Lawsuit halts US bitcoin exchange partnership

A partnership that sought to make it easy for Americans and Canadians to buy the virtual currency bitcoin has dissolved into a US$75 million lawsuit.

Bitcoin startup CoinLab alleges that the largest bitcoin exchange, Mt. Gox in Tokyo, breached a November 2012 agreement that would connect the companies' IT systems for North American bitcoin purchases.

The suit, filed Thursday in U.S. District Court for the Western District of Washington, alleges Mt. Gox failed to transfer the account of North American users, including login and password information, to CoinLab. Gawker posted a copy of the lawsuit which was not yet available on online court records.

The suit also contends that despite an exclusivity agreement with CoinLab, Mt. Gox continued to court North American customers and accept new business.

CoinLab, based in Seattle, had been strangely quiet in recently weeks in regards to its Mt. Gox partnership. In late February, CoinLab said the cooperation with Mt. Gox would begin around March 22, but it didn't appear to take off.

Mt. Gox runs the largest exchange for bitcoin, which allows people to purchase the currency on an open electronic market. Mt. Gox holds a large majority of the market for bitcoin exchange services, but according to the lawsuit, has no established banking relationships in the U.S. or Canada.

CoinLab CEO Peter Vessenes wrote on a company blog that the delays caused by Mt. Gox left him apologizing to customers.

"What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse," Vessenes wrote.

Mt. Gox spokesman Gonzague Gay-Bouchery said the company's lawyers were checking into the lawsuit and did not have an immediate comment.

"We will update people shortly on this," he wrote in an email.

Mt. Gox has suffered problems in recent weeks with distributed denial-of-service attacks that have disrupted trading and caused bitcoin's price to wildly fluctuate. As of 3:20 AM UTC time on Friday, a bitcoin traded for around US$98.50.

The Bitcoin network was launched in 2009. It is the creation of Satoshi Nakamoto, a presumed pseudonym for an expert cryptographer who described the system in a nine-page white paper. The electronic currency can be transferred using one of the many software clients that implement its protocol.

It takes about an hour or less for a transaction to be confirmed anywhere in the world. Transfers incur either a very low fee or are free.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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Barnes & Noble boosts content on Nook with Google Play

Barnes & Noble is adding the Google Play store to HD versions of its Nook tablet, in a bid to counter slowing sales of its devices.

Nook HD and Nook HD+ customers will be able to access over 700,000 Android apps and games, millions of songs and more, besides the Chrome browser, Gmail, YouTube, Google Search and Google Maps, the bookseller said Friday.

The Nook Store will also continue to be available to users. It continues to feature books, magazines and Nook apps tailored for the devices including educational apps for kids, the company said.

By including Google Play on the Nook, Barnes & Noble may be bowing to user pressure to open up its devices to more content. The company did not disclose the revenue it would share with Google in its release.

In its fiscal third quarter ended Jan. 26, Barnes & Noble said its Nook business had revenue of US$316 million, down 26 percent year-on-year, mainly because of "lower device unit volume." The company said it would focus on digital content, which saw sales increase 6.8 percent over a year earlier.

Barnes & Noble is providing software update version 2.1.0 that provides access to Google Play and the other Google services. The software update will be available to new and existing Nook HD and Nook HD+ customers in the U.S. and U.K. at no cost through an automatic over-the-air update, starting Friday for users connected to Wi-Fi. The software can also be updated manually.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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China cracks down on Internet bird flu rumors

Chinese authorities have detained two Internet users for allegedly spreading rumors about the new bird flu virus on the nation's top Twitter-like microblogging site, Sina Weibo.

The two Internet users, surnamed Li and Gong, deliberately created the online rumors as a way to draw attention, according to a Thursday posting from China's State Internet Information Office.

Chinese police will detain Li for five days, and Gong for 10. In addition, authorities have shut down over 20 accounts on Sina Weibo belonging to the two Internet users and several others.

Sina Weibo is one of China's most popular social networking sites, with over 503 million registered accounts. But authorities regularly censor information on the site, deleting posts that deal with anti-government topics or cover sensitive subjects. In some instances, Chinese police have gone as far as arresting users for spreading alleged online rumors.

Currently, a small number of users are spreading rumors on Sina Weibo in the guise of dispelling lies, according to the China's State Internet Information Office. In response, authorities are increasing efforts to crack down on the rumors.

Both Li and Gong are from China's Guizhou province, located in the country's southwest. No confirmed bird flu cases have yet to be reported in the province as of May 1, according to the World Health Organization. In total, more than 126 bird flu cases have been found in China, mostly in the eastern part of the country. 24 deaths have been recorded.

