Cyber Firm: The NSA Is Out-Hacking the Chinese and the Russians

The exposure of an all-star hacker group thought to be affiliated with the National Security Agency is both a feather in the spy agency's cap and a setback for intelligence-gathering on Islamic extremists, some threat analysts say.

On Sunday, Kaspersky Lab, a research firm headquartered in Moscow, published an analysis implying the "Equation Group" is the same entity behind the so-called Stuxnet worm. That malware is believed to be a joint NSA-Israeli invention that sabotaged Iran's nuclear centrifuges in 2009 or 2010.

Code developed by the possibly-20-year-old group can reprogram popular hard drives in a way that is virtually impossible for almost any person or machine to see. While surveilling an Islamic Jihadist discussion forum, the team took pains to infect only specific targets by checking their usernames and network addresses, according to the new analysis.

"The person responsible or the team, on the one hand, should be patting themselves on the back,” said Alex McGeorge, head of threat intelligence at security firm Immunity and a former Transportation Department cyber consultant. “I think this is work you can really be proud of from a purely technical standpoint."

The victims resided in Iran, Russia, Syria, Afghanistan and Belgium, among some 30 other countries, according to Kaspersky. The company's founder, Eugene Kaspersky, has worked for the Russian military, a sometimes cyber adversary of the United States, but the lab's research is respected by security experts worldwide. 

The Equation group is “the most advanced threat actor we have seen," researchers at Kaspersky’s Global Research and Analysis Team said. Over the past several years, the team has investigated more than 60 advanced attackers.

McGeorge said the group seems to be exercising discretion during its operations.

"No one is really going to come out and say you shouldn’t deploy this stuff against ISIS," he said. "All you’ve got to do is look at the news and see that ISIS are the worst bad guys since the Nazis."

To snoop on some targets, the group mailed a spyware-laced CD-ROM of materials from a Houston conference to select attendees, according to Kaspersky.

"Realistically, this is what taxpayers pay the intelligence community to do," McGeorge said. "This team was deploying this against appropriate people. This is not Procter & Gamble in New Jersey. This is enemies foreign."

Several Days' Work Down the Drain

The outing of the group could foil some NSA plans, if the agency is indeed involved, he said. However, the amount of time lost will not be measured in years.

"It’s definitely going to be a setback. It’s definitely going to ruffle a lot of feathers and ruin several days," McGeorge said, but “I don't think this is the end of a career or the end of our intelligence gathering capability against ISIS."

His firm, Immunity, was founded by Dave Aitel, an offensive cyber expert who used to work at NSA. 

NSA spokeswoman Vanee Vines on Monday declined to comment on any claims raised in the report, but told Nextgov that “broadly speaking, any time these kinds of allegations are made publicly, there is always a risk of harm to our national security."

The Equation group has breached perhaps tens of thousands of individuals in sectors spanning government, telecommunications, energy, encryption and academia, just to name a few, according to Kaspersky.

Relative to the agency’s massive data sweeps, this NSA effort is somewhat more discreet, but still damaging to the security of the Internet, says Bruce Schneier, a world-renowned technologist. He also happens to be a former NSA employee, but has eschewed the agency’s alleged practices of weakening encryption and inserting “backdoor” bugs in communications technologies to make eavesdropping easier.

Now Criminals and China Know the Equation, Too

"On one hand, it’s the sort of thing we want the NSA to do," he said in a Monday post on the Lawfare Blog. "It’s targeted. It’s exploiting existing vulnerabilities. In the overall scheme of things, this is much less disruptive to Internet security than deliberately inserting vulnerabilities that leave everyone insecure."

That said, the Equation group's "techniques aren’t magically exclusive to the NSA," with China and cyber spy companies like Gamma Group using similar ploys in Third World governments, Schneier noted. "We need to figure out how to maintain security in the face of these sorts of attacks, because we’re all going to be subjected to the criminal versions of them in three to five years."

The bag of tricks still could perform well for NSA for a while, McGeorge said.  

Depending on the technical sophistication of the adversary, "the tool chain may continue to be viable against targets that have already been compromised,” he said. The questions that have to be asked are: Do they have the ability to detect, remediate and mitigate this sort of risk? How long is it going to take them to develop that capability? 

The moniker Equation group refers to the team’s "love for encryption algorithms," the Kaspersky researchers said. 

In a statement, NSA officials said they are aware of the recently released report and would not discuss any details.

“The U.S. government calls on our intelligence agencies to protect the United States, its citizens, and its allies from a wide array of serious threats -- including terrorist plots from al-Qaeda, ISIL and others,” as well as the proliferation of weapons of mass destruction and international crime rings, officials said.

Cyber forensics firms such as Kaspersky, Mandiant and iSight have published a bevy of reports on Chinese and Russian cyber battalions that have waged deep-rooted cyberespionage campaigns.

But “this is way more sophisticated than anything that's been made public so far and that bodes well," McGeorge said. “I’m confident that there are other tools that can be brought to bear that will fill the same needs just in different ways."