Microsoft distrupts Nitol botnet, malware hidden in supply chain

Pierluigi Paganini September 16, 2012

The malware diffusion is assuming dimension difficult to control, no matter if we are facing with a state-sponsored attack or with a cyber scam, malicious agents are around us, they have infected a huge quantity of machines with dramatic consequences.

But what’s happen if we discover the malware inside the controller of ordinary object that surround us? What could happen if malicious code is installed directly in the factory?

We discussed several times regarding the alleged presence of backdoor inside Chinese network equipment, a nightmare that scare security experts and that could open the doors to disturbing incidents.

Sometimes the reality goes beyond the imagination, Microsoft in fact has published evidence of the presence of a bot agent  installed and hidden on personal computers  during their assembly in China.

The malware being pre-installed onto computers at the factories, this malware is loaded onto the computers before it reaches a customer or end purchaser. This means that the malware is loaded after the product is shipped by the original equipment manufacturer to a distributor, transporter, or reseller. 

Microsoft, in particular its Digital Crimes Unit, has started the investigation in August 2011, naming the operation ‘Operation B70’, finding several brand new laptops and desktop PCs from various cities in China infected with backdoor and rootkit such as ‘Nitol’.

The blog post states:

“A supply chain between a manufacturer and a consumer becomes unsecure when a distributor or reseller receives or sells products from unknown or unauthorized sources. In Operation b70, we discovered that retailers were selling computers loaded with counterfeit versions of Windows software embedded with harmful malware.” 

The responsibles for the spread of malware in the supply chain had planned to build a large botnet to use to attacks their victims with DDoS attack or to spread other malicious agents.

The process of infection is really smart, the compromised factory made PC where used also as starting point for the infection, they were able to transfer the malware on every removable drives connected.

The domain, used as Command & Control server for Nitol agent,, also hosted other 500 different strains of malware on more than 70,000 sub-domains to gain complete control of victims and to steal information.

Microsoft company has released the following declaration on the investigation made on supply chain security:

“What’s especially disturbing is that the counterfeit software embedded with malware could have entered the chain at any point as a computer travels among companies that transport and resell the computer,”

The study proposed by Microsoft on the event shown how cybercriminals exploiting a new way to spread malware preloading malicious code inside counterfeit software deployed onto computers that are offered for sale. To give an idea of the phenomenon 20% of the PCs researchers bought from an unsecure supply chain were infected with malware.

Last week, the U.S. District Court for the Eastern District of Virginia granted Microsoft’s Digital Crimes Unit permission to disrupt more than 500 different strains of malware discovered during the investigation, it is the second botnet disruption in the last six months operated by the company.

The action against the Nitol botnet is considered as part of a larger Project MARS (Microsoft Active Response for Security) Program to proactively eliminate malware threats that target its customers and MS services.

The scenario proposed is really worrying, the installation of a malware during manufacture raise the question on the security level ensured during the supply chain and the possible effect of a massive diffusion of agents spread using compromised machines.

Microsoft is one of the most active companies against the botnet diffusion, let’s consider that these agents are mainly designed for Windows machines, the recent study on Cybercrime evolution in North America and Western Europe revealed in fact that most attacked OS are Windows, Android and Mac OS X.

An interesting initiative of Microsoft is that companies plans to give third-parties access to its botnet intelligence feeds through an API, CERTs, ISPs and even foreign governments could so benefit of the information provided by the firm, a first step in the fight of botnet.

Microsoft’s Digital Crimes Unit (DCU) has announced that it is beta testing a system “described as a sort of real time honeypot that attempts to connect to and monitor bot  and C&C servers gathering data in traffic patterns”.

In the future to avoid similar problems it is fundamental  that suppliers, resellers, distributors and retailers involved in the supply chain implement best practices to safeguard people from harmful counterfeit software.

“They need to adopt and practice stringent policies that ensure that the computers and software they purchase and resell come from trustworthy sources. “

Microsoft post conclude promising help to all its client providing information and tool to mitigate the incoming cyber threats.

“If you believe your computer might be infected with malware, we encourage you to visit as this site offers free information and tools to analyze and clean your computer.”

Many sites report the news but no one has asked the question of who is responsible for the spread of malware … are we dealing with a simple criminal act or is there a responsibility of the government?

Pierluigi Paganini

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