Tag Archives: national security policy

Regulating DAOs

2022-10-14 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/10/regulating-daos.html

In August, the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the cryptocurrency platform Tornado Cash, a virtual currency “mixer” designed to make it harder to trace cryptocurrency transactions—and a worldwide favorite money-laundering platform. Americans are now forbidden from using it. According to the US government, Tornado Cash was sanctioned because it allegedly laundered over $7 billion in cryptocurrency, $455 million of which was stolen by a North Korean state-sponsored hacking group.

Tornado Cash is not a traditional company run by human beings, but instead a series of “smart contracts”: self-executing code that exists only as software. Critics argue that prohibiting Americans from using Tornado Cash is a restraint of free speech, pointing to court rulings in the 1990s that established that computer language is a form of language, and that software programs are a form of speech. They also suggest that the Treasury Department has the authority to sanction only humans and not software.

We think that the most useful way to understand the speech issues involved with regulating Tornado Cash and other decentralized autonomous organizations (DAOs) is through an analogy: the golem. There are many versions of the Jewish golem legend, but in most of them, a person-like clay statue comes to life after someone writes the word “truth” in Hebrew on its forehead, and eventually starts doing terrible things. The golem stops only when a rabbi erases one of those letters, turning “truth” into the Hebrew word for “death,” and the golem ceases to function.

The analogy between DAOs and golems is quite precise, and has important consequences for the relationship between free speech and code. Ultimately, just as the golem needed the intervention of a rabbi to stop wreaking havoc on the world, so too do DAOs need to be subject to regulation.

The equivalency of code and free speech was established during the first “crypto wars” of the 1990s, which were about cryptography, not cryptocurrencies. US agencies tried to use export control laws to prevent sophisticated cryptography software from being exported outside the US. Activists and lawyers cleverly showed how code could be transformed into speech and vice versa, turning the source code for a cryptographic product into a printed book and daring US authorities to prevent its export. In 1996, US District Judge Marilyn Hall Patel ruled that computer code is a language, just like German or French, and that coded programs deserve First Amendment protection. That such code is also functional, instructing a computer to do something, was irrelevant to its expressive capabilities, according to Patel’s ruling. However, both a concurring and dissenting opinion argued that computer code also has the “functional purpose of controlling computers and, in that regard, does not command protection under the First Amendment.”

This disagreement highlights the awkward distinction between ordinary language and computer code. Language does not change the world, except insofar as it persuades, informs, or compels other people. Code, however, is a language where words have inherent power. Type the appropriate instructions and the computer will implement them without hesitation, second-guessing, or independence of will. They are like the words inscribed on a golem’s forehead (or the written instructions that, in some versions of the folklore, are placed in its mouth). The golem has no choice, because it is incapable of making choices. The words are code, and the golem is no different from a computer.

Unlike ordinary organizations, DAOs don’t rely on human beings to carry out many of their core functions. Instead, those functions have been translated into a set of instructions that are implemented in software. In the case of Tornado Cash, its code exists as part of Ethereum, a widely used cryptocurrency that can also run arbitrary computer code.

Cryptocurrency zealots thought that DAOs would allow them to place their trust in secure computer code, which would do exactly what they wanted it to do, rather than fallible human beings who might fail or cheat. Humans could still have input, but under rules that were enshrined in self-running software. The past several years of DAO activity has taught these zealots a series of painful and expensive lessons on the limits of both computer security and incomplete contracts: Software has bugs, and contracts may do weird things under unanticipated circumstances. The combination frequently results in multimillion-dollar frauds and thefts.

Further complicating the matter is that individual DAOs can have very different rules. DAOs were supposed to create truly decentralized services that could never turn into a source of state power and coercion. Today, some DAOs talk a big game about decentralization, but provide power to founders and big investors like Andreessen Horowitz. Others are deliberately set up to frustrate outside control. Indeed, the creators of Tornado Cash explicitly wanted to create a golem-like entity that would be immune from law. In doing so, they were following in a long libertarian tradition.

In 2014, Gavin Woods, one of Ethereum’s core developers, gave a talk on what he called “allegality” of decentralized software services. Woods’s argument was very simple. Companies like PayPal employ real people and real lawyers. That meant that “if they provide a service to you that is deemed wrong or illegal … then they get fucked … maybe [go] to prison.” But cryptocurrencies like Bitcoin “had no operator.” By using software running on blockchains rather than people to run your organization, you could do an end-run around normal, human law. You could create services that “cannot be shut down. Not by a court, not by a police force, not by a nation state.” People would be able to set whatever rules they wanted, regardless of what any government prohibited.

Woods’s speech helped inspire the first DAO (The DAO), and his ideas live on in Tornado Cash. Tornado Cash was designed, in its founder’s words, “to be unstoppable.” The way the protocol is “designed, decentralized and autonomous …[,] there’s nobody in charge.” The people who ran Tornado Cash used a decentralized protocol running on the Ethereum computing platform, which is itself radically decentralized. But they used indelible ink. The protocol was deliberately instructed never to accept an update command.

Other elements of Tornado Cash—its website, and the GitHub repository where its source code was stored—have been taken down. But the protocol that actually mixes cryptocurrency is still available through the Ethereum network, even if it doesn’t have a user-friendly front end. Like a golem that has been set in motion, it will just keep on going, taking in, processing, and returning cryptocurrency according to its original instructions.

This gets us to the argument that the US government, by sanctioning a software program, is restraining free speech. Not only is it more complicated than that, but it’s complicated in ways that undercut this argument. OFAC’s actions aren’t aimed against free speech and the publication of source code, as its clarifications have made clear. Researchers are not prohibited from copying, posting, “discussing, teaching about, or including open-source code in written publications, such as textbooks.” GitHub could potentially still host the source code and the project. OFAC’s actions are aimed at preventing persons from using software applications that undercut one of the most basic functions of government: regulating activities that it deems endangers national security.

