KETTLE The FBI has announced what appears to be a third arrest in the ShinyHunters investigation, following the group's breach of Bureau systems, even as AI advances potentially leave human hackers on borrowed time.

You can A second vulnerability discovered by Anthropic's Mythos model has been exploited in the wild, and it's not one that humans probably would have discovered, begging the question just how important we are in the future of cybercrime.

Join host Brandon Vigliarolo, cybersecurity editor Jessica Lyons, and senior reporter Tom Claburn to discuss those stories, and what they mean for the future of cybersecurity, on this week's episode. A lightly edited transcript is below: Brandon (00:01) Hey everyone, and welcome to the latest episode of The's Kettle Podcast. I'm your host, Reg reporter Brandon Vigliarolo, and this week we've got a couple cybersecurity stories to chat about, but that doesn't mean we're leaving AI out of the conversation, of course.

With me to chat about some arrests and new revelations about the capabilities of Anthropic's Mythos model are Reg cybersecurity editor Jess Lyons and senior reporter Tom Claburn. Thanks to both of you for coming on. Yeah, thank you. Jessica (00:28) Good to be here.

So Jess, let's start with the FBI's continuing crusade against who seems to be its new arch nemesis, the Shiny Hunters cyber extortion crew. So as I understand, one guy was arrested at the end of last month and now they bagged another one this week. Is that right? Well, this looks like it brings the count up to three, actually.

Right, because of today's announcement, right? [Ed: The show is recorded on Friday.] Yes, today's announcement. The FBI director this morning put out this cryptic message on X, and then it was also emailed to news reporters saying that our agents in the field have arrested another suspected co-conspirator of the Shiny Hunters group. And this of course is related to the late September hack that stole a ton of data on agents and people who wanted to be hired by the FBI about their names, jobs, physical locations, emergency contact information. How many people's data was stolen? I mean, it was a ton, wasn't it? I mean, they claim it was everyone's.

So is what they claimed. And sometimes these claims are inflated a bit just to increase extortion demands and hopefully get payments, but it was by all accounts a ton of information.

As Shiny Hunters told you they were doing this not for monetary gain, but literally to prove how good they were at this stuff, right? Exactly.

Right. So there might be some inflation going on here. Who knows? Either way, it seems to have attracted the FBI's attention.

Yes for sure. So today we get this message from the director and he says that there's been another arrest. So I immediately reached out and asked the FBI, is this a third? Is this referring to some of the earlier arrests that have been reported? Because they told me earlier in the week also that we've arrested that we made, quote, multiple arrests related to this hack. So then they said we have no further comment, but the New York Times is reporting that it's a Canadian citizen who was arrested in Pennsylvania. So that would be the first arrest that happened in America if this is true.

I really don't understand why if you are a relatively high-profile cyber criminal who's going to try to attack the FBI, you would do so from within the boundaries of the country that the FBI has jurisdiction over. That to me sounds like a dumb move, right? These guys are obviously good at their craft, maybe not practical planning. I mean, honestly, I wouldn't do it if if I were in an extradition country at all. Because the other two guys were arrested where? One was in the Netherlands and then one is reportedly detained in Jordan. Okay, so right, both countries that I'm assuming will extradite people to the United States. Right.

I would assume the people doing this kind of thing would be Russians, right? Whenever I hear about a cybercrime crew, I always assume it's China or Russia. That's where you're going to be safe.

No, but that's really the interesting thing about this group is that they're English speakers. It's primarily North America, the UK, and Western Europe. And this whole move, the first thing I asked them was, "Well, how much money are you demanding?" And they immediately told me, "This is not financially motivated, this is to preserve our reputation." They wanted the FBI to walk back these earlier statements that they had made during the Instructure breach.

And that affected Canvas, this educational tech platform that's used by tons of K-12 schools and universities. And so they didn't like the FBI's implication in that that they were quote unquote violent criminals, that they used intimidation tactics. It was implied that there were cases of sextortion. And so they wanted the FBI to walk this back. And I said, "Well, that's not going to happen. So doesn't this just put a huge target on your back and you already have a pretty big one?"

And again, they just are determined that this is going to restore their business, show what great hackers they are, and encourage other – they call them their corporate partners, these are the extortion victims – encourage those organizations to pay these multimillion [dollar] demands when they're breached. Right, because obviously these guys they do have an extortion business, right?

That's their main thing. There is financial motivation in this, right? Right. I mean by some accounts they are the most successful cybercrime business. They've extorted an estimated $70 million just in the last year. And they're very good at what they do. This also seems a little bit reckless even by their standards to go after the FBI. Even if it's a politically motivated stunt or reputationally motivated, it seems like a bad idea, especially like you said, if some of them are located in the United States.

But now I'm also curious, because this is a gang of clearly talented cyber criminals, but they broke into the FBI and they got a huge target painted on their back, and now we've seen allegedly three, possibly more arrests that the FBI might not be talking about. But at least three arrests of their members in the course of two weeks after they break into the FBI. Now, I imagine the FBI is probably better than a lot of people at logging things on their network, but it kind of makes me wonder, okay, they broke into the FBI and now the FBI has nabbed three of them. Could the FBI in the federal government be catching cyber criminals more easily than they do?