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Australia mulls data breach notification law, but details are secret

Australia's government is keeping a tight hold on proposed data breach notification legislation that could become law before a federal election in September.

The country does not have a data breach notification law. Instead, the federal government recommends that organizations notify the Office of the Australian Information Commissioner (OAIC) if a breach poses a "real risk of serious harm."

Earlier this month, the Attorney-General's Department privately shared a draft bill with some stakeholders that outlines the government's thoughts on data breach notification and what would be required of companies and organizations.

A spokesman for the attorney general said Thursday the draft bill hasn't been publicly released. The document, titled "Exposure Draft -- Privacy Amendment (Privacy Alerts) Bill 2013," was obtained by SC Magazine but not published.

However, some organizations and companies have publicly published their responses to the draft legislation. Roger Clarke, chairman of the Australian Privacy Foundation (APF), said the attorney general shared the draft bill with the APF on the condition it be held in confidence.

Clarke said the draft bill, which he believes should be publicly released, could be stronger and needs some tightening.

"We think there's a number of things that need to be changed," Clarke said. "I don't think it needs to be rewritten."

The APF argued in its April 22 response to the Attorney General that determining when an organization should report a breach -- which it said is defined in the draft bill as a "real risk of serious harm" -- is too high. Any breach should be subject to notification when there is any risk of harm, the APF said.

Under the draft bill, "notification would generally remain voluntary, except in the case of some very serious breaches, and the result would be that the bill would "only have a very limited impact on organizations that have inadequate safeguards," the APF wrote.

Organizations should be subject to "substantial penalties" for failing to secure their data, he said.

"We are arguing for criminal, not just civil liability," Clarke said.

A spokeswoman for the OAIC said on Thursday that Privacy Commissioner Timothy Pilgrim in general supports a data breach notification law.

Last November, the OAIC said current data breach notification arrangements are insufficient. New legislation, the OAIC suggested, should be an amendment to the Privacy Act 1988.

In December, Australia's Parliament passed a bill that amended the Privacy Act, which included giving Pilgrim the power to seek civil penalties for serious data breaches. But the bill stopped short of mandating that organizations notify consumers of data leaks.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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D-Link publishes beta patches for IP camera vulnerabilities

D-Link has published beta patches for vulnerabilities in the firmware of many of its IP surveillance cameras, which could allow a hacker to intercept a video stream.

The company said on its support forum that it will publish a full release of the upgraded firmware within a month. Some of D-Link's consumer IP cameras in its Cloud product line will automatically receive the updates.

"We are releasing beta firmware with the security patch for customers who want to manually update their cameras immediately," a D-Link administrator wrote on the company's support forum.

The administrator also posted instructions for how to upgrade the firmware. Users should not upgrade over a wireless connection, as an error could break the camera.

Identical notices were published on the pages for other affected products. The updates come after Core Security published on Monday details of five vulnerabilities in D-Link's firmware, which is used in more than a dozen of its products.

D-Link's IP video cameras can take stills and record video and can be managed through web-based control panels or mobile devices. Core found a range of problems, including hard-coded credentials and authentication issues that could allow an attacker access via the RTSP (real time streaming protocol).

The technical details were posted in the Full Disclosure section of Seclists.org. Some of the products have been phased out by D-Link, according to the company's website.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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Dish chairman says Sprint modernization has to be done from the US

Dish Network chairman Charlie Ergen said Wednesday that his is an American company, and the modernization of Sprint Nextel's network will have to be done from the U.S. with operations control in the country, and English speaking staff.

The remarks in an interview to USA Today come after SoftBank Chairman and CEO Masayoshi Son, which has a rival bid for Sprint, took a swing at Dish.

"We're offering a higher price. That's just math," Ergen said in the interview. It's insulting to managers of Sprint to say that the only team that knows how to build a network is in Japan, he added.

Dish, a satellite TV service provider, made a US$25.5 billion bid to acquire Sprint last month. SoftBank in Tokyo announced in October last year that it had reached an agreement to acquire a 70 percent stake in Sprint for $20 billion.

Dish has previously also focused on its advantages as a U.S. company for clinching the Sprint deal. In filings to the Federal Communications Commission, it has argued that its merger proposal was better for U.S. national security than the proposal from SoftBank. It also said that the proposed merger would put more U.S. spectrum than anyone else holds in the hands of a single, foreign-owned company.

