YouSaid · the spoken record

Thomas Rid

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66

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2020-07-18

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2020-07-18

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Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

1. “So basically, if we think about sort of former Soviet Union states there are very well known for the more technical aspects of cybercrime. So these are primarily the cyber criminals from here are the ones who are responsible for actually coding the malware for really developing a lot of the products that get sold in the underground. So that's in some sense what they're known for. And if we look at the opposite end of that spectrum, if we think about the west and places like the US or the UK, I think what the West is known for is cash out experts. So these are people who are primarily responsible for converting the sort of virtual gains into monetary or physical ones. And we see a kind of natural partnership between the sort of supply end, which is the sort of technical actors in the East with those who are actually turning this into meaningful profit in the West. And we see a whole range of other activities in between, a whole bunch of different types of fraud. Everyone's familiar with Nigerian types of fraud from the emails, which have a very long history.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

2. “When you talk about this kind of specialization, let's actually break that down. So, do you mean both specialization in terms of roles or like in terms of sectors or both? What does that specialization look like?”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

3. “And then you started to see people spin out of the Zeus program, and you had this kind of fracturing of that market, right? So, you know, it's just like the normal technology industry. It's under the same pressures and it developed in much the same way.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

4. “And as these became more professionalized, right, they started to come under the same pressures that technology companies have today. So it's how do you find a PhP developer that's really good at writing code, right? Recruiting. It takes six months, right? Yeah. Oh, how fast. And you're dealing with these highly specialized, super talented folks who, much like in the valley, they get to a point in an organization and they branch off and do their own thing, right? So the first big malware that kind of got deployed to steal banking credentials was Zeus.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

5. “But in some way, that's not that different from a mafia because mafia group structures people often think of many, many members, but in a lot of cases actually a number of these people are not formal members of the organization. They're people doing criminal activity under the protection of the mafia.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Yeah. So you see this with malware groups that generally the eight to ten is probably going to be the largest size involved in kind of malware operation of writing the code and dealing with the code because it becomes quite difficult to actually sustain the group structure. So that's the kind of online element. The offline element is interesting because this allows some of these firms and businesses to scale up in size. And in some cases we see people operating out of physical office space. And they really begin to look like technology companies. And actually they are technology companies. They're just criminal ones. And so that's only possible in jurisdictions where either they're operating in a kind of gray zone in terms of what the laws are around what they're doing or they're operating in a gray zone because there's not such strong enforcement either due to a lack of capacity or because there's some other thing going on in terms of an arrangement they have of protection or other things like this. When we start to think about the large organizations and that's when you can see potentially thousands of members of a particular marketplace.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Bigger the group, and then you know you don't know if people are going to be running off with money, running off with code, all sorts of things. You might also have a problem just with getting people to do their jobs within the firm.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

8. “The complications really come into the criminality involved, which is obviously as much as they want to operate in a very business-like function, they're still going to be in some sense an extra tax on top of them, which is law enforcement interest. And so this in some ways limits how businesslike they can get. So you really see two kind of approaches. One is online structures, which are usually limited in size, because even when you develop various mechanisms to try and help trust each other, there's still going to be a kind of a limit to how far you can probably get in terms of group size because you ultimately don't really know who you're doing business with.”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

9. “Absolutely. So they would hack each other's websites. They would sell exploit code. There was all sorts of shenanigans that they were doing to each other. Basically, these guys would inform on each other, right? So they were just as unscrupulous with each other as they were with themselves, but they built those trust relationships and how they built that network, right? And I think The really interesting thing from my perspective is that we're going through a rapid decentralization of everything because of technology and society. And essentially this is the quintessential Byzantine general's problem, right? It's like the how do you trust all these people will act in a coordinated way and how do you posit that sort of activity and these folks came up with very interesting ways to work through that problem?”

   2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

10. “The way that we were looking at it back then was that this was essentially a regulatory arbitrage, right? It was there are these disciplines and practices that you could apply in places where these activities weren't necessarily illegal. And so you saw the proliferation of these syndicates in places where law enforcement wouldn't pursue them and they had the ability to operate freely. And that was a pretty interesting development in terms of as they became more sort of coalesced around certain networks and entities that were operating, they actually started to target each other.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

11. “Yeah, I mean, they're sophisticated in the sense that they're sophisticated for crime, but actually they're quite similar to what we see in other types of business. In fact, what we're seeing is the application of traditional business principles from conventional life. So one, we have the marketplace. This is where we have many, many different actors trading. And that, even at this point, you can still have lone wolves involved in some way, trading within a market. But the operational structures is another interesting aspect of this, which is basically people coming together not just to trade, but to actually work together. And in some cases, these groups look a lot like firms, whether it's a venture capitalist firm, whether it's people selling various products. For criminals, actually and for cyber criminals, they're also employing a similar structure, which is have a team of people. Some have different skill sets from each other. There's usually someone with some organizational capability, and they're going to perform the role of a business because that's how they can maximize their profits as well by bringing people together in a kind of unified endeavor.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

12. “Planet was the first marketplace where things really started to take off. And if we're looking for that kind of shift, at least in a symbolic way, that's probably the case where it happened because you started to see for the first time this sort of large-scale trade in, say, stone, credit card data and other products and services. But you also started to see a drawing together of a community of people. People on network, a fairly sophisticated actors throughout Eastern Europe and also other parts of the world who had started to bring a real sort of technical knowledge and ability and a real sophistication to what they were doing in business terms. And you see a very sort of important drawing on the sort of local technical talent and the local business brains as well.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Absolutely, right? So they would essentially have these large chat rooms either on IRC or of various other marketplaces that they would build. And they would just coordinate with each other and they'd say, for example, that they had 20,000 credit card numbers. They'd post a few to validate that you could prove that they were actually having those numbers. And then there would be sort of a negotiation in plain sight for the transfer of this information.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

14. “Right around nineteen ninety nine, 2000, there was just a rapid, rapid commercialization of cybercrime. You could go on to online chat rooms and just see people's personal information scale by tens of thousands of credit card numbers scaling by and starting to see kind of the formation of the marketplace. And that was really just kind of a pivotal moment where it became really obvious that it was no longer the hunt for the wily hacker. It was becoming big business.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

15. “Exactly. See, there wasn't really a reason to be a profit driven cyber criminal. But once we start to see those targets emerging and that value to be had, that's when we begin to get the higher levels of sophistication, the high levels of organization. And the reason for that basically is once you have that value there, you need people who can maximize profit. And you need people who begin to specialize in different areas of the business, who can help each other out. And it suddenly becomes much more profitable to be part of sometimes a group of people who have different skill sets or to be in a marketplace that people can offer different things of value.”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source

16. “The shift from the lone hacker to the highly organized industry is really one that's taken place over quite a long period of time. I mean, this is something that actually wasn't criminal to begin with, really. When it started to become a little bit more of a criminal activity, that's when we started to see people operating in this kind of lone wolf capacity and causing trouble, you know, sometimes in small groups, but largely just as individuals, when we start to see something that's far more structured, organized, and profit driven, really begins to occur mostly in the nineties, because this is the period that we're starting to put things of value online. So until we have the actual targets there that make it worth people's time to go after them,”

    2020-07-18 · a16z Podcast · Cybercrime, Incorporated · IDENTIFIED FROM THE TRANSCRIPT · source