New Ransomware Variant Developed Entirely as Shellcode

Researchers have discovered a new ransomware variant that they say has significantly different behavior and characteristics than most other ransomware types.

The ransomware, called PwndLocker, was found by The Crypsis Group in February during a client engagement. Subsequent analysis showed it was developed entirely as shellcode—something that malware authors have traditionally reserved for more specialized purposes.

The malware also implemented a custom encryption algorithm that the researchers discovered was potentially breakable, and in fact has already been broken. However, according to Crypsis, the malware authors can easily swap out the existing encryption algorithm with a stronger one at any time.

Matt Thaxton, senior consultant with The Crypsis Group, says PwndLocker's use of shellcode - or location-independent code - makes it a more complex and harder-to-spot ransomware variant than others. "The reason these types of code are harder for automated tools to spot is because they usually don't reside on disk and because they are often injected into other legitimate processes such as native, signed Windows-processes," he says.

Shellcode can sometimes be classified as fileless malware. But in the case of PwndLocker, it wouldn't be classified as fileless because it loads from a fake avi file, Thaxton noted.

Many exploits use shellcode to force vulnerable legitimate processes to use or to run illegitimate code. But typically malware authors have used shellcode only in secondary malware downloaders and sophisticated implants because of how complex and time-consuming it can be to create and implement such code. This is the first time, however, that ransomware has been developed using shellcode, Thaxton says.

"I'm not sure why this threat actor decided to write their ransomware in this way," he says. "My only guess would be that they wanted it to be very unique so that it is harder to spot through the usual [methods]." Also, it is possible that the malware authors wanted to be distinctive simply for the sake of differentiating from other variants.

Another noteworthy feature with PwndLocker is its use of a relatively weak custom-developed encryption algorithm rather than the more robust Windows crypto API, Thaxton notes. There's no real reason why they couldn't have just used the API like almost every other ransomware in the wild currently does, he says. "There may have been a reason for creating it this way that is yet to be determined. But at this point, it's not clear," Thaxton says.

In an alert Friday, security vendor Emsisoft said it has developed a way to decrypt files that PwndLocker might have encrypted. However, each decryptor requires customization before use. That means that victims of PwndLocker who want their files decrypted will need to send the ransomware executable that was used in the particular attack, Emsisoft said. "While the ransomware automatically deletes the executable, it is often possible to recover it using file recovery tools," the vendor said.

According to Emsisoft, PwndLocker has been observed mainly targeting business and government organizations and demanding ransom of more than $500,000. The malware has numerous variants, all of which are designed to delete shadow copies of data, which makes recovery harder.

"There is always going to be a mix of old and new ransomware variants as threat actors work to gain fast cash or put their unique stamp on an evolving threat landscape," Thaxton says. "Enterprises can't 'guess' what is going to come next."

The best approach is to adhere to best practices across the enterprise, and pay attention to end-user training within the security program, he says.

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