Waledac botnet poised for a comeback with stolen credentials

Botnet was crippled last year by legal action from Microsoft, but now has managed to collect a trove of high-quality email accounts for spam

The Waledac botnet, crippled by legal action from Microsoft and covert infiltration by security researchers just a year ago, appears poised for a big comeback.

Waledac was mostly shut down after Microsoft -- whose Hotmail service had been abused by the botnet -- was granted a temporary restraining order by a U.S. court that shut down domain names the botnet used to communicate. Security researchers also managed to disrupt Waledac's peer-to-peer communications system and gain control over some 60,000 infected computers.

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But according to researchers from security vendor Last Line, Waledac has collected 489,528 credentials for POP3 email accounts, which will likely be used for high-quality spam campaigns.

"The technique abuses legitimate mail servers by authenticating as the victim through the SMTP-AUTH protocol to send spam messages," according to Last Line's blog. "This method makes IP-based blacklist filtering considerably more difficult."

Additionally, Waledac has also collected 123,920 log-in credentials for FTP servers.

"This number is significant considering the Waledac controllers use an automated program to login to these servers and patch (or upload) specific files to redirect users to sites that serve malware or promote cheap pharmaceuticals," Last Line said. " In January, we observed 222 websites that had been compromised containing a total of 9,447 pages."

Other data from Last Line's analysis of a Waledac command-and-control server showed that more than 12,000 infected computers had connected. That figure is far fewer than estimates of Waledac before the February 2010 takedown, but could rise.

"The Waledac botnet remains just a shadow of its former self for now, but that's likely to change given the number of compromised accounts that the Waledac crew possesses," Last Line said.

Waledac showed signs of a resurgence around the end last year, when researchers from Websense noticed a large run of spam purporting to be electronic greeting cards. The messages contained links that if clicked redirected to a domain that falsely informed victims they needed to upgrade Flash player to see the card. The supposed Flash update file is malicious.

The Shadowserver Foundation, which tracks botnets, wrote at the end of December that the latest version of Waledac was also using fast-flux, a technique that allows the domain to be hosted on a rotating selection of IP addresses, for hosting malicious domains.

Send news tips and comments to jeremy_kirk@idg.com.

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