The question is whether the First Amendment covers golems. When your words are used not to persuade or argue, but to animate a mindless entity that will exist as long as the Ethereum blockchain exists and will carry out your final instructions no matter what, should your golem be immune from legal action?

When Patel issued her famous ruling, she caustically dismissed the argument that “even one drop of ‘direct functionality’” overwhelmed people’s expressive rights. Arguably, the question with Tornado Cash is whether a possibly notional droplet of free speech expressivity can overwhelm the direct functionality of running code, especially code designed to refuse any further human intervention. The Tornado Cash protocol will accept and implement the routine commands described by its protocol: It will still launder cryptocurrency. But the protocol itself is frozen.

We certainly don’t think that the US government should ban DAOs or code running on Ethereum or other blockchains, or demand any universal right of access to their workings. That would be just as sweeping—and wrong—as the general claim that encrypted messaging results in a “lawless space,” or the contrary notion that regulating code is always a prior restraint on free speech. There is wide scope for legitimate disagreement about government regulation of code and its legal authorities over distributed systems.

However, it’s hard not to sympathize with OFAC’s desire to push back against a radical effort to undermine the very idea of government authority. What would happen if the Tornado Cash approach to the law prevailed? That is, what would be the outcome if judges and politicians decided that entities like Tornado Cash could not be regulated, on free speech or any other grounds?

Likely, anyone who wanted to facilitate illegal activities would have a strong incentive to turn their operation into a DAO—and then throw away the key. Ethereum’s programming language is Turing-complete. That means, as Woods argued back in 2014, that one could turn all kinds of organizational rules into software, whether or not they were against the law.

In practice, it wouldn’t be so easy. Turning business principles into running code is hard, and doing it without creating bugs or loopholes is much harder still. Ethereum and other blockchains still have hard limits on computing power. But human ingenuity can accomplish many things when there’s a lot of money at stake.

People have legitimate reasons for seeking anonymity in their financial transactions, but these reasons need to be weighed against other harms to society. As privacy advocate Cory Doctorow wrote recently: “When you combine anonymity with finance—not the right to speak anonymously, but the right to run an investment fund anonymously—you’re rolling out the red carpet for serial scammers, who can run a scam, get caught, change names, and run it again, incorporating the lessons they learned.”

It’s a mistake to defend DAOs on the grounds that code is free speech. Some code is speech, but not all code is speech. And code can also directly affect the world. DAOs, which are in essence autonomous golems, made from code rather than clay, make this distinction especially stark.

This will become even more important as robots become more capable and prevalent. Robots are even more obviously golems than DAOs are, performing actions in the physical world. Should their code enjoy a safe harbor from the law? What if robots, like DAOs, are designed to obey only their initial instructions, however unlawful—and refuse all further updates or commands? Assuming that code is free speech and only free speech, and ignoring its functional purpose, will at best tangle the law up in knots.

Tying free speech arguments to the cause of DAOs like Tornado Cash imperils some of the important free speech victories that were won in the past. But the risks for everyone might be even greater if that argument wins. A world where democratic governments are unable to enforce their laws is not a world where civic spaces or civil liberties will thrive.

This essay was written with Henry Farrell, and previously appeared on Lawfare.com.

The Justice Department Will No Longer Charge Security Researchers with Criminal Hacking

2022-05-24 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/05/the-justice-department-will-no-longer-charge-security-researchers-with-criminal-hacking.html

Following a recent Supreme Court ruling, the Justice Department will no longer prosecute “good faith” security researchers with cybercrimes:

The policy for the first time directs that good-faith security research should not be charged. Good faith security research means accessing a computer solely for purposes of good-faith testing, investigation, and/or correction of a security flaw or vulnerability, where such activity is carried out in a manner designed to avoid any harm to individuals or the public, and where the information derived from the activity is used primarily to promote the security or safety of the class of devices, machines, or online services to which the accessed computer belongs, or those who use such devices, machines, or online services.

[…]

The new policy states explicitly the longstanding practice that “the department’s goals for CFAA enforcement are to promote privacy and cybersecurity by upholding the legal right of individuals, network owners, operators, and other persons to ensure the confidentiality, integrity, and availability of information stored in their information systems.” Accordingly, the policy clarifies that hypothetical CFAA violations that have concerned some courts and commentators are not to be charged. Embellishing an online dating profile contrary to the terms of service of the dating website; creating fictional accounts on hiring, housing, or rental websites; using a pseudonym on a social networking site that prohibits them; checking sports scores at work; paying bills at work; or violating an access restriction contained in a term of service are not themselves sufficient to warrant federal criminal charges. The policy focuses the department’s resources on cases where a defendant is either not authorized at all to access a computer or was authorized to access one part of a computer—such as one email account—and, despite knowing about that restriction, accessed a part of the computer to which his authorized access did not extend, such as other users’ emails.

News article.

Attacks on Managed Service Providers Expected to Increase

2022-05-17 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/05/attacks-on-managed-service-providers-expected-to-increase.html

CISA, NSA, FBI, and similar organizations in the other Five Eyes countries are warning that attacks on MSPs — as a vector to their customers — are likely to increase. No details about what this prediction is based on. Makes sense, though. The SolarWinds attack was incredibly successful for the Russian SVR, and a blueprint for future attacks.

News articles.

ICE Is a Domestic Surveillance Agency

2022-05-11 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/05/ice-is-a-domestic-surveillance-agency.html

Georgetown has a new report on the highly secretive bulk surveillance activities of ICE in the US:

When you think about government surveillance in the United States, you likely think of the National Security Agency or the FBI. You might even think of a powerful police agency, such as the New York Police Department. But unless you or someone you love has been targeted for deportation, you probably don’t immediately think of Immigration and Customs Enforcement (ICE).

