When 2-Factor Stops Being 2-Factor – Part 2

This is a continuation of my previous post on the failure of two-factor authentication. Let’s look at some case studies:

In late 2012, a version of the Zeuz in the mobile Trojan named “Eurograbber” stole over $46 million from European customers by bypassing the SMS based 2-factor authentication [1].

The way that it works is simple:

  • The attackers successfully execute a phishing or clickjacking attack on the victim and lure them to log into their banking site.
  • The attackers inject javascript that prompts the user to enter their mobile phone number.
  • Victim is sent an SMS message telling them to download a mobile app for security but in reality it is malicious.
  • The malicious app intercepts incoming SMS messages such as the 2-factor security code a bank sends when accessing an account.
  • The attackers intercept the SMS message and gain access to the user’s bank account and withdraw all the funds.

This is another instance of 2-Factor authentication failing and it’s proof that we cannot rely on a mobile operating system that is susceptible to malware and Trojans to act as our second or third factor for authentication. In theory, 2-factor solutions such as Google Authenticator or Authy could also be spoofed by screen grabbing TOTP tokens.

The second case study was just brought to light about a week ago. It is a variation of the ZeusVM and is called Chthonic (try pronouncing that). In true ZeuS fashion, the Trojan uses tried and true web injection methods to trick victims into providing sensitive banking information and then cleaning out their accounts. Over 150 banks have been targeted and I’m sure there’s many more to come [2].

The vast majority of attacks target the everyman. Who is the every man you may ask? In the Simpsons, the Everyman is a “dumpy, unappealing loser” [3] and in literature, the everyman is an “ordinary individual, with whom the audience or reader is supposed to be able to identify easily”. In books and films, the everyman is often put into extraordinary circumstances and often triumphs. However, when he is a target of a cyber attack in the real world, he simply does not have the knowledge or the experience to protect themselves from sophisticated attacks.


So why does this happen? First, passwords were shown to be insecure because people make them insecure and can’t remember them. Second, 2-factor authentication has been proven insecure because of how 2-factor authentication is implemented (mobile devices, phones, RSA tokens). Traditional 2-Factor solutions either fall victim to malware or can get lost/stolen.

It seems that our only hope of truly securing the Everyman is 3-Factor authentication. And I don’t mean ridiculous solutions like voice or face recognition that easily fall prey to the same attacks as 2-factor authentication. I’m talking about real biometrics such as fingerprints, hair follicle tests, and retinal scanners. You know, cool stuff from James Bond movies (By the way, Idris Elba should totally be the next Bond)!

The problem however, is that secure biometrics are really, really hard to pull off. They are often expensive both from a financial and computational standpoint. They are also very hard to deploy on a massive scale and I think that’s the main reason they haven’t taken off. Now that we are in 2015 and we are all supposed to have hover boards, I think we are finally at the point where we can realistically pull off a widely distributable 3-Factor authentication scheme.

It's 2015, get with the program folks!

Hell, as Oscar Goldman put it, “we have the technology”! In recent years, biometric fingerprint scanners have become affordable, chips that can process biometrics are small enough, and Bluetooth Low Energy can act as the transmission protocol to put it all together.


[1] Eurograbber, A Smart Trojan Attack

[2] Trojan programmed based on ZeuS targets 150 banks, can hijack webcams

[3] Everyman – Simpsons


Why Even Cyber Criminals Need Web App Security

Back in October 2013, this guy Ross Ulbricht (AKA Dread Pirate Roberts – DPR) who was in charge of the popular website Silk Road was arrested by the FBI in a San Francisco library. His laptop had about 45 million bucks in Bitcoin on it and he was charged with a bunch or stuff ranging from planned murder to breaking just about everything in the Computer Fraud and Abuse Act.

Nice message from FBI we saw when Silk Road was seized

It was a bit of a surprise when he got arrested because he was very careful. He hid behind a bunch of Tor nodes, hid everything he did, and went out of his way to remain anonymous. Many thought that the Tor network was suddenly hackable by the FBI and that they used illegal means to arrest him. Well, the nice folks at the FBI recently told us what really happened; he was a web app security noob of ginormous proportions. But hey, before you start calling him that, remember that you probably are too (heck, this site is built on WordPress).

DPR got caught because he used a captcha on his site as everyone should when authenticating users. However, the captcha verification resolved to his main website server directly instead of going through Tor like the rest of his site (LOL!). This was probably going on for a stupid amount time but no one ever really figured it out. It’s one of those things that are just so stupid that you would never think to check it.