Like they just haven't hit the wrong target. The fact that they busted into the FBI, well that let the dog off the leash. But I onder sometimes, if you're busting into Microsoft or you're stealing things from other companies, do they have better attribution and better ways of tracking these people down than they usually do?

Do we know what the initial lead was that led the FBI to arrest them? And was the fact that one of them was already publicly known?

Well, see, that's the thing. And until today's arrest, both of these two were publicly known. And so my question that I've been asking a lot of security researchers, third party security researchers, because the FBI won't address any of this on the record, is just say, hey, look we got two of these criminals. So but again, they're already known. One has been arrested previously. And so those two seemed kind of like easy gets to me. I don't know what the leads were that led them to the latest arrest. And again, I haven't been able to confirm it with the FBI that this was somebody who was arrested in America and as a Canadian citizen, I'm trying to do that.

But it does seem a little stunning. And the typical answers that I get is, well, there's reasons not to make arrests public sometimes, especially with this group in particular, some of them are very young. The person in Jordan, I believe, is 16 who was detained. So a lot of times you don't necessarily want to arrest somebody if they are under 18. It's better to kind of keep an eye on them. And if you can see what they're doing and who they're talking to, that can lead you to people who can be prosecuted as adults, which is typically preferable in these cases.

It does seem that we could be seeing more arrests. And that's something that I am always asking the law enforcement sources that I talk to, the private resources or private company sources that I talk to. And the bottom line that they always come back to is that, well, it's more difficult than it looks. And then with Shiny Hunters, with a group like this, it's more a brand than an individual or a group of a dozen individuals or so at this point. So it's just the brand is going to continue, whether or not it's the same, you know, quote unquote leadership, maybe not, but the brand isn't really going anywhere.

So have you spoken to them since these arrests started happening? No?

No, I have not spoken to them since these arrests started happening. There's been claims that their leak site is going to be back up online shortly, but at this point that's down. The channels that I speak to them on are down. So we'll see. I wonder, has the advent of AI-driven bug hunting changed the reputation game for them? It was one thing to boast about your elite skills back when you were doing it yourself.

Now that a lot of these people may or may not have access to open source models, GLM 5.3 or maybe they even have a red team account somewhere with one of the big providers, is there any sense that they should be a little bit more modest that maybe they're not doing all the work and the AI is doing it? Or are people still trying to claim all the credit for their own skills and not really disclosing, oh yeah, I had Claude do that for me. At this point, I don't think especially with this group, I don't think it really matters because even before these AI models were really good at finding and exploiting zero days, they've been doing that for a while now.

So I feel like they've already established their reputation that they are good at what they do. And then they're also really good at the social engineering part of it, which is a big piece. They're good they're good at convincing people on phone calls that they are a contractor who's locked out or they're an employee who's locked out and they need to reset their password or their MFA.

So they have developed scripts and there have been indications that they're recruiting people and that they do have AI kits that can help with the social engineering piece of it now, especially. But I don't think at this point it really matters whether it was a human Shiny Hunter or whether it was a Shiny Hunter using an AI model to find a zero day and break into your organization. I don't think that matters too much to the people who are the victims who are being extorted or really for the group's reputation.

So if these people are as good as they say they are, are they good enough to get sort of an out by being hired by the FBI? Isn't that kind of the traditional way? That's right.

That's what I was thinking too, right? If you've got a 16-year-old on the hook, you can be like, "Look, you're either going to jail, we're going to keep watching you, or you're coming to work for us" kind of thing.

That definitely, I think that that would be a smart move. I mean, then you do have always the risk, like we saw with the arrest from the Dutch police. Here was somebody who was working for a private security firm after serving some time and then being quote unquote reformed. And so there's always the risk that the draw and the potential money-making opportunities from crime are a lot higher than they are working for law enforcement or working for a private company. And or even, that was a question I asked and they didn't answer.

I said, "Well, you're so good at this, so why don't you use your skills for good here and not have to worry about getting arrested and constantly hiding your tracks?" And Shiny Hunters wouldn't answer that question. I think the answer to that's pretty obvious is that there's more money if you're doing it illegally. Right. There's a lot more money. There's like tens of millions more.

I mean the FBI would probably have to offer these kids a lot of cash, right? Why don't you come clean and be a white hat? What is it going to take for that? I mean, I guarantee it's going to be a lot of money.

Right and if they are young too, I mean, typically they don't end up serving a lot of time, if any, especially if they're teenagers or even young adults. So you spend five years in jail and then you get out and you go back to making millions doing this. Sadly the financial incentive is there to keep on working for the bad guys.

And I mean, I guess if you're good enough, that's the thing too, right? If the United States government's going to court you, it wouldn't be surprising to me if a foreign government wanted to court you as well. And basically told you, like, look, we'll give you safe haven here. You can keep doing whatever illegal shit you want as long as it's not targeting our people, right? Like target people outside the US and we don't care. Or outside Russia or China or whatever. It's really interesting to think about what thkind of careers these people could have if they decided to do things the right way or for the right people, I guess.