This report argues that you should. Our two-year investigation, including hundreds of Freedom of Information Act requests and a comprehensive review of ICE’s contracting and procurement records, reveals that ICE now operates as a domestic surveillance agency. Since its founding in 2003, ICE has not only been building its own capacity to use surveillance to carry out deportations but has also played a key role in the federal government’s larger push to amass as much information as possible about all of our lives. By reaching into the digital records of state and local governments and buying databases with billions of data points from private companies, ICE has created a surveillance infrastructure that enables it to pull detailed dossiers on nearly anyone, seemingly at any time. In its efforts to arrest and deport, ICE has — without any judicial, legislative or public oversight — reached into datasets containing personal information about the vast majority of people living in the U.S., whose records can end up in the hands of immigration enforcement simply because they apply for driver’s licenses; drive on the roads; or sign up with their local utilities to get access to heat, water and electricity.

ICE has built its dragnet surveillance system by crossing legal and ethical lines, leveraging the trust that people place in state agencies and essential service providers, and exploiting the vulnerability of people who volunteer their information to reunite with their families. Despite the incredible scope and evident civil rights implications of ICE’s surveillance practices, the agency has managed to shroud those practices in near-total secrecy, evading enforcement of even the handful of laws and policies that could be invoked to impose limitations. Federal and state lawmakers, for the most part, have yet to confront this reality.

EDITED TO ADD (5/13): A news article.

Corporate Involvement in International Cybersecurity Treaties

2022-05-06 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/05/corporate-involvement-in-international-cybersecurity-treaties.html

The Paris Call for Trust and Stability in Cyberspace is an initiative launched by French President Emmanuel Macron during the 2018 UNESCO’s Internet Governance Forum. It’s an attempt by the world’s governments to come together and create a set of international norms and standards for a reliable, trustworthy, safe, and secure Internet. It’s not an international treaty, but it does impose obligations on the signatories. It’s a major milestone for global Internet security and safety.

Corporate interests are all over this initiative, sponsoring and managing different parts of the process. As part of the Call, the French company Cigref and the Russian company Kaspersky chaired a working group on cybersecurity processes, along with French research center GEODE. Another working group on international norms was chaired by US company Microsoft and Finnish company F-Secure, along with a University of Florence research center. A third working group’s participant list includes more corporations than any other group.

As a result, this process has become very different than previous international negotiations. Instead of governments coming together to create standards, it is being drive by the very corporations that the new international regulatory climate is supposed to govern. This is wrong.

The companies making the tools and equipment being regulated shouldn’t be the ones negotiating the international regulatory climate, and their executives shouldn’t be named to key negotiation roles without appointment and confirmation. It’s an abdication of responsibility by the US government for something that is too important to be treated this cavalierly.

On the one hand, this is no surprise. The notions of trust and stability in cyberspace are about much more than international safety and security. They’re about market share and corporate profits. And corporations have long led policymakers in the fast-moving and highly technological battleground that is cyberspace.

The international Internet has always relied on what is known as a multistakeholder model, where those who show up and do the work can be more influential than those in charge of governments. The Internet Engineering Task Force, the group that agrees on the technical protocols that make the Internet work, is largely run by volunteer individuals. This worked best during the Internet’s era of benign neglect, where no one but the technologists cared. Today, it’s different. Corporate and government interests dominate, even if the individuals involved use the polite fiction of their own names and personal identities.

However, we are a far cry from decades past, where the Internet was something that governments didn’t understand and largely ignored. Today, the Internet is an essential infrastructure that underpins much of society, and its governance structure is something that nations care about deeply. Having for-profit tech companies run the Paris Call process on regulating tech is analogous to putting the defense contractors Northrop Grumman or Boeing in charge of the 1970s SALT nuclear agreements between the US and the Soviet Union.

This also isn’t the first time that US corporations have led what should be an international relations process regarding the Internet. Since he first gave a speech on the topic in 2017, Microsoft President Brad Smith has become almost synonymous with the term “Digital Geneva Convention.” It’s not just that corporations in the US and elsewhere are taking a lead on international diplomacy, they’re framing the debate down to the words and the concepts.

Why is this happening? Different countries have their own problems, but we can point to three that currently plague the US.

First and foremost, “cyber” still isn’t taken seriously by much of the government, specifically the State Department. It’s not real to the older military veterans, or to the even older politicians who confuse Facebook with TikTok and use the same password for everything. It’s not even a topic area for negotiations for the US Trade Representative. Nuclear disarmament is “real geopolitics,” while the Internet is still, even now, seen as vaguely magical, and something that can be “fixed” by having the nerds yank plugs out of a wall.

Second, the State Department was gutted during the Trump years. It lost many of the up-and-coming public servants who understood the way the world was changing. The work of previous diplomats to increase the visibility of the State Department’s cyber efforts was abandoned. There are few left on staff to do this work, and even fewer to decide if they’re any good. It’s hard to hire senior information security professionals in the best of circumstances; it’s why charlatans so easily flourish in the cybersecurity field. The built-up skill set of the people who poured their effort and time into this work during the Obama years is gone.

Third, there’s a power struggle at the heart of the US government involving cyber issues, between the White House, the Department of Homeland Security (represented by CISA), and the military (represented by US Cyber Command). Trying to create another cyber center of power within the State Department threatens those existing powers. It’s easier to leave it in the hands of private industry, which does not affect those government organizations’ budgets or turf.

We don’t want to go back to the era when only governments set technological standards. The governance model from the days of the telephone is another lesson in how not to do things. The International Telecommunications Union is an agency run out of the United Nations. It is moribund and ponderous precisely because it is run by national governments, with civil society and corporations largely alienated from the decision-making processes.

Today, the Internet is fundamental to global society. It’s part of everything. It affects national security and will be a theater in any future war. How individuals, corporations, and governments act in cyberspace is critical to our future. The Internet is critical infrastructure. It provides and controls access to healthcare, space, the military, water, energy, education, and nuclear weaponry. How it is regulated isn’t just something that will affect the future. It is the future.

