W32/Xpaj Botnet Growing Rapidly

Two weeks ago I blogged about a new virus–W32/Xpaj–found in the wild by McAfee researchers and actively spreading around the world. Since then we have closely monitored the change in spread and severity of the virus, improved generic detection for future W32/Xpaj instances, and added cleaning and proper repair for all the files infected by the virus. Today I want to share more news related to this threat.

Further analysis has revealed some interesting details about the malicious behavior of W32/Xpaj. The Virus is building a widespread “zombie” network, by taking control thousands of Internet-connected computers. The new botnet is in its infancy, although thousands of machines have been infected during last two weeks. The botnet infects computers around the world and has spread across many countries. The attacks are mostly aimed at enterprises, but they have now spread to consumer machines as well. Based on multiple characteristics and our own research, the virus is most probably the work of eastern European cybercriminals.

Most bots are connected to a central location from where one machine can control the entire botnet. W32/Xpaj, on the other hand, deploys several control channels to communicate and control its bots. It employs the same techniques used by Srizbi and Conficker; that is, it uses randomly generated DNS names for backup control servers. Even though W32/Xpaj does not know where the control server is, it knows how to search for it, making it possible to predict which host is in use on a given day.

To prevent botnet hijacking, W32/Xpaj accepts only digitally signed payloads and commands. Malware authors use a cryptographic hash (MD5 algorithm) to validate the authenticity of any payload received from the control server).

Our analysis has not revealed any cryptology system to protect the payload, thus there is a chance for a rival to take control of the entire botnet.

The W32/Xpaj variants we analyzed use a sophisticated domain-generation algorithm to create and query the list of random domains starting on September 24. The virus first tries to resolve the domain name to an IP address. If that succeeds, it sends an HTTP request in the form of a string:

/GET /up.php?a=g2&cm=15A91F71

The malicious host responds with the path to a binary containing further instructions and code to be executed:

http://[infected]/stamm/stamm.dat

http://[infected]/plugin/plugin.dat

The first binary containing malicious instruction has already been received by all W32/Xpaj-infected machines. The virus stores the downloaded encrypted binary in the Windows folder. After decryption, the malicious code executes and instructs the virus to gather information about the infected machine and report to the server, sending the victim’s IP address, machine name, host process, registry records, current home page, and even fonts and path variables.

Every time an infected machine receives a payload and executes malicious code, a marker (a file with a random name) is created in the Windows folder, preventing the virus from executing the same payload twice.

Botnets grow and evolve quickly. We measure them by the number of compromised computers under their control. However, proactive virus detection and following these simple recommendations will help prevent your computer from becoming a part of a botnet:

• Keep your anti-virus software up to date
• Apply all the latest security patches and keep your operating system up to date
• Set up a firewall to block unauthorized access while you are connected to the Internet. Use strict firewall policies and allow only those connections–both incoming and outgoing–that are absolutely necessary for your business.

Although many security vendors struggled to release new signatures and cleaning support for this virus, McAfee customers are already protected. You will hear a lot more from us in the coming months, so stay tuned and keep reading our blogs.

Thanks to Abhishek Karnik, Rachit Mathur, Di Tian, Ivan Teblin, and Adrian Dunbar for their help in analyzing and defeating this threat.