But moving on from this gangbust to some AI enabled cybercrime as well. Mythos. There was some interesting information about Mythos's capabilities that came out this week. Jess, I think the story you wrote was talking about this is like the second vulnerability detected by Mythos that's been exploited in the wild.

Is that right? Right, that's right. That's according to a Vulnchek security researcher who's been tracking this ever since the start of Mythos partner program. And this is the second one. It was kind of interesting because it's really wonky, really nerdy from a math perspective here. It was a critical authentication bypass in Rejetto HTTP file server, HFS. And so this it essentially allowed full admin access and then remote code execution. But it's something that is it's not very likely that a human on their own would have uncovered this one.

Right. Right. So this is yeah, tell me a bit more about that. So what did it involve? It was some weird math or some weird something to do with the way a random number generator was generating random numbers, right?

Yes. Exactly. So Mythos was able, they analyzed the source code for this open source project. And then Mythos, the AI, realized that the random number generator was insecure. It could reverse this, and it also was leaking. So then it was able to reverse this, access the leak, and from that access the –What was it leaking? Just something to do with its hash or the way it was creating numbers or? Yes, it was leaking the output, the generator. This PRNG was leaking its output.

Okay. And then Mythos was able to basically figure out this is not as random as it's supposed to be and I can kind of reverse engineer the algorithm. Yeah. I can reverse it. Exactly. Right. But again, it's something that would have been tricky for a human, even a human who is really good at math to spend the time doing this. So we saw a security researcher who is using with Horizon 3, they've been using Mythos ever since it was announced to pen test and find a lot of vulnerabilities.

And so they were the ones who uncovered this. And then the researcher, Zach Hanley, he published this video showing how to exploit this flaw and achieve remote code execution. And then the next day, this CVE, which does have a patch too, has been updated, but the next day the CVE was already being exploited. Ta da.

Yeah, publish a proof of concept for this zero day and all of a sudden someone latches onto it. I mean, from what I was seeing, it was an IP in China, but it was very narrowly targeted, right? Like there were only a few victims.

Yes. They were targeting the US and Japan. There's only been a few so far. It picked up a bit over the weekend, but it hasn't been widely exploited.

Okay. So it's the Rejetto HTTP file server. And is that a widely deployed piece of open source software? Are there a lot of potential targets here to be exploited?

I'm honestly not quite sure how widely used it is. I don't know. Maybe Tom, do you have a better idea of that? I don't know. Is it visible in Shodan? I'm not sure. I believe so.

Either way, some people are finding it, right? And they're exploiting it. So hopefully people who have this running are getting it updated. But Tom, this actually kind of makes me think about a discussion I think we had maybe last week or the week before about who's liable for these sorts of things, right? This is a bug that wouldn't have probably been found by human researchers. And I'm sure there's an argument to be made for the likely wouldn't have been found part of that.

But I find it interesting that this is an incredibly complicated, tiny, hard to notice bug that was found by an AI and promptly exploited. Is Anthropic on the hook at all for these discoveries being made and exploited, or do you think it's the same as any kind of proof of concept?

I don't think for the discoveries, but it is sort of an interesting question because just this week they did a bunch of reorientation of their security programs. They added another tier for their defense program so you can get access to the models and they refuse a little bit less, or you can be a red team researcher and have even fewer refusals, or be at the special government level where you have almost no refusals. And so they reorganized that program and then they also opened up a critical infrastructure vulnerability program and released OSS scanner, which is a way for prominent open source projects to get free AI enabled reports about possible vulnerabilities.

So to the extent that they're offering a program that purports to control these things, if it looks like they're doing a bad job and there's a bunch of stuff leaking out, then I suppose someone could bring a claim that they're negligent in the administration of these programs. They're not doing well enough. But I think just using a tool and discovering something is not going to create problems for anybody. It's going to be the application.

Did they explain why they were redoing the structure of that program at all? I'm just kind of curious what they justified that as.

I assume it's for lack of participation because they had it fairly tightly tied up and I think they're trying to make it easier for people. They said that this is their desire to help and bring defenders up to speed with the tools that attackers already have. But I think it's also coming in the wake of the Hugging Face incident and all the other ones that have been disclosed, they realize that if they aren't seen being proactive, legislators are going to be pushing them harder. Not that there's been any effective legislation about AI recently, but there's going to be more pressure on that if all of a sudden people are using their stuff to break into companies and the defenders just don't have access to tools to fix it.

The thing that surprised me is one of their posts they were talking about, they think in two years the defenders will have an advantage, which would be a very optimistic spin on things since the traditional security formulation is the defenders have to be right all the time and the attacker only needs to be right once. I'd be surprised if the balance of advantage tips in the favor of defenders. But there is some argument to be made that if you're writing code with a really good LLM and you have good security people who know what you're doing, you may be able to deploy with far fewer vulnerabilities than you might otherwise. There's a lot of Rust rewriting going on and that's going to help just by default for a lot of memory bugs that might exist in other languages. Does that really shift the balance of power? It's hard to say.

I don't see it either. Like you said, a defender has to be right all the time, an attacker has to be right just