Ok! Ok! I must have, I must have put a decimal point in the wrong place
or something. Shit. I always do that. I always mess up some mundane

In my professional opinion (if you can call it that), if DPR had taken the time to have security professionals look into the security of his site, he wouldn’t have gotten caught so fast. I guess that even if you’re running a seedy and most likely illegal online enterprise, security should still matter. Probably more than ever.

Here is how the test by a professional would have gone assuming they know anonymity is a priority:

  1. They would setup a proxy for the Silk Road website and observe traffic
  2. They would see that most traffic goes to TOR nodes
  3. It would be easy to see that the Captcha verification always resolves to the same IP
  4. Notify DPR that they know where his site is hosted

Case solved… 45 million bucks saved for the time being.


When Two-Factor Auth Stops Being Two Factors

Recently I got my phone stolen at a busy bar in NYC after attending an OWASP meetup and going to hang out with a few of the fellas afterwards.

Having your phone stolen definitely makes you feel like a victim. I’m not particularly worried about any of my data because my Android phone has remote wipe, a 15 character password, encryption enabled, and a bunch of other stuff.

The following day I got my new Android phone and it was time to start installing everything all over again. This included adding some of the following:

  • 2 factor Authentication apps (Authy, Google Authenticator)
  • Google accounts (business, personal, etc..)
  • Other email accounts
  • Personal banking apps
  • Productivity apps (for expense reports, time management)

I quickly noticed that all the accounts I was putting back onto my phone had two factor authentication (as they should). But I also noticed one common theme, for every account, the second factor was my damn phone. I would add my banking app, and I would have to put in a code I received via SMS. I would add my google account and I would be prompted to put in my Google Authenticator token. It really made me think is two factor still a valid authentication scheme if my second factor is my device? To me it isn’t. What if my phone is compromised via malware? The security validity of second factor suddenly goes out the damn window. Don’t get me wrong, having two factor auth on your mobile device is still better than not having it at all. But it definitely isn’t nearly as effective of a security solution as it is when using it for 2 factor authentication on a computer.

With the meteoric rise in BYOD where employees are adding company and personal accounts on their mobile devices, they are being urged to use two factor authentication. It seems to me that this is becoming more of a “security by obscurity” solution rather than a viable solution to the authentication problem we are faced with. I am seriously considering getting a separate device just to do 2-factor authentication with or just going back to a flip phone 🙂


Favorite Android App Hacking Tools

Below is a list of some of my favorite tools to use for hacking android applications. Each one has its particular usefulness and can be fun to use. Most of them are open source projects so feel free to reach out to the developers on Github to ask for help or even contribute. I’ve found it that they are very helpful.

  1. Android SDK
    • http://developer.android.com/sdk/index.html
    • This is a must have for obvious reasons
    • Main SDK used to interact with android. Particular tools of interest are Android Debug Bridge (ADB) and AAPT.
    • Used to gain shell access to a device. Allows for an array of actions via command line.
  2. Android Backup Extractor
    • https://github.com/nelenkov/android-backup-extractor
    • Used to extract android application backups. Apps with the flag allowBackups=”true” in their AndroidManifest.xml can be backed up. The backup will include information such as preferences, the APK itself, and any database files that are stored on that application. This often times contains PII and passwords, unfortunately.
    • Backups will not retrieve data for an application that is on external storage. You will have to access the external storage separately to access any data that may be stored outside of the application’s context.
    • Doesn’t work very well if the device has encryption turned on. Depends on the device.
  3. APK Tool
    • https://code.google.com/p/android-apktool/
    • Used to decompile an APK and commonly used for reverse engineering.
    • Useful for looking for hardcoded passwords or encryption keys when source code is not available.
    • You can look at the resulting android manifest file to see which services and activities can be called. Checking for restrictions can be useful.
    • Check resulting android manifest file for any particular URIs that an application accepts. It may be an entry point.
  4. Fastboot
    • http://elinux.org/Android_Fastboot
    • Used to manipulate partitions on the device
    • Let’s you reset partitions and also flash the device with other images.
    • Keep in mind that flashing the system partition does NOT remove the app partition where application data is stored. This can be useful when working with an Mobile Device Management (MDM) where the MDM is installed on the system partition and prevents access at the App partition level. If you flash the system partition, the MDM will be gone and you’ll have unrestricted access to data on the App partition.
  5. Burp Suite Pro
    • http://portswigger.net/burp/
    • Favorite proxy tool for anything really
    • Keep in mind that some applications use WebSockets so keep an eye on that tab
    • When proxying Android apps, you may need to accept other MIME types that aren’t on by default.
  6. OWASP Dependency Check
  7. Dex2Jar
    • https://code.google.com/p/dex2jar/
    • When reverse engineering an android APK, you can use this tool to get the java code for the outputs provided by the APK tool above.
    • This can also be used to decompile an APK, modify it, and then re-package it. Keep in mind this will ruin the signature of the APK but it will remain the same otherwise.
    • Can be buggy
  8. SQLite Database Browser
  9. Towel Root
    • https://towelroot.com/
    • Used to root Android devices. Can root just about anything except for a few I’ve already reported to the developer.
    • Root access = game over 99% of the time.