Son on Tuesday criticized the offer made by Dish in Englewood, Colorado, claiming it is based on "imaginary" numbers and would create a company with "insane" levels of debt. SoftBank did not plan to increase its bid for Sprint, as it was already offering a better deal than Dish, he said in Tokyo. Dish's proposal includes a large payment in stock, and some of the payment would be delayed for a year, while SoftBank would pay immediately in cash, he added.

Countering claims that Dish was an amateur in the mobile business, Ergen said that Dish grew without previous experience in the satellite business, much the way SoftBank evolved from technology investor to wireless carrier.

Son claimed that as SoftBank and Sprint are both mobile operators, their merger would create one of the largest operators in the world with clout in procurement and other deals. Both companies are rolling out high-speed LTE networks for smartphones, while Dish is in a different business as a satellite provider, he added.

SoftBank received support for its bid earlier this week from chip maker Intel, which described Son's plan to build a high-speed competitive third national network as "very compelling." In a letter to FCC Chairman Julius Genachowski, Intel CEO Paul Otellini said he preferred that SoftBank rather than Dish acquired Sprint, as competition in the wireless space is needed as the model provided by AT&T and Verizon Wireless is not giving that to consumers at this time.

Sprint has also received clearance from SoftBank to enter into a non-disclosure agreement with Dish to get further information from it regarding its offer. Sprint is, however, barred from disclosing any non-public information to Dish or to negotiate terms for a future deal.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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Report: Yahoo drops Dailymotion deal in face of French opposition

Yahoo has scrapped plans to invest in French online video site Dailymotion, after the French government opposed the Internet giant acquiring a majority stake in the company, according to reports.

French Industry Minister Arnaud Montebourg told Yahoo chief operating officer Henrique de Castro and France Telecom chief financial officer Gervais Pellissier during a meeting in April that he did not want a 75 percent stake in one of France's best startups to be sold to a U.S. Internet giant, The Wall Street Journal reported, citing people briefed on the meeting.

The deal would have valued Dailymotion at US$300 million, according to the newspaper.

Earlier, French news reports had also indicated that the French government was opposed to Yahoo acquiring a majority stake in the company.

France Telecom bought 49 percent of Dailymotion in 2011, to meet increasing demand from customers for video content on mobile devices. The agreement provided for a progressive capital increase to 100 percent in 2013, which was completed earlier this year, and "the integration of new business partners."

To save the deal, France Telecom executives and government officials tried to turn it into a 50:50 partnership, which the U.S. company declined last week, WSJ reported.

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Aging networking protocols abused in DDoS attacks

Aging networking protocols still employed by nearly every Internet-connected device are being abused by hackers to conduct distributed denial-of-service (DDoS) attacks.

Security vendor Prolexic found that attackers are increasingly using the protocols for what it terms "distributed reflection denial-of-service attacks" (DrDos), where a device is tricked into sending a high volume of traffic to a victim's network.

"DrDos protocol reflection attacks are possible due to the inherent design of the original architecture," Prolexic wrote in a white paper. "When these protocols were developed, functionality was the main focus, not security."

Government organizations, banks and companies are targeted by DDoS attacks for a variety of reasons. Hackers sometimes use DDoS attacks to draw attention away from other mischief or want to disrupt an organization for political or philosophical reasons.

One of the targeted protocols, known as Network Time Protocol (NTP), is used in all major operating systems, network infrastructure and embedded devices, Prolexic wrote. It is used to synchronize clocks among computers and servers.

A hacker can launch at attack against NTP by sending many requests for updates. By spoofing the origin of the requests, the NTP responses can be directed at a victim host.

It appears the attackers are abusing a monitoring function in the protocol called NTP mode 7 (monlist). The gaming industry has been targeted by this style of attack, Prolexic said.

Other network devices, such as printers, routers, IP video cameras and a variety of other Internet-connected equipment use an application layer protocol called Simple Network Management Protocol (SNMP).

SNMP communicates data about device components, Prolexic wrote, such as measurements or sensor readings. SNMP devices return three times as much data as when they're pinged, making them an effective way to attack. Again, an attacker will send a spoofed IP request to an SNMP host, directing the response to a victim.

Prolexic wrote there are numerous ways to mitigate an attack. The best advice is to disable SNMP if it is not needed.

The U.S. Computer Emergency Readiness Team warned administrators in 1996 of a potential attack scenario involving another protocol, Character Generator Protocol, or CHARGEN.