Since the Paris Call was finalized in 2018, it has been signed by 81 countries — including the US in 2021 — 36 local governments and public authorities, 706 companies and private organizations, and 390 civil society groups. The Paris Call isn’t the first international agreement that puts companies on an equal signatory footing as governments. The Global Internet Forum to Combat Terrorism and the Christchurch Call to eliminate extremist content online do the same thing. But the Paris Call is different. It’s bigger. It’s more important. It’s something that should be the purview of governments and not a vehicle for corporate power and profit.

When something as important as the Paris Call comes along again, perhaps in UN negotiations for a cybercrime treaty, we call for actual State Department officials with technical expertise to be sitting at the table with the interests of the entire US in their pocket…not people with equity shares to protect.

This essay was written with Tarah Wheeler, and previously published on The Cipher Brief.

John Oliver on Data Brokers

2022-04-12 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/04/john-oliver-on-data-brokers.html

John Oliver has an excellent segment on data brokers and surveillance capitalism.

US Disrupts Russian Botnet

2022-04-07 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/04/us-disrupts-russian-botnet.html

The Justice Department announced the disruption of a Russian GRU-controlled botnet:

The Justice Department today announced a court-authorized operation, conducted in March 2022, to disrupt a two-tiered global botnet of thousands of infected network hardware devices under the control of a threat actor known to security researchers as Sandworm, which the U.S. government has previously attributed to the Main Intelligence Directorate of the General Staff of the Armed Forces of the Russian Federation (the GRU). The operation copied and removed malware from vulnerable internet-connected firewall devices that Sandworm used for command and control (C2) of the underlying botnet. Although the operation did not involve access to the Sandworm malware on the thousands of underlying victim devices worldwide, referred to as “bots,” the disabling of the C2 mechanism severed those bots from the Sandworm C2 devices’ control.

The botnet “targets network devices manufactured by WatchGuard Technologies Inc. (WatchGuard) and ASUSTek Computer Inc. (ASUS).” And note that only the command-and-control mechanism was disrupted. Those devices are still vulnerable.

The Justice Department made a point that they did this before the botnet was used for anything offensive.

Four more news articles. Slashdot post.

EDITED TO ADD (4/13): WatchGuard knew and fixed it nearly a year ago, but tried to keep it hidden. The patches were reverse-engineered.

NASA’s Insider Threat Program

2022-03-23 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/03/nasas-insider-threat-program.html

The Office of Inspector General has audited NASA’s insider threat program:

While NASA has a fully operational insider threat program for its classified systems, the vast majority of the Agency’s information technology (IT) systems — including many containing high-value assets or critical infrastructure — are unclassified and are therefore not covered by its current insider threat program. Consequently, the Agency may be facing a higher-than-necessary risk to its unclassified systems and data. While NASA’s exclusion of unclassified systems from its insider threat program is common among federal agencies, adding those systems to a multi-faceted security program could provide an additional level of maturity to the program and better protect agency resources. According to Agency officials, expanding the insider threat program to unclassified systems would benefit the Agency’s cybersecurity posture if incremental improvements, such as focusing on IT systems and people at the most risk, were implemented. However, on-going concerns including staffing challenges, technology resource limitations, and lack of funding to support such an expansion would need to be addressed prior to enhancing the existing program.

Further amplifying the complexities of insider threats are the cross-discipline challenges surrounding cybersecurity expertise. At NASA, responsibilities for unclassified systems are largely shared between the Office of Protective Services and the Office of the Chief Information Officer. In addition, Agency contracts are managed by the Office of Procurement while grants and cooperative agreements are managed by the Office of the Chief Financial Officer. Nonetheless, in our view, mitigating the risk of an insider threat is a team sport in which a comprehensive insider threat risk assessment would allow the Agency to gather key information on weak spots or gaps in administrative processes and cybersecurity. At a time when there is growing concern about the continuing threats of foreign influence, taking the proactive step to conduct a risk assessment to evaluate NASA’s unclassified systems ensures that gaps cannot be exploited in ways that undermine the Agency’s ability to carry out its mission.

A New Cybersecurity “Social Contract”

2022-02-22 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/02/a-new-cybersecurity-social-contract.html

The US National Cyber Director Chris Inglis wrote an essay outlining a new social contract for the cyber age:

The United States needs a new social contract for the digital age — one that meaningfully alters the relationship between public and private sectors and proposes a new set of obligations for each. Such a shift is momentous but not without precedent. From the Pure Food and Drug Act of 1906 to the Clean Air Act of 1963 and the public-private revolution in airline safety in the 1990s, the United States has made important adjustments following profound changes in the economy and technology.

A similarly innovative shift in the cyber-realm will likely require an intense process of development and iteration. Still, its contours are already clear: the private sector must prioritize long-term investments in a digital ecosystem that equitably distributes the burden of cyberdefense. Government, in turn, must provide more timely and comprehensive threat information while simultaneously treating industry as a vital partner. Finally, both the public and private sectors must commit to moving toward true collaboration — contributing resources, attention, expertise, and people toward institutions designed to prevent, counter, and recover from cyber-incidents.

The devil is in the details, of course, but he’s 100% right when he writes that the market cannot solve this: that the incentives are all wrong. While he never actually uses the word “regulation,” the future he postulates won’t be possible without it. Regulation is how society aligns market incentives with its own values. He also leaves out the NSA — whose effectiveness rests on all of these global insecurities — and the FBI, whose incessant push for encryption backdoors goes against his vision of increased cybersecurity. I’m not sure how he’s going to get them on board. Or the surveillance capitalists, for that matter. A lot of what he wants will require reining in that particular business model.

Good essay — worth reading in full.