The Hard Thing About Hard Things

I am at an interesting point in my life. I am transitioning from being in a consulting role to becoming CTO of a Payments/Bitcoin startup. This prospect is both extremely exciting and a bit terrifying at the same time.

I have also been working on making myself more of a well-rounded individual. Since my rising interest in Bitcoin, I have become increasingly interested in the world of finance, entrepreneurship, and dare I say…politics (gross). I was recommended a book written by Ben Horowitz, the ex CEO and a very successful VC and entrepreneur. After googling the first chapter and reading it, I decided to buy the book.

There were many things in Ben’s early life that I could personally relate to so the book was an easy and entertaining read for me. For example, we both come from very humble beginnings. My family and I are refugees from Bosnia that had to start from scratch after moving to the states. My parents were 40 years old at the time and I don’t know about you, but I can’t imagine moving somewhere at 40 with only what you could pack into a suitcase and starting over – never mind being successful (all with young children and not speaking a lick of English). Ben mentions his parents being card-carrying communists which was particularly interesting to me since I was born in communist Yugoslavia and I always noticed how my parents were affected having grown up in that form of government. When I was growing up in Kentucky my father would always ask me if I had my “documents” every time I ventured outdoors to play with my friends. There were many other similarities that I won’t go into but the one thing I believe is that when you don’t come up in a privileged environment, you have to grow up fast and be able to adapt very quickly. This definitely seems to be a theme throughout Ben’s book.

The book goes through Ben’s version of the crazy roller coaster ride that is the venture capital lifestyle that’s so prevalent in Silicon Valley. What really keeps you on the edge of your seat is the insane number of choices a CEO has to make regularly that could mean the life or death of the company. The book also highlights how the leadership position is a very lonely place. The CEO often makes decisions and they are never popular with everyone. The book goes into many of the tougher decisions that a leader has to make whether it’s firing a close friend or a manager that has significant influence at the company. What I really liked about this book is that there weren’t any chapters that I read and thought the content was common sense. Ben did a great job of cutting out the bullshit and providing the reader with content that really matters.

Overall I think the book is a great read no matter who you are. I’ve seen multiple reviews that criticize the book by saying that it’s geared toward CEO’s and other top level executives. I whole-heartedly disagree because to me the book has great advice on how to be a leader and how to take responsibility when being put in a position where your decisions affect those around you. My only criticism is that I would have liked to read more examples of failures that Ben and others in the industry have had and how they have successfully recovered from them.

I would definitely recommend the read.

Amazon Link to Book
Annotated First Chapter on Genius.com
Ben’s Twitter


H.O.P.E Conference Tidbits

This past weekend I attended the Hackers of Planet Earth (HOPE) conference in New York City (http://hope.net/)

There were over 90 scheduled talks and most of them were pretty amazing. Here are some of my highlights.

Edward Snowden and Daniel Ellsberg Keynote

The keynote was packed with people! I managed to get a seat near the back about 2 hours before the keynote and when I looked behind me a few minutes later there were a sea of people who were overflowing into the other room. They announced that people were piling out the doors on the first floor of the hotel so that they can see the feed on the first floor. Amazing. I was also amazed at just how little BO there was considering the audience.

Snowden and Ellsberg had a great conversation about where they see the whistleblowing going in the future. Ellsberg wanted to get the point across that more people in the government and corporate industries should take the risk and leak information. Snowden was more focused on enabling these people to leak information and stay anonymous at the same time so they don’t go into exile like himself. I personally don’t have an opinion on this since I tend to focus more on the technology and try to steer clear of the politics. However, I cannot imagine everyday people risking their families, lives, and friends to leak information that may not be nearly as earth-shattering as Snowden’s leaks.