It is used as a debugging tool since it sends data back regardless of the input. But Prolexic wrote that it "may allow attackers to craft malicious network payloads and reflect them by spoofing the transmission source to effectively direct it to a target. This can result in traffic loops and service degradation with large amounts of network traffic."

CERT recommended at that time to disable any UDP (User Datagram Protocol) service such as CHARGEN if it isn't needed.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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Electricity zaps gamers' muscles for force feedback

A research project on show at the Computer Human Interaction conference in Paris uses a small electrical current to give the sensation of force feedback while gaming.

The system, developed by researchers at Germany's Hasso Plattner Institute, involves sticking electrodes on gamers' forearms and then delivering a small pulse of electricity from a 9-volt battery. The pulse makes the muscle contract and it's the fighting of that contraction that delivers the feeling of force feedback.

To see the prototype in action, watch a video on YouTube.

"Traditionally I think people are going to remember arcades in the 80s or 90s and playing with force feedback," said Pedro Lopes, a Ph.D. student at the Hasso Plattner Institute. "Your car was drifting on gravel or something like that and you would feel physical forces."

With the advent of mobile gaming, force feedback has all but gone away, he said at the CHI conference Tuesday. Some other research projects have experimented with delivering force feedback, but they typically involved "motors or exoskeletons or a crazy actuator."

"We just deliver a little medically compliant current which causes your muscle to actuate and you feel like you're being actuated," Lopes said.

Muscle contractions usually happen at about 12 volts and 20 milliamps, or less, according to Lopes. He built the prototype system with off-the-shelf parts including a medical grade signal generator to produce the current.

IDG News Service had a chance to try the system in Paris. There's no pain in the muscle, just a contraction, but the skin feels the current a bit different; not a painful sensation, just slightly uncomfortable.

The prototype is quite bulky, but Lopes wants to slim it down and make it wireless.

"I'd just have a bracelet with electrodes inside," he said. "[It would be] all Bluetooth communication and you can just have two gaming bracelets with force feedback."

Zapping conference attendees is becoming more commonplace at CHI. Last year, students from Japan's Meiji University added electricity to food to change its taste. Their idea is that electricity can mimic the taste of salt allowing people to consume less of it. They were back this year with more electric food.

Both groups made conference attendees sign medical waivers before wiring up.

Nick Barber covers general technology news in both text and video for IDG News Service. E-mail him at Nick_Barber@idg.com and follow him on Twitter at @nickjb.

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Spanish police say DDoS suspect used a van as a mobile office

The man suspected of participating in a large DDoS attack on an antispam organization that caused intermittent Internet hiccups drove around Spain in a van he used as a mobile office, Spain's Interior Ministry said Sunday.

The van was equipped with "various antennas" that were used to scan frequencies, the ministry said in a news release. On Thursday, Spanish police arrested a 35-year-old Dutch man in Barcelona suspected of conducting cyberattacks against Spamhaus, a nonprofit group that develops widely used lists of networks identified as sending spam.

Spanish police published a video of a sparse residence they raided. Images showed the room was strewn with wires and computer equipment, including routers, a Mac Mini computer, laptops, an antennae and a single cot with the book "Quicksilver" by Neal Stephenson on it. Also shown were several rubber stamps, two of which were emblazoned "NATO secret" and "NATO unclassified."

The man has been identified by an official close to the investigation as Sven Kamphuis, who has denied involvement. Dutch authorities only identified the suspect by the initials "S.K." for privacy reasons. Kamphuis has said he believes the attacks originated with members of Stophaus, a group aiming to shutdown Spamhaus for its antispam work.

The DDoS attack was estimated to peak at more than 300Gbps, making it one of the largest attacks on record, but computer security experts disagreed somewhat over its broader effect on the Internet. The attack caused problems for some European Internet exchanges nodes, or places where ISPs link to transfer traffic to one another.

The Interior Ministry, which did not name the suspect, said they seized two laptops and documents from the residence. At the time of his arrest, the man, from Alkmaar, Netherlands, claimed to be the minister of telecommunications and foreign affairs of the Republic of CyberBunker, Spanish police said.

CyberBunker.com is a hosting provider based in a former military facility in the Netherlands. It specializes in so-called "bulletproof" hosting, or one that resists law enforcement efforts to remove certain content from the Internet. It claims it has no involvement in spam and does not allow SMTP traffic, the protocol used to send email.

Kamphuis runs a network provider called CB3ROB, which provided services for CyberBunker. CB3ROB had been blacklisted by Spamhaus for activity related to spamming botnets and extortion scams.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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