Waledac Botnet Reappears as New Password Stealing Variant

The Waledac spam botnet has reawakened, and its new password-stealing capabilities make it a much more dangerous threat than the older one Microsoft shut down more than a year ago, according to Palo Alto Networks.

Computers infected with the new variant of Waledac still sends out spam, but the malware has added capabilities to steal passwords and authentication information from compromised systems, said Wade Williamson, a senior security analyst at Palo Alto Networks. Palo Alto Networks first detected the new variant on Feb. 2 in customer networks, Williamson said. It publicized its findings on Feb. 15.

The new Waledac malware sniffs user credentials for FTP, POP3 and SMTP accounts as well as stealing configuration files for FTP and BitCoin, the virtual currency often used for online transactions. The core behavior, communications methods, internal operations and delivery mechanism remain the same, said Williamson. The source code is essentially the same, Palo Alto Networks has determined.

Waledac is back, but the gang behind it is "being much more quiet and trying to stay under the radar this time," said Williamson.

Microsoft "famously" took down the Waledac botnet by seizing the malicious domains associated with the botnet and law enforcement authorities seized command and control servers in 2010. Since then, Waledac "wasn’t there at all," Williamson said.

Before its takedown, Waledac was a "decent-sized" spam botnet that accounted for about 1 percent of the global spam volume. Unlike its newer variant, the original Waledac was devoted to spewing out spam as fast as it could to as many targets as possible. While it was not pleasant for enterprises to have a spam bot operating on its networks, the impact was generally limited to just higher bandwidth bills and network congestion, said Williamson.

The new Waledac is capable of sifting out login credentials and sensitive information and transmitting these to external adversaries to use in other attacks. Recent events have shown that serious breaches and compromises could be traced back to having the password on an email account being stolen, said Williamson.

In fact, attackers relied on login credentials stolen from seven senior executives to break into Nortel Networks in 2000, according to a Feb. 14 Wall Street Journal report about the decade-long security breach.

Williamson noted that even though the source code is essentially the same, the current threat is a variant of the original botnet and uses new domains and command and control servers. The new Waledac also uses proxies and exhibits other dynamic behavior when looking for the C&C server to connect to, said Williamson.

Palo Alto Networks is still analyzing the variant and it was too soon to speculate whether the group behind the original Waledac has resumed operations, or if a brand-new group had somehow acquired the code, said Williamson. It is clear, however, that criminals are reusing infrastructure and techniques that have been proven to work.

To read the original eWeek article, click here: Waledac Botnet Reappears as New Password Stealing Variant