Private Military Corporation Groom Lake: Web3’s Most Feared Hacker Hunter

Groom Lake Founder and CEO Fernando Reyes Jr., known in crypto circles as “FDR”, has been called the “scariest man on-chain”, and for sophisticated hackers and cyber-crime groups going after high-profile protocols and VIPs, it’s probably not too far from the truth.

In essence, FDR’s company functions similar to an elite unit like the Delta Force in the realm of cryptocurrency security. If you attempt a hack and your target seeks their assistance, be prepared for immediate retaliation. This team boasts ex-US military and intelligence personnel specialized in offensive security, forensic investigation, and psychological warfare. They can rapidly deploy these skills almost anywhere worldwide within 24 hours. So, just one mistake could lead to a swift and powerful response from them.

As a researcher focusing on cybersecurity, I delve into strategies that put digital intruders, ranging from lone operators to state-sponsored groups, in a precarious position from the start. By leveraging cutting-edge military knowledge and unyielding tenacity, it’s likely you’ll find yourself facing an intimidating squad of law enforcement officers, who will apprehend you, disarm you, and seize your illicit earnings, all before you have a chance to convert them into legitimate funds.

In other words, we had a conversation with this individual, and he shared the reasons that, as a hacker, it’s not something you’d want chasing after you…

1: Groom Lake describes itself as the “private military corporation” for Web3, which suggests that your company operates in a way that’s comparable to the military. But why do Web3 companies/protocols/investors need military-grade security?

Groom Lake serves as both an offensive and defensive mechanism, ready to deal firmly with potential cyber threats or attacks. The usual culprit behind these incidents can be either an insider or a state-sponsored group, such as the Lazarus Group, which represents a significant threat from external actors.

In our recent operation, codenamed Ural Spectre, we discovered a sophisticated cyber threat group, known as Lazarus, operating from the Russian Far East. By employing on-chain forensics and open-source intelligence (OSINT), we were able to unmask their strategies and take appropriate countermeasures. This group took advantage of VPN misconfigurations and used wallets subject to OFAC sanctions to clean their assets – a fact that underscores the primary motivation behind North Korean state actors carrying out crypto hacks despite increasing sanctions and limitations in accessing the global financial system.

Historically, it’s evident that these attacks aren’t standalone incidents but rather a rising pattern of state-level entities focusing on protocols, exchanges, and wealthy individuals. As the market experiences a bull phase, financial motivations for these groups intensify, making their targets more significant. Interestingly, data analysis shows a direct link between highly volatile, bustling markets and the amount of assets vulnerable to nation-state threats.

When Groom Lake ensures military-grade protection, it implies that to combat such threats, you must match or exceed these levels of capability. This requires sophisticated intelligence, swift reaction times, and proactive security strategies – tactics we’ve demonstrated through our experience at the NSA or Army Cyber Command, capable of countering groups similar to Lazarus.

2: How likely is it that one of your average customers is going to face some kind of critical security threat?

It’s extremely probable due to the fact that the emphasis on security in Web3 has primarily revolved around smart contract risks, with solutions traditionally being static, one-time offerings like audits. This often leads people to abandon hope when these audits fail to detect crucial vulnerabilities, and they consider further recovery and investigation as a task for slow-moving authorities in law enforcement.

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It’s very likely due to the historical focus on security in Web3 being mainly on smart contract risks, with solutions often being static, one-time solutions like audits. This can lead individuals to give up when these audits fail to uncover critical vulnerabilities, and they may perceive further recovery and investigation as a task for slow-moving bureaucrats in law enforcement.

In essence, customers encounter risks from various directions such as phishing, SIM swaps, internal threats, and common smart contract vulnerabilities. Therefore, it’s crucial for protocols to address both ends of the security spectrum: traditional safety measures and secure smart contracts. Groom Lake has taken a leading role in this by introducing solutions like Drosera.

3: Your presentation repeatedly emphasizes the need for a plan of action and rapid speed when responding to security incidents, and it claims you can have an operative on the ground, anywhere in the world in 48 hours or less. Why is this so important, and what kind of impact does this speedy response have on the success of your investigations, compared to just rolling up a few days later?

In our usual routine, we work with 24 hours, but 48 hours can seem quite lengthy. Time is crucial in incident response, as delaying actions could lead to irreversible fund loss or additional damage. This is similar to the TV show “The First 48 Hours”, where detectives and law enforcement officers are always rushing to meet critical milestones within the initial 48 hours of a murder. The reason for this urgency lies in the fact that fresh evidence, potential mistakes by the perpetrator, and the psychological factors like pressure and surprise increase the chances of success. In essence, the strategy involves using psychological warfare, shock tactics, and the relentless pursuit as key elements to winning.

In the heart of London during Operation Hidden Forge, I spearheaded a dedicated team that collaborated with local authorities. Our mission was to track down illicit funds, identify the culprit, and monitor his activities until law enforcement could intervene. If not for the swift action taken by our client or Groom Lake, it’s hard to say what the outcome might have been, or where the perpetrator might have vanished to next.

4: In your Operation Wavefront case study, it says you used OSINT to track down a developer who had freshly minted millions of new tokens and sold them on exchanges. What kind of OSINT did you rely on? What steps were taken to identify this person, how many people were involved in this process and how long did it take?