Identifying Back Doors, Attack Points, and Surveillance Mechanisms in iOS Devices

This was one of the most interesting talks to me. The speaker did a great job of showing some real security concerns about the IOS security infrastructure. Apple has put in many back doors to exfiltrate data from devices that are locked and assumably encrypted. Most IOS users think their data is encrypted on their device with either their PIN or fingerprint if they have one of the newer IOS devices. But it’s not.

Apple puts this back door to get data out of a device in the event a company person is deceased which makes sense. If this is used by the wrong people, the feature can be very dangerous. I am definitely re-visiting my stance on IOS vs Android security after this talk. The Google Play Store may be full of malware but at least Google isn’t putting back doors into my device. How do I know this? Because Android is open source!

North Korea – Using Social Engineering and Concealed Electronic Devices to Gather Information in the World’s Most Restrictive Nation

I only have two words for this talk. Simply Amazing. The speaker did an absolutely amazing job presenting his findings that he gathered from his multiple trips to North Korea. I’ve been following the North Korea stories pretty closely so I wasn’t really expecting to learn anything new. Man, was I wrong. The DPRK is basically a country of 24 million people who are willing to die at a moment’s notice for some crazy guy. Every morning, propaganda is played as people wake up, go to work, as they work, and before they go to sleep. The only television is NK TV that’s on a couple hours a day. The radios in homes do not have dials for stations (they can never be entirely turned down either) and those that do, unapproved frequencies are jammed by the government.

I will continue to watch the fascinating events that unfold in North Korea. The shit in the country will eventually hit the fan and we’ll all watch in fascination as millions of brainwashed people have to adapt to the world around them. If they survive.


Engineers Perspective of The NYDFS BitLicense Regulatory Framework

A few minutes ago, Ben Lawsky from NYDFS released the Proposed BitLicense Regulatory Framework. I’m sure lots of very smart lawyers, regulators, and finance folks will have a thorough analysis of the proposal. However, I wanted to check it out to see how this proposal would affect virtual currency related implementations for engineers.

There is no doubt that this will affect business and regulatory requirements for many Bitcoin software and hardware startups. So lets look at some of the points.

Anti Money Laundering & Cyber Security

  1. Provide for independent testing for compliance with, and the effectiveness of, the anti-money laundering program to be conducted by qualified personnel of the Licensee or by a qualified outside party, at least annually – This will affect almost every Bitcoin based business. Engineers will have to implement a robust logging and auditing feature that monitors all their business’ transactions so that at the end of the year they can provide a complete log of what went on. There are many security implications for this. For one, this will most likely contain Personally Identifiable Information (PII) and will have to be kept safe. I could see potential businesses popping up just to provide this service for Bitcoin companies.
  2. Provide ongoing training for appropriate personnel to ensure they have a fulsome understanding of anti-money laundering requirements – Yeah, that won’t happen anywhere. If it does, it will be some e-learning program that everyone forgets within minutes of watching it. But hey, that’s compliance!
  3. Records of Virtual Currency transactions. Each Licensee shall maintain the following information for all transactions involving the payment, receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency: the identity and physical addresses of the parties involved, the amount or value of the transaction, including in what denomination purchased, sold, or transferred, the method of payment, the date(s) on which the transaction was initiated and completed, and a description of the transaction – This is a doozie. I think this is what will give companies the most headache. The two that give me the most pause is the fact that you have to have the physical address of the parties involved and a description of the transaction. It basically means that if you’re a BitLicense holder and you’re doing business with a person or entity, they not only have to provide you with their address but also a description of what the transaction is for. We’re already seeing this added at companies like Coinbase where whenever you take BTC out of your wallet, they ask you where it’s going. It seems quite intrusive to me and might turn away many people from Bitcoin. On the technical side of things, engineers will have to make sure that the data they collect is valid and compensate for the fact that transactions just went from simply putting in a Bitcoin address and hitting send to having to provide physical addresses and detailed descriptions. How do you validate these descriptions? There will need to be a protocol or system in place that allows merchants and businesses to whitelist Bitcoin addresses and that leads to a huge privacy issue in itself.
  4. Each Licensee shall file Suspicious Activity Reports – This is hard. Engineering this can be a total nightmare. There will be a lot of false positives and Bitcoin startups will struggle to keep up with the customer relations nightmare this might cause.
  5. Each Licensee shall establish and maintain an effective cyber security program to ensure the availability and functionality of the Licensee’s electronic systems and to protect those systems and any sensitive data stored on those systems from unauthorized access, use, or tampering. – Thank you Jesus! This is probably the most important aspect of this entire section. Unfortunately Fortune 500 businesses fail miserably at this, what makes us think Bitcoin startups with college dropouts for Engineers can do it? I actually have more faith in them than I do in the financial industry.
  6. Each Licensee shall designate a qualified employee to serve as the Licensee’s Chief Information Security Officer (“CISO”) – This is a neat idea. This expense will be huge for small Bitcoin companies. They simply cannot afford penetration tests, code reviews, and other items in this section. A huge amount of their funding may have to be spent on security which in turn might reduce time to market significantly if not done extremely efficiently.