New German Government is Pro-Encryption and Anti-Backdoors

2021-12-08 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/12/new-german-government-is-pro-encryption-and-anti-backdoors.html

I hope this is true:

According to Jens Zimmermann, the German coalition negotiations had made it “quite clear” that the incoming government of the Social Democrats (SPD), the Greens and the business-friendly liberal FDP would reject “the weakening of encryption, which is being attempted under the guise of the fight against child abuse” by the coalition partners.

Such regulations, which are already enshrined in the interim solution of the ePrivacy Regulation, for example, “diametrically contradict the character of the coalition agreement” because secure end-to-end encryption is guaranteed there, Zimmermann said.

Introducing backdoors would undermine this goal of the coalition agreement, he added.

I have written about this.

US Blacklists NSO Group

2021-11-04 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/11/us-blacklists-nso-group.html

The Israeli cyberweapons arms manufacturer — and human rights violator, and probably war criminal — NSO Group has been added to the US Department of Commerce’s trade blacklist. US companies and individuals cannot sell to them. Aside from the obvious difficulties this causes, it’ll make it harder for them to buy zero-day vulnerabilities on the open market.

This is another step in the ongoing US actions against the company.

Security Risks of Client-Side Scanning

2021-10-15 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/10/security-risks-of-client-side-scanning.html

Even before Apple made its announcement, law enforcement shifted their battle for backdoors to client-side scanning. The idea is that they wouldn’t touch the cryptography, but instead eavesdrop on communications and systems before encryption or after decryption. It’s not a cryptographic backdoor, but it’s still a backdoor — and brings with it all the insecurities of a backdoor.

I’m part of a group of cryptographers that has just published a paper discussing the security risks of such a system. (It’s substantially the same group that wrote a similar paper about key escrow in 1997, and other “exceptional access” proposals in 2015. We seem to have to do this every decade or so.) In our paper, we examine both the efficacy of such a system and its potential security failures, and conclude that it’s a really bad idea.

We had been working on the paper well before Apple’s announcement. And while we do talk about Apple’s system, our focus is really on the idea in general.

Ross Anderson wrote a blog post on the paper. (It’s always great when Ross writes something. It means I don’t have to.) So did Susan Landau. And there’s press coverage in the New York Times, the Guardian, Computer Weekly, the Financial Times, Forbes, El Pais (English translation), NRK (English translation), and — this is the best article of them all — the Register. See also this analysis of the law and politics of client-side scanning from last year.

National Security Risks of Late-Stage Capitalism

2021-03-01 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/03/national-security-risks-of-late-stage-capitalism.html

Early in 2020, cyberspace attackers apparently working for the Russian government compromised a piece of widely used network management software made by a company called SolarWinds. The hack gave the attackers access to the computer networks of some 18,000 of SolarWinds’s customers, including US government agencies such as the Homeland Security Department and State Department, American nuclear research labs, government contractors, IT companies and nongovernmental agencies around the world.

It was a huge attack, with major implications for US national security. The Senate Intelligence Committee is scheduled to hold a hearing on the breach on Tuesday. Who is at fault?

The US government deserves considerable blame, of course, for its inadequate cyberdefense. But to see the problem only as a technical shortcoming is to miss the bigger picture. The modern market economy, which aggressively rewards corporations for short-term profits and aggressive cost-cutting, is also part of the problem: Its incentive structure all but ensures that successful tech companies will end up selling insecure products and services.

Like all for-profit corporations, SolarWinds aims to increase shareholder value by minimizing costs and maximizing profit. The company is owned in large part by Silver Lake and Thoma Bravo, private-equity firms known for extreme cost-cutting.

SolarWinds certainly seems to have underspent on security. The company outsourced much of its software engineering to cheaper programmers overseas, even though that typically increases the risk of security vulnerabilities. For a while, in 2019, the update server’s password for SolarWinds’s network management software was reported to be “solarwinds123.” Russian hackers were able to breach SolarWinds’s own email system and lurk there for months. Chinese hackers appear to have exploited a separate vulnerability in the company’s products to break into US government computers. A cybersecurity adviser for the company said that he quit after his recommendations to strengthen security were ignored.

There is no good reason to underspend on security other than to save money — especially when your clients include government agencies around the world and when the technology experts that you pay to advise you are telling you to do more.

As the economics writer Matt Stoller has suggested, cybersecurity is a natural area for a technology company to cut costs because its customers won’t notice unless they are hacked – and if they are, they will have already paid for the product. In other words, the risk of a cyberattack can be transferred to the customers. Doesn’t this strategy jeopardize the possibility of long-term, repeat customers? Sure, there’s a danger there – but investors are so focused on short-term gains that they’re too often willing to take that risk.

The market loves to reward corporations for risk-taking when those risks are largely borne by other parties, like taxpayers. This is known as “privatizing profits and socializing losses.” Standard examples include companies that are deemed “too big to fail,” which means that society as a whole pays for their bad luck or poor business decisions. When national security is compromised by high-flying technology companies that fob off cybersecurity risks onto their customers, something similar is at work.

Similar misaligned incentives affect your everyday cybersecurity, too. Your smartphone is vulnerable to something called SIM-swap fraud because phone companies want to make it easy for you to frequently get a new phone — and they know that the cost of fraud is largely borne by customers. Data brokers and credit bureaus that collect, use, and sell your personal data don’t spend a lot of money securing it because it’s your problem if someone hacks them and steals it. Social media companies too easily let hate speech and misinformation flourish on their platforms because it’s expensive and complicated to remove it, and they don’t suffer the immediate costs – indeed, they tend to profit from user engagement regardless of its nature.

There are two problems to solve. The first is information asymmetry: buyers can’t adequately judge the security of software products or company practices. The second is a perverse incentive structure: the market encourages companies to make decisions in their private interest, even if that imperils the broader interests of society. Together these two problems result in companies that save money by taking on greater risk and then pass off that risk to the rest of us, as individuals and as a nation.

