down last year by U.S. law enforcement authorities, and the man authorities say was behind its operations was arrested and charged with narcotics trafficking and money laundering.

“There should be no impact on Bitcoin prices based on the reduction of illegal activity,” said Sebastien Galy, currency strategist at Societe Generale in New York. “It really indicates that there’s nervousness in the market.”

Galy said seasoned traders likely bought Bitcoin after its price dropped.

“Professional traders would recognize that there is overselling based on irrational fears,” he said.

Spain to force search engines to pay to display some content

News media companies in Spain will be able to charge search engines such as Google for displaying copyrighted content under a new law proposed by the Spanish government on Friday.
The measure echoes similar drives around Europe. Publishers in Portugal, France, Belgium and Germanyhave pushed for compensation in some form or another for links, snippets, headlines and lead paragraphs that appear in news search engines and aggregators such as Google News and Yahoo news.

The search engines draw revenue from advertising placed near news content and media companies have fought for a share of it.

The new rule was introduced in the draft of an intellectual property law that the centre-right People’s Party government will present to parliament for approval, Deputy Prime Minister Soraya Saenz de Santamaria told a weekly news conference.

Under the proposed changes, the search engines would not have to seek permission to publish brief fragments but would have to pay “an equitable remuneration for the use”.

The government did not say how it would be determined which fragments must be paid for and how amounts would be calculated. This has been a matter of fierce debate elsewhere in Europe.

A spokeswoman for Google in Spain said the company could not comment because it had not yet seen the exact wording of the intellectual property reform bill.

“Long-standing demand”
The Association of Spanish Newspaper Editors, known by its Spanish-language acronym AEDE, applauded the proposal.

“We are very satisfied with the intellectual property law, which recognises a long-standing demand from news editors,” said Irene Lanzaco, deputy director of the association.

Spanish media have been hit hard by a prolonged economic recession as advertising spending has plunged. Dozens of newspapers and other media have shut down and 9,500 journalists have been laid off in the last four years.

European countries have taken different approaches to the issue of news content on search engines.

A year ago Google agreed to pay 60 million euros into a special fund to help French media develop their presence on the Internet, but search engines will not pay publishers in France for displaying content.

Germany passed a new copyright law last March that allows media there to charge search engines for using their content, but the original bill was watered down and links and small excerpts of text were exempted.

Spain’s proposed reform on search engines and content is just one element in a major overhaul of intellectual property rules that the government has been working on since last year.

Internet piracy is widespread in Spain, which is considered to be one of Europe’s worst offenders for illegal downloading of music, films and games.

The draft bill approved by the cabinet on Friday envisages speedier processes to shut down piracy sites and establishes sanctions for sites that redirect users to illegal downloading sites, advertisers on piracy websites and companies that process payments to piracy sites.

New Google tool to make business videoconferences easier

Google is introducing a videoconferencing tool designed to make it easier and less expensive to hold face-to-face business meetings even if the participants are scattered in different locations.

The device, called ‘Chromebox For Meetings’, went on sale in the US on Thursday for $999 and will be available in the coming weeks in Canada, the United Kingdom, Japan, Spain, France, Australia and New Zealand.

The $999 price includes technology support for the first year. Customers needing support after that will have to pay $250 annually.

Chromebox For Meetings is being sold by Dell Inc, Hewlett-Packard Co and AsusTek Computer Inc, all of which already sell an assortment of gear to corporate customers and government agencies.

Google Inc said the box contains everything needed to set up a videoconferencing system that can connect people in up to 15 different locations. The company said someone simply needs to connect the device to a display screen and follow the instructions step by step.

The videoconferencing kit relies on several existing Google products: the Chrome operating system based on the eponymous Web browser; the technology running Google’s free Hangouts video chat system; and a suite of applications that the company has been selling to businesses for several years.

Most of Google’s previous forays in corporate markets have been aimed at competing with Microsoft Corp’s Office software and Windows operating system. With the expansion into business videoconferencing, Google is attacking products made by Cisco Systems Inc. and Polycom Inc.

The introduction of the new Chromebox also underscores Google’s commitment to continue stamping its brand on a variety of gadgets, just a week after announcing plans to sell its Motorola Mobility smartphone business to Lenovo Group for $2.9 billion. Google bought Motorola in 2012 with aspirations of building it into an influential player in the growing smartphone maker, but the deal turned into an expensive mistake.