Ransomware comprises a class of malware which restricts access to the computer system that it infects, and demands a ransom paid to the creator of the malware in order for the restriction to be removed.

Some forms of ransomware encrypt files on the system’s hard drive (cryptoviral extortion), while some may simply lock the system and display messages intended to coax the user into paying. While initially popular in Russia, the use of ransomware scams has grown internationally.

Ransomware typically propagates as a trojan like a conventional computer worm, entering a system through, for example, a downloaded file or a vulnerability in a network service. The program will then run a payload: such as one that will begin to encrypt personal files on the hard drive. More sophisticated applications hybrid-encrypt the victim’s plaintext with a random symmetric key and a fixed public key. The malware author is the only party that knows the needed private decryption key. Some ransomware payloads do not use encryption. In these cases, the payload is simply an application designed to restrict interaction with the system, typically by setting the Windows Shell to itself, or even modifying the master boot record and/or partition table (which prevents the operating system from booting at all until it is repaired).

Ransomware payloads utilize elements of scareware (programs sold through fraudulent alarms) to extort money from the system’s user. The payload may, for example, display notices purportedly issued by companies or law enforcement agencies which falsely claim that the system had been used for illegal activities, or contains illegal content such as pornography and pirated software or media. Some ransomware payloads imitate Windows XP’s product activation notices, falsely claiming that their computer’s Windows installation is counterfeit or requires re-activation. These tactics coax the user into paying the malware’s author to remove the ransomware, either by supplying a program which can decrypt the files, or by sending an unlock code that undoes the changes the payload has made. These payments are often delivered using either a wire transfer, bitcoins, premium-rate text messages, or through an online payment voucher service such as Ukash or Paysafecard.

The first known ransomware was the 1989 ‘AIDS’ trojan (also known as ‘PC Cyborg’) written by Joseph Popp, which triggered a payload claiming that the user’s license to use a certain piece of software had expired, encrypted file names on the hard drive, and required the user to pay US$189 to ‘PC Cyborg Corporation’ in order to unlock the system. Popp was declared mentally unfit to stand trial for his actions, but he promised to donate the profits from the malware to fund AIDS research. The notion of using public key cryptography for such attacks was introduced in 1996 by Adam L. Young and Moti Yung. The two believed that the AIDS trojan was ineffective due to its use of symmetric cryptography, and presented a proof-of-concept cryptovirus for the Macintosh SE/30 using RSA and TEA. Young and Yung referred to this attack as being ‘cryptoviral extortion,’ an overt attack that is part of a larger class of attacks in a field called cryptovirology, which also includes covert attacks.

By 2006 worms were utilizing more sophisticated RSA encryption schemes, with ever-increasing key-sizes. Gpcode.AG, which was detected that year, was encrypted with a 660-bit RSA public key. In 2008, a variant known as Gpcode.AK was detected; using a 1024-bit RSA key, it was believed to computationally infeasible to break without a concerted distributed effort.

In 2010, Russian authorities arrested ten individuals connected to a ransomware worm known as WinLock. Unlike the previous Gpcode worms, WinLock did not use encryption. Instead, it trivially restricted access to the system by displaying pornographic images, and asked users to send a premium-rate SMS (costing around US$10) to receive a code that could be used to unlock their machines. The scam hit a large number of users across Russia and neighboring countries—reportedly earning the group over US$16 million.

In 2011, a ransomware worm imitating the Windows Product Activation notice surfaced that informed users that a system’s Windows installation would have to be re-activated due to ‘[being a] victim of fraud.’ An online activation option was offered, but was unavailable, requiring the user to call one of six international numbers to input a 6-digit code. While the malware claimed that this call would be free, it was routed through a rogue operator in a country with high international phone rates, who placed the call on hold, causing the user to incur large long distance charges.

In 2012, a major ransomware worm known as Reveton began to spread. Based on the Citadel trojan (which itself, is based on the Zeus trojan), its payload displays a warning purportedly from a law enforcement agency (leading to its nickname as the ‘police trojan’), claiming that the computer had been used for illegal activities. The warning informs the user that to unlock their system, they would have to pay a fine using a voucher from an anonymous prepaid cash service. To increase the illusion that the computer is being tracked by law enforcement, the screen also displays the computer’s IP address, while some versions display footage from a computer’s webcam to give the illusion that the user is being purportedly recorded as well.

Reveton initially began spreading in various European countries in early 2012. Variants were localized with templates branded with the logos of different law enforcement organizations based on the user’s country; for example, variants used in the United Kingdom contained the branding of organizations such as the Metropolitan Police Service, the collection society PRS for Music (which specifically accused the user of illegally downloading music), and the Police National E-Crime Unit. In a statement warning the public about the malware, the Metropolitan Police clarified that they would never lock a computer in such a way as part of an investigation. When authorities do have suspicion that someone is downloading child porn, they will not give the suspect a heads up, as that would give the them time to flee or dispose of evidence.

Encrypting ransomware reappeared in 2013 with a worm known as CryptoLocker. Distributed either as an attachment to a malicious e-mail or as a drive-by download, it first attempts to connect to a command-and-control server, after which the program generates a 2048-bit RSA public and private key pair, and uploads the key to the server. The malware then attempts to encrypt data on any local or network storage drive that the user can access using a 2048-bit RSA key, targeting files matching a whitelist of file extensions. While the public key is stored on the computer, the private key is stored on the command-and-control server; CryptoLocker demands a payment with either a MoneyPak card or Bitcoin to recover the key and begin decrypting files, and threatens to delete the private key if a payment is not received within 3 days. Due to the extremely large key size it uses, analysts and those affected by the worm have considered CryptoLocker to be extremely difficult to repair.

Also in 2013, a 21-year-old male from Virginia turned himself in to police after receiving ransomware containing a fake FBI warning accusing him of possessing child pornography. However, after further investigation, the user was charged with possessing child pornography and child sexual abuse when it was discovered that his computer contained pictures of underaged females, and he had conducted inappropriate communications with them.


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