The only way to force companies to provide safety and security features for customers and users is with government intervention. Companies need to pay the true costs of their insecurities, through a combination of laws, regulations, and legal liability. Governments routinely legislate safety — pollution standards, automobile seat belts, lead-free gasoline, food service regulations. We need to do the same with cybersecurity: the federal government should set minimum security standards for software and software development.

In today’s underregulated markets, it’s just too easy for software companies like SolarWinds to save money by skimping on security and to hope for the best. That’s a rational decision in today’s free-market world, and the only way to change that is to change the economic incentives.

This essay previously appeared in the New York Times.

On Chinese-Owned Technology Platforms

2021-02-25 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/02/on-chinese-owned-technology-platforms.html

I am a co-author on a report published by the Hoover Institution: “Chinese Technology Platforms Operating in the United States.” From a blog post:

The report suggests a comprehensive framework for understanding and assessing the risks posed by Chinese technology platforms in the United States and developing tailored responses. It starts from the common view of the signatories — one reflected in numerous publicly available threat assessments — that China’s power is growing, that a large part of that power is in the digital sphere, and that China can and will wield that power in ways that adversely affect our national security. However, the specific threats and risks posed by different Chinese technologies vary, and effective policies must start with a targeted understanding of the nature of risks and an assessment of the impact US measures will have on national security and competitiveness. The goal of the paper is not to specifically quantify the risk of any particular technology, but rather to analyze the various threats, put them into context, and offer a framework for assessing proposed responses in ways that the signatories hope can aid those doing the risk analysis in individual cases.

GPS Vulnerabilities

2021-02-22 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/02/gps-vulnerabilities.html

Really good op-ed in the New York Times about how vulnerable the GPS system is to interference, spoofing, and jamming — and potential alternatives.

The 2018 National Defense Authorization Act included funding for the Departments of Defense, Homeland Security and Transportation to jointly conduct demonstrations of various alternatives to GPS, which were concluded last March. Eleven potential systems were tested, including eLoran, a low-frequency, high-power timing and navigation system transmitted from terrestrial towers at Coast Guard facilities throughout the United States.

“China, Russia, Iran, South Korea and Saudi Arabia all have eLoran systems because they don’t want to be as vulnerable as we are to disruptions of signals from space,” said Dana Goward, the president of the Resilient Navigation and Timing Foundation, a nonprofit that advocates for the implementation of an eLoran backup for GPS.

Also under consideration by federal authorities are timing systems delivered via fiber optic network and satellite systems in a lower orbit than GPS, which therefore have a stronger signal, making them harder to hack. A report on the technologies was submitted to Congress last week.

GPS is a piece of our critical infrastructure that is essential to a lot of the rest of our critical infrastructure. It needs to be more secure.

Chinese Supply-Chain Attack on Computer Systems

2021-02-13 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/02/chinese-supply-chain-attack-on-computer-systems.html

Bloomberg News has a major story about the Chinese hacking computer motherboards made by Supermicro, Levono, and others. It’s been going on since at least 2008. The US government has known about it for almost as long, and has tried to keep the attack secret:

China’s exploitation of products made by Supermicro, as the U.S. company is known, has been under federal scrutiny for much of the past decade, according to 14 former law enforcement and intelligence officials familiar with the matter. That included an FBI counterintelligence investigation that began around 2012, when agents started monitoring the communications of a small group of Supermicro workers, using warrants obtained under the Foreign Intelligence Surveillance Act, or FISA, according to five of the officials.

There’s lots of detail in the article, and I recommend that you read it through.

This is a follow on, with a lot more detail, to a story Bloomberg reported on in fall 2018. I didn’t believe the story back then, writing:

I don’t think it’s real. Yes, it’s plausible. But first of all, if someone actually surreptitiously put malicious chips onto motherboards en masse, we would have seen a photo of the alleged chip already. And second, there are easier, more effective, and less obvious ways of adding backdoors to networking equipment.

I seem to have been wrong. From the current Bloomberg story:

Mike Quinn, a cybersecurity executive who served in senior roles at Cisco Systems Inc. and Microsoft Corp., said he was briefed about added chips on Supermicro motherboards by officials from the U.S. Air Force. Quinn was working for a company that was a potential bidder for Air Force contracts, and the officials wanted to ensure that any work would not include Supermicro equipment, he said. Bloomberg agreed not to specify when Quinn received the briefing or identify the company he was working for at the time.

“This wasn’t a case of a guy stealing a board and soldering a chip on in his hotel room; it was architected onto the final device,” Quinn said, recalling details provided by Air Force officials. The chip “was blended into the trace on a multilayered board,” he said.

“The attackers knew how that board was designed so it would pass” quality assurance tests, Quinn said.

Supply-chain attacks are the flavor of the moment, it seems. But they’re serious, and very hard to defend against in our deeply international IT industry. (I have repeatedly called this an “insurmountable problem.”) Here’s me in 2018:

Supply-chain security is an incredibly complex problem. US-only design and manufacturing isn’t an option; the tech world is far too internationally interdependent for that. We can’t trust anyone, yet we have no choice but to trust everyone. Our phones, computers, software and cloud systems are touched by citizens of dozens of different countries, any one of whom could subvert them at the demand of their government.

We need some fundamental security research here. I wrote this in 2019:

The other solution is to build a secure system, even though any of its parts can be subverted. This is what the former Deputy Director of National Intelligence Sue Gordon meant in April when she said about 5G, “You have to presume a dirty network.” Or more precisely, can we solve this by building trustworthy systems out of untrustworthy parts?

It sounds ridiculous on its face, but the Internet itself was a solution to a similar problem: a reliable network built out of unreliable parts. This was the result of decades of research. That research continues today, and it’s how we can have highly resilient distributed systems like Google’s network even though none of the individual components are particularly good. It’s also the philosophy behind much of the cybersecurity industry today: systems watching one another, looking for vulnerabilities and signs of attack.