At a glance, Groom Lake doesn’t openly share its methods (Tactics, Techniques, and Procedures) – however, by merging open-source intelligence with blockchain investigative techniques, we managed to pinpoint the developer. An incident involving a GitHub API leak exposed the culprit’s email address, which was then traced back to the main suspect’s Ethereum wallet. This email was found in public business reviews, leading us to the identity of the perpetrator. We cross-checked this information using LinkedIn and other social media platforms. On-chain analysis enabled us to track the stolen tokens as they moved between exchanges and digital wallets, ultimately constructing a comprehensive profile. Within hours of being mobilized for the task, our team drew significant conclusions and swiftly took action thereafter.

Typically, these tasks are managed strategically by personnel from our Intelligence Unit during Phase 1. As we get ready for deployment, we dispatch one main operative to the specific region. This operative subsequently liaises with secondary assets based at Groom Lake within the host country.

5: Besides catching the culprit, did you offer the project in the above case any assistance in terms of mitigating the impact of what happened (exchanges being flooded with tokens, sending the price crashing)? If so, what did you do?

In comparable situations, Groom Lake often collaborates with platforms to halt transactions, recoup funds, and prohibit additional token sales. They might also assess the effects on liquidity and suggest strategies for a project’s recovery to stabilize token prices. Essentially, their role is more about being a swift, decisive action force rather than legal or negotiating professionals per se.

6: Your case studies focus on how you have assisted protocols, but you also offer services to VIPs and whales. How different is the nature of the threats faced by VIPs and whales, and how do you protect them against these threats?

At Groom Lake, the range of potential dangers for VIPs and whales expands beyond the conventional security challenges, including targeted phishing, SIM swaps, and social engineering attacks. Fortunately, our expertise at Groom Lake is well-suited to address these issues directly. Additionally, we’ve created unique tools such as REAPER – a real-time threat intelligence feed tailored for our clients – to anticipate and mitigate these risks effectively.

7: Have you helped any whales/VIPs who were hacked before? If so, can you tell us about it?

Indeed, while the specifics are kept private, it’s known that Groom Lake has effectively retrieved valuable assets for prominent customers. This is achieved by swiftly tracking funds, partnering with various exchanges, and utilizing worldwide intelligence networks as resources. However, due to client confidentiality, only cases with explicit consent can be discussed publicly.

To put it simply, our work is centered around gathering information. We’ve assisted whales and VIPs in numerous ways, often leading to a straightforward resolution such as carrying out investigations, compiling reports for the authorities, and pinpointing the exchanges where funds are being transferred. In unique cases, we coordinate deployments with law enforcement agencies for joint operations that lead to apprehensions.

These operations demand diverse strategies, ranging from psychological tactics to gathering covert intelligence off-chain, all aimed at uncovering as much information as possible about the objective. We’ve also assisted high-profile individuals who have been subjected to threats by rivals – by unmasking the targets and helping the client navigate their situation more effectively using the obtained data.

In my professional analysis, these types of situations typically lead me to recommend that we continue our preventative measures to minimize the likelihood of a recurrence significantly.

8: What are the most beneficial security best practices that every protocol and whale should employ, and which, if any, are not really that useful?

It’s crucial to incorporate security measures right from the start in any project or platform development. Platforms such as Twitter, Discord, GitHub, Google Workspace, and others are commonly overlooked as teams prioritize development over securing existing elements. Important safety practices include using multi-factor authentication (MFA) via authenticator apps, avoiding SMS-based MFA due to the risk of SIM swapping, checking links carefully before clicking, performing routine access audits, and adhering to the principle of least privilege (POLP) to minimize “shadow IT” – unauthorized use of excessive permissions by users.

For whales, or high net worth individuals, the threat landscape varies significantly compared to typical users. Since they lack enterprise systems, these individuals’ main vulnerability lies with themselves. They often become targets for vishing (voice phishing) and conventional phishing attempts. To minimize these dangers, it’s crucial to always confirm the identity of anyone reaching out to you, as phone numbers can be falsified. If there’s any uncertainty, disconnect the call and contact the person directly again using a new call – outgoing calls are hard to spoof unless the target has undergone SIM swapping. Enhancing security measures with your mobile service provider can help reduce SIM swap risks further. Furthermore, it is recommended that whales secure their digital assets by employing MFA (Multi-Factor Authentication) through authenticator apps instead of relying on SMS methods.

Essential foundations are crucial for their purpose, and should more aid be required, Groom Lake stands ready to offer assistance in both proactive measures and crisis management.

9: Is there any kind of scenario where Groom Lake might struggle to investigate/catch the bad guys? If so, what are you trying to do to address this deficiency?

Cases that have passed the initial phase of an attack are often more complex and less likely to result in a successful resolution. This is because funds may have already been spent or diverted, the culprit may have successfully covered their tracks, or the attack could be highly anonymous or even state-sponsored. Nonetheless, Groom Lake works closely with law enforcement, international organizations such as INTERPOL, and employs specialized tools to mitigate these obstacles.

At Groom Lake, we apply the same rigorous analytical methods as in the U.S. intelligence community, primarily adhering to ICD 203 guidelines. This system was crafted post-the intelligence misjudgments concerning WMD evaluations during the 2003 Iraq War, ensuring our assessments and quick updates (rapid reports) uphold the utmost level of credibility.

Our team consists of individuals trained by the NSA, using an exceptionally stringent approach in their tasks. This results in a degree of accuracy and responsibility that exceeds the norm in many non-military organizations.

Following stringent standards akin to those used in the military, we provide security solutions tailored to tackle the intricate and diverse risks encountered within Web3 networks.

Deck:https://bit.ly/groomlakeintro

2025-01-16 17:55