Overall thoughts

I think NYDFS definitely took a lot of caution when writing this. It’s a thin line for sure because if they are too strict with their framework it will drive innovation and jobs out of the state and possibly this country. As a New York resident, I’m not terribly disappointed by the proposal. It seems doable. The simple fact of the matter is that most people will have no issue adhering to this BitLicense. None of the items seem to be any more intrusive than the credit card industry and the merchants still get the benefit of irreversible transactions that protect them from chargebacks and fraud.

Engineers will have their work cut out for them as they should. The security items outlined in the proposal are robust. While it will definitely increase cost from both a staffing and infrastructure perspective, it will encourage Bitcoin companies to think about security before something bad happens. Frameworks will have to be put in place to secure, audit, and monitor all virtual currency activity in an organization. This will be tough at first but I think services and tools will become available to aid businesses in doing this.

I think the Bitcoin community is innovative enough to find cost effective solutions to meet all these proposed regulations in a way that does not stifle innovation too much. However, I also think that the process to meet these regulations will “separate the men from the boys” when people start thinking about starting a Bitcoin business.

You can view the full thing here: http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf


Freezing, Cold, Brisk, Warm, and Hot Bitcoin Storage

I get a lot of people asking me about the proper way to do cold storage of their Bitcoins. These are commonly folks who are building a Bitcoin startup and are taking preventative measures. I like to think these are the people that will be successful. Unlike Mt. Gox and many other Bitcoin startups who neglect to think about their customers.

Anyway, I’ve devised a scheme for this on the Bitcoin Security Project organization that I run. In my security engineer duties I’ve had to design many secure architectures and I certainly think that this is one of them. If you disagree, contact me.

The scheme is a multi-tier architecture that I believe to be suitable for small to large Bitcoin companies. The basics are simple:

  1. Keep only a small amount in hot storage that wouldn’t ruin you if you lose it.
  2. Require strong authorization and authentication from multiple people when moving Bitcoin between tiers.
  3. Give some training to the folks who have control of your Bitcoin, please.
  4. Use common sense and do not automate withdrawal from cold storage. Servers get hacked all the time ya know.

Below is the scheme if you’re too lazy to check out the link above.

Multi Tiered Cold Storage Solution


The Aegis Bitcoin Wallet

I’ve been using Bitcoin for a couple of years now. It’s gone from a curiosity to somewhat of an obsession. Anyway, my mobile device of choice is an Android and I haven’t been able to find a wallet that I can use and trust at the same time. So I decided to create one.

I designed it from the ground up for security. Lots of help was given by the guys at specularX.com especially in the NFC department. They also did an awesome job coordinating and coming through on the UI design. Admittedly, I am more of an engineer and definitely not a UI designer.

The wallet has a ton of features. For security, it encrypts all keys that are on the device. In order to send money, you either have to provide a password or an NFC tag that has an encryption value stored on it.

You can download the wallet at the play store or you can visit the site here: http://aegiswallet.com

You can check out the code on github at https://github.com/bsimic0001/AegisWallet. Please contribute if you can. All help is appreciated.

Aegis Home Screen


Android Security Score Release!

It’s been a while since my last post and many things have changed. I’ve started a new job at an awesome place, moved to New York City, learned a ton, and even made a second Android app.

It’s called (after much deliberation) Android Security Score and it does some stuff I haven’t seen other security apps do. It analyzes all the installed apps as well as all important security settings of an Android device. It then gives the user a simple score (A-F) that a person can use to get an idea of where their device is in terms of security.

Here’s some other stuff it does:

  1. Provide the user with permissions an app requests
  2. Give advice on how to make their device more secure/improve their score
  3. List potentially dangerous third party apps
  4. Root detection
  5. Showing apps that are old and out of date
  6. And several other things I can’t think of right now

It can be downloaded from https://play.google.com/store/apps/details?id=com.device.security.analytics.androidsecurityanalyticspro

And if you want the PRO version, which includes a handy dandy PDF report of all your results, you can get it from this here link.

Without further ado, here are some screenshots.

If you have any ideas for improvement or features you’d like to see, please let me know!