It seems that supply-chain attacks are constantly in the news right now. That’s good. They’ve been a serious problem for a long time, and we need to take the threat seriously. For further reading, I strongly recommend this Atlantic Council report from last summer: “Breaking trust: Shades of crisis across an insecure software supply chain.“

Presidential Cybersecurity and Pelotons

2021-02-05 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/02/presidential-cybersecurity-and-pelotons.html

President Biden wants his Peloton in the White House. For those who have missed the hype, it’s an Internet-connected stationary bicycle. It has a screen, a camera, and a microphone. You can take live classes online, work out with your friends, or join the exercise social network. And all of that is a security risk, especially if you are the president of the United States.

Any computer brings with it the risk of hacking. This is true of our computers and phones, and it’s also true about all of the Internet-of-Things devices that are increasingly part of our lives. These large and small appliances, cars, medical devices, toys and — yes — exercise machines are all computers at their core, and they’re all just as vulnerable. Presidents face special risks when it comes to the IoT, but Biden has the NSA to help him handle them.

Not everyone is so lucky, and the rest of us need something more structural.

US presidents have long tussled with their security advisers over tech. The NSA often customizes devices, but that means eliminating features. In 2010, President Barack Obama complained that his presidential BlackBerry device was “no fun” because only ten people were allowed to contact him on it. In 2013, security prevented him from getting an iPhone. When he finally got an upgrade to his BlackBerry in 2016, he complained that his new “secure” phone couldn’t take pictures, send texts, or play music. His “hardened” iPad to read daily intelligence briefings was presumably similarly handicapped. We don’t know what the NSA did to these devices, but they certainly modified the software and physically removed the cameras and microphones — and possibly the wireless Internet connection.

President Donald Trump resisted efforts to secure his phones. We don’t know the details, only that they were regularly replaced, with the government effectively treating them as burner phones.

The risks are serious. We know that the Russians and the Chinese were eavesdropping on Trump’s phones. Hackers can remotely turn on microphones and cameras, listening in on conversations. They can grab copies of any documents on the device. They can also use those devices to further infiltrate government networks, maybe even jumping onto classified networks that the devices connect to. If the devices have physical capabilities, those can be hacked as well. In 2007, the wireless features of Vice President Richard B. Cheney’s pacemaker were disabled out of fears that it could be hacked to assassinate him. In 1999, the NSA banned Furbies from its offices, mistakenly believing that they could listen and learn.

Physically removing features and components works, but the results are increasingly unacceptable. The NSA could take Biden’s Peloton and rip out the camera, microphone, and Internet connection, and that would make it secure — but then it would just be a normal (albeit expensive) stationary bike. Maybe Biden wouldn’t accept that, and he’d demand that the NSA do even more work to customize and secure the Peloton part of the bicycle. Maybe Biden’s security agents could isolate his Peloton in a specially shielded room where it couldn’t infect other computers, and warn him not to discuss national security in its presence.

This might work, but it certainly doesn’t scale. As president, Biden can direct substantial resources to solving his cybersecurity problems. The real issue is what everyone else should do. The president of the United States is a singular espionage target, but so are members of his staff and other administration officials.

Members of Congress are targets, as are governors and mayors, police officers and judges, CEOs and directors of human rights organizations, nuclear power plant operators, and election officials. All of these people have smartphones, tablets, and laptops. Many have Internet-connected cars and appliances, vacuums, bikes, and doorbells. Every one of those devices is a potential security risk, and all of those people are potential national security targets. But none of those people will get their Internet-connected devices customized by the NSA.

That is the real cybersecurity issue. Internet connectivity brings with it features we like. In our cars, it means real-time navigation, entertainment options, automatic diagnostics, and more. In a Peloton, it means everything that makes it more than a stationary bike. In a pacemaker, it means continuous monitoring by your doctor — and possibly your life saved as a result. In an iPhone or iPad, it means…well, everything. We can search for older, non-networked versions of some of these devices, or the NSA can disable connectivity for the privileged few of us. But the result is the same: in Obama’s words, “no fun.”

And unconnected options are increasingly hard to find. In 2016, I tried to find a new car that didn’t come with Internet connectivity, but I had to give up: there were no options to omit that in the class of car I wanted. Similarly, it’s getting harder to find major appliances without a wireless connection. As the price of connectivity continues to drop, more and more things will only be available Internet-enabled.

Internet security is national security — not because the president is personally vulnerable but because we are all part of a single network. Depending on who we are and what we do, we will make different trade-offs between security and fun. But we all deserve better options.

Regulations that force manufacturers to provide better security for all of us are the only way to do that. We need minimum security standards for computers of all kinds. We need transparency laws that give all of us, from the president on down, sufficient information to make our own security trade-offs. And we need liability laws that hold companies liable when they misrepresent the security of their products and services.

I’m not worried about Biden. He and his staff will figure out how to balance his exercise needs with the national security needs of the country. Sometimes the solutions are weirdly customized, such as the anti-eavesdropping tent that Obama used while traveling. I am much more worried about the political activists, journalists, human rights workers, and oppressed minorities around the world who don’t have the money or expertise to secure their technology, or the information that would give them the ability to make informed decisions on which technologies to choose.

This essay previously appeared in the Washington Post.

Georgia’s Ballot-Marking Devices

2021-02-01 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/02/georgias-ballot-marking-devices.html

Andrew Appel discusses Georgia’s voting machines, how the paper ballots facilitated a recount, and the problem with automatic ballot-marking devices:

Suppose the polling-place optical scanners had been hacked (enough to change the outcome). Then this would have been detected in the audit, and (in principle) Georgia would have been able to recover by doing a full recount. That’s what we mean when we say optical-scan voting machines have “strong software independence”you can obtain a trustworthy result even if you’re not sure about the software in the machine on election day.

