Microsoft: Kelihos Ring Sold 'Botnet-As-A-Service'

Windows 8 Visual Tour: Microsoft's New Desktop

A Czech-based malware ring was so sophisticated it was able to sell time and space on its network of rogue computers to third parties in exchange for cash and other compensation, Microsoft charged in what may be a groundbreaking lawsuit against the group's organizers.

"The Kelihos Botnet operators sell botnet capacity as a service, including the capability of sending spam email to perpetuate fraud, to collect financial and personal data, and to distribute harmful and malicious software," Microsoft alleged in court papers filed in U.S. District Court for Eastern Virginia.

Microsoft filed the suit against Dominique Alexander Piatti, a Czech resident that the company believes was behind the Kelihos botnet, which infected more than 40,000 Windows computers with code that used the PCs to further disseminate malware, scareware, spam, and other nefarious files. The suit also names dotFREE Group S.R.O., a company Microsoft believes is controlled by Piatti, as well as a number of John Does, as defendants.

Microsoft did not identify the third parties it believes paid to use the Kelihos botnet, but noted in the Sept. 22 court filing that, "Botnets are often created and controlled by sophisticated criminal organizations." Microsoft is seeking unspecified damages from Piatti and his alleged co-conspirators.

[ Microsot soon will introduce a fast new PC operating system. Windows 8 Promises 8-Second Boot Ups ]

According to the suit, Piatti spread the Kelihos botnet, which is also known as Waledac 2.0, through a domain called cz.cc, and through 20 related .com domains. The botnet travelled from a "command and control" computer controlled by Piatti, to router PCs and then, ultimately, "spammer" PCs that distributed the bot through the Internet, Microsoft alleges.

A PC would become a Kelihos zombie (a computer that is corralled into a botnet network to further spread malware without the user's knowledge or permission), if the user opened email or visited a Web site infected with Kelihos' malicious code, Microsoft claimed.

"The spread of the Kelihos Botnet in this way is not related to any vulnerability in Microsoft's systems, but it is instead achieved by misleading unwitting users into taking steps that result in the infection of their machines," Microsoft said in court papers.

Microsoft said its lawsuit represents the first time a botnet distributor has been identified by name in a civil court action. "Naming defendants in this case marks a big step forward for Microsoft in making good on its commitment to aggressively protect its platform and customers against abuse from whomever and wherever it may originate," a company attorney said in a statement.

Last week, the software maker obtained a court order that required cz.cc's U.S. hosts and Internet providers, which include Verisign, AT&T, and Charter Communications, to sever the domain's link to infected computers. Piatti has yet to file a formal response to Microsoft's allegations.

Security professionals often view compliance as a burden, but it doesn't have to be that way. In this report, we show the security team how to partner with the compliance pros. Download the report here. (Free registration required.)