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* Most complex piece of malicious software yet found

* Speculation may grow over countries wielding cyber weapons

* Virus targeted mainly in Middle East

By Jim Finkle

BOSTON, May 28 (Reuters) – Security experts have discovered

a highly sophisticated computer virus in Iran and the Middle

East that they believe was deployed at least five years ago to

engage in state-sponsored cyber espionage.

Evidence suggest that the virus, dubbed Flame, may have been

built on behalf of the same nation or nations that commissioned

the Stuxnet worm that attacked Iran’s nuclear program in 2010,

according to Kaspersky Lab, the Russian cyber security software

maker that claimed responsibility for discovering the virus.

Kaspersky researchers said on Monday they have yet to

determine whether Flame had a specific mission like Stuxnet, and

declined to say who they think built it.

Iran has accused the United States and Israel of deploying

Stuxnet.

Cyber security experts said the discovery provides new

evidence to the public to show what experts privy to classified

information have long known: that nations have been using pieces

of malicious computer code as weapons to promote their security

interests for several years.

“This is one of many, many campaigns that happen all the

time and never make it into the public domain,” said Alexander

Klimburg, a cyber security expert at the Austrian Institute for

International Affairs.

A cyber security agency in Iran said on its website on

Monday that Flame bore a “close relation” to Stuxnet, the

notorious computer worm that attacked that country’s nuclear

program in 2010 and is the first publicly known example of a

cyber weapon.

Iran’s National Computer Emergency Response Team also said

Flame might be linked to recent cyber attacks that officials in

Tehran have said were responsible for massive data losses on

some Iranian computer systems.

Kaspersky Lab said it discovered Flame after a U.N.

telecommunications agency asked it to analyze data on malicious

software across the Middle East in search of the data-wiping

virus reported by Iran.

STUXNET CONNECTION

Experts at Kaspersky Lab and Hungary’s Laboratory of

Cryptography and System Security who have spent weeks studying

Flame said they have yet to find any evidence that it can attack

infrastructure, delete data or inflict other physical damage.

Yet they said they are in the early stages of their

investigations and that they may discover other purposes beyond

data theft. It took researchers months to determine the key

mysteries behind Stuxnet, including the purpose of modules used

to attack a uranium enrichment facility at Natanz, Iran.

“Their initial research suggest that this was probably

written by the authors of Stuxnet for covert intelligence

collection,” said John Bumgarner, a cyber warfare expert with

the non-profit U.S. Cyber Consequences Unit think tank.

Flame appears poised to go down in history as the third

major cyber weapon uncovered after Stuxnet and its data-stealing

cousin Duqu, named after the Star Wars villain.

The Moscow-based company is controlled by Russian malware

researcher Eugene Kaspersky. It gained notoriety in cyber

weapons research after solving several mysteries surrounding

Stuxnet and Duqu.

Their research shows the largest number of infected machines

are in Iran, followed by Israel and the Palestinian territories,

then Sudan and Syria.

The virus contains about 20 times as much code as Stuxnet,

which caused centrifuges to fail at the Iranian enrichment

facility it attacked. It has about 100 times as much code as a

typical virus designed to steal financial information, said

Kaspersky Lab senior researcher Roel Schouwenberg.

GATHERING DATA

Flame can gather data files, remotely change settings on

computers, turn on PC microphones to record conversations, take

screen shots and log instant messaging chats.

Kaspersky Lab said Flame and Stuxnet appear to infect

machines by exploiting the same flaw in the Windows operating

system and that both viruses employ a similar way of spreading.

That means the teams that built Stuxnet and Duqu might have

had access to the same technology as the team that built Flame,

Schouwenberg said.

He said that a nation state would have the capability to

build such a sophisticated tool, but declined to comment on

which countries might do so.

The question of who built flame is sure to become a hot

topic in the security community as well as the diplomatic world.

There is some controversy over who was behind Stuxnet and

Duqu.

Some experts suspect the United States and Israel, a view

that was laid out in a January 2011 New York Times report that

said it came from a joint program begun around 2004 to undermine

what they say are Iran’s efforts to build a bomb. That article

said the program was originally authorized by U.S. President

George W. Bush, and then accelerated by his successor, Barack

Obama.

A U.S. Defense Department spokesman, David Oten, declined to

comment on Flame on Monday, saying it may take “some time”

because of the U.S. Memorial Day holiday.

The CIA, the State Department, the National Security Agency,

and the U.S. Cyber Command declined to comment.

Hungarian researcher Boldizsar Bencsath, whose Laboratory of

Cryptography and Systems Security first discovered Duqu, said

his analysis shows that Flame may have been active for at least

five years and perhaps eight years or more.

“The scary thing for me is: if this is what they were

capable of five years ago, I can only think what they are

developing now,” Mohan Koo, managing director of British-based

Dtex Systems cyber security company.

Mikko Hypponen, chief research officer for anti-virus

software maker F-Secure of Finland, described Flame as the

latest of high-profile viruses that show makers of anti-virus

software need to improve their performance.

“Stuxnet, Duqu and Flame are all examples where we – the

anti-virus industry – have dramatically failed,” he said. “All

of these cases were spreading undetected for extended periods of

time … Yet, anti-virus products failed to protect users

against these attacks.”