If Georgia had still been using the paperless touchscreen DRE voting machines that they used from 2003 to 2019, then there would have been no paper ballots to recount, and no way to disprove the allegations that the election was hacked. That would have been a nightmare scenario. I’ll bet that Secretary of State Raffensperger now appreciates why the Federal Court forced him to stop using those DRE machines (Curling v. Raffensperger, Case 1:17-cv-02989-AT Document 579).

I have long advocated voter-verifiable paper ballots, and this is an example of why.

Russia’s SolarWinds Attack and Software Security

2021-01-08 Bruce Schneier

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/01/russias-solarwinds-attack-and-software-security.html

The information that is emerging about Russia’s extensive cyberintelligence operation against the United States and other countries should be increasingly alarming to the public. The magnitude of the hacking, now believed to have affected more than 250 federal agencies and businesses — primarily through a malicious update of the SolarWinds network management software — may have slipped under most people’s radar during the holiday season, but its implications are stunning.

According to a Washington Post report, this is a massive intelligence coup by Russia’s foreign intelligence service (SVR). And a massive security failure on the part of the United States is also to blame. Our insecure Internet infrastructure has become a critical national security risk — one that we need to take seriously and spend money to reduce.

President-elect Joe Biden’s initial response spoke of retaliation, but there really isn’t much the United States can do beyond what it already does. Cyberespionage is business as usual among countries and governments, and the United States is aggressively offensive in this regard. We benefit from the lack of norms in this area and are unlikely to push back too hard because we don’t want to limit our own offensive actions.

Biden took a more realistic tone last week when he spoke of the need to improve US defenses. The initial focus will likely be on how to clean the hackers out of our networks, why the National Security Agency and US Cyber Command failed to detect this intrusion and whether the 2-year-old Cybersecurity and Infrastructure Security Agency has the resources necessary to defend the United States against attacks of this caliber. These are important discussions to have, but we also need to address the economic incentives that led to SolarWinds being breached and how that insecure software ended up in so many critical US government networks.

Software has become incredibly complicated. Most of us almost don’t know all of the software running on our laptops and what it’s doing. We don’t know where it’s connecting to on the Internet — not even which countries it’s connecting to — and what data it’s sending. We typically don’t know what third party libraries are in the software we install. We don’t know what software any of our cloud services are running. And we’re rarely alone in our ignorance. Finding all of this out is incredibly difficult.

This is even more true for software that runs our large government networks, or even the Internet backbone. Government software comes from large companies, small suppliers, open source projects and everything in between. Obscure software packages can have hidden vulnerabilities that affect the security of these networks, and sometimes the entire Internet. Russia’s SVR leveraged one of those vulnerabilities when it gained access to SolarWinds’ update server, tricking thousands of customers into downloading a malicious software update that gave the Russians access to those networks.

The fundamental problem is one of economic incentives. The market rewards quick development of products. It rewards new features. It rewards spying on customers and users: collecting and selling individual data. The market does not reward security, safety or transparency. It doesn’t reward reliability past a bare minimum, and it doesn’t reward resilience at all.

This is what happened at SolarWinds. A New York Times report noted the company ignored basic security practices. It moved software development to Eastern Europe, where Russia has more influence and could potentially subvert programmers, because it’s cheaper.

Short-term profit was seemingly prioritized over product security.

Companies have the right to make decisions like this. The real question is why the US government bought such shoddy software for its critical networks. This is a problem that Biden can fix, and he needs to do so immediately.

The United States needs to improve government software procurement. Software is now critical to national security. Any system for acquiring software needs to evaluate the security of the software and the security practices of the company, in detail, to ensure they are sufficient to meet the security needs of the network they’re being installed in. Procurement contracts need to include security controls of the software development process. They need security attestations on the part of the vendors, with substantial penalties for misrepresentation or failure to comply. The government needs detailed best practices for government and other companies.

Some of the groundwork for an approach like this has already been laid by the federal government, which has sponsored the development of a “Software Bill of Materials” that would set out a process for software makers to identify the components used to assemble their software.

This scrutiny can’t end with purchase. These security requirements need to be monitored throughout the software’s life cycle, along with what software is being used in government networks.

None of this is cheap, and we should be prepared to pay substantially more for secure software. But there’s a benefit to these practices. If the government evaluations are public, along with the list of companies that meet them, all network buyers can benefit from them. The US government acting purely in the realm of procurement can improve the security of nongovernmental networks worldwide.

This is important, but it isn’t enough. We need to set minimum safety and security standards for all software: from the code in that Internet of Things appliance you just bought to the code running our critical national infrastructure. It’s all one network, and a vulnerability in your refrigerator’s software can be used to attack the national power grid.

The IOT Cybersecurity Improvement Act, signed into law last month, is a start in this direction.

The Biden administration should prioritize minimum security standards for all software sold in the United States, not just to the government but to everyone. Long gone are the days when we can let the software industry decide how much emphasis to place on security. Software security is now a matter of personal safety: whether it’s ensuring your car isn’t hacked over the Internet or that the national power grid isn’t hacked by the Russians.

This regulation is the only way to force companies to provide safety and security features for customers — just as legislation was necessary to mandate food safety measures and require auto manufacturers to install life-saving features such as seat belts and air bags. Smart regulations that incentivize innovation create a market for security features. And they improve security for everyone.

It’s true that creating software in this sort of regulatory environment is more expensive. But if we truly value our personal and national security, we need to be prepared to pay for it.

The truth is that we’re already paying for it. Today, software companies increase their profits by secretly pushing risk onto their customers. We pay the cost of insecure personal computers, just as the government is now paying the cost to clean up after the SolarWinds hack. Fixing this requires both transparency and regulation. And while the industry will resist both, they are essential for national security in our increasingly computer-dependent worlds.

This essay previously appeared on CNN.com.

Noise