Global phone firm Gemalto confirms likely GCHQ/NSA attacks

News by Tim Ring

European SIM card supplier Gemalto, which supplies billions of phone cards and services to operators like Vodafone and Verizon, has confirmed it was "probably" hacked by spies from GCHQ and America's NSA.

Gemalto, based in France and registered in The Netherlands, launched an urgent investigation last week into press reports of the attacks, dating back to 2010 and 2011. It has now confirmed it detected two “particularly sophisticated intrusions that give us reasonable grounds to believe that an operation by NSA and GCHQ probably happened”.

Gemalto admits the hackers were trying to steal its SIM card encryption keys and has railed against such “indiscriminate operations against private companies with no grounds for suspicion”.

But it insists the attacks “only breached its office networks and could not have resulted in a massive theft of SIM encryption keys”.

The hacks were revealed last week by ‘The Intercept' news site, based on documents from whistleblower Edward Snowden. It said GCHQ and the NSA mounted the attacks so they could eavesdrop on mobile phone calls made via operators in Afghanistan, Yemen, India, Serbia, Iran, Iceland, Somalia, Pakistan and Tajikistan, as reported by SC.

The Intercept says Gemalto was a prime target of a secret joint GCHQ/NSA team tasked with exploiting vulnerabilities in mobile phones, who stole private encryption keys that enabled them to potentially monitor a "large portion of the world's cellular communications".

Gemalto is one of the world's biggest SIM suppliers with clients including Vodafone, Verizon, AT&T, T-Mobile and Sprint, as well as around 450 wireless network providers worldwide.

In its statement this week, the company detailed how it suffered numerous cyber-attacks in 2010 and 2011, including two “sophisticated” intrusions:

“In June 2010, we noticed suspicious activity in one of our French sites where a third-party was trying to spy on the office network used by employees to communicate with each other and the outside world,” Gemalto said.

“In July 2010, a second incident identified by our security team involved fake emails sent to one of our mobile operator customers, spoofing legitimate Gemalto email addresses, which contained an attachment that could download malicious code.”

The company added: “During the same period, we also detected several attempts to access the PCs of employees who had regular contact with customers.

“At the time we were unable to identify the perpetrators but we now think that they could be related to the NSA and GCHQ operation.”

Gemalto insists “no breaches” were found in the networks running its SIM activity, nor its banking card, ID card or electronic passport products.

“Each of these networks is isolated from one another,” it said, describing its network architecture as “like a cross between an onion and an orange - it has multiple layers and segments which help to cluster and isolate data”.

But Gemalto admits GCHQ and NSA could – as The Intercept claims – have obtained multiple encryption keys by intercepting communications between itself (and other SIM card suppliers) and mobile operators.

It said: “The risk of the data being intercepted as it was shared with our customers was greatly reduced with the highly secure exchange processes that we had put in place well before 2010.”

However: “In 2010 these data transmission methods were not universally used, and certain operators and suppliers had opted not to use them.

“We can confirm that the transmission of data between Pakistani operators and Gemalto used the highly secure exchange process at that time” – explaining why The Intercept documents show the spies “failed to produce results against Pakistani networks”.

Gemalto says only 2G phones are vulnerable to the attacks mounted, so users of 3G and 4G should be secure. But it accepts many mobile operators in the countries targeted were still using 2G networks in 2010 and 2011.

Gemalto has vowed to “work even closer with our customers and the industry to build even more sophisticated solutions” in the face of the attacks, raising questions over the “indiscriminate” data interception methods used by GCHQ and NSA.

But UK cyber-security expert and author David Lacey has defended their approach, telling “A lot of people would be expecting intelligence services to be using their capability to gather data which will help them with counter-terrorist operations. It's hard to see how you can complain as long as the data is not misused, for prying on people or upsetting the commercial marketplace.

“The benefit to national security seems to outweigh the very small risk of misuse of the data. The risk of a major terrorist incident is much scarier than the risk of misuse, and we haven't seen any evidence that lots of people are using data outside of the purposes for which it was gathered.”

Meanwhile, privacy expert Rafael Laguna, CEO of open-source software company Open-Xchange, said the nature of the attacks raises questions over how systems are secured and data encrypted.

He told SC via email: “The Gemalto breach, and to a certain extent the recent Lenovo/Superfish issue, calls into question the ongoing feasibility of the central certification authority model for maintaining secure systems.

“Can we really afford to have central, single points of failure for such important cryptography algorithms?”

Laguna said the breaches show that “some certification authorities perhaps shouldn't have been trusted in the first place due to questionable business practices. Others, in this case Gemalto, are unable to adequately protect sensitive data, resulting in further loss of trust.

“Rather than relying on these central authorities, the industry should look to implement distributed and federated certification models, removing the central point of failure altogether.

“Bitcoin is probably the most recent example of how such a decentralised system could work, and although imperfect, through co-operation users can ensure the security of the system, and don't have to put blind trust into any one institution.”

Lacey commented on the sophistication of GCHQ and NSA's methods: “If they're just discovering an attack from 2011 then you have to wonder what's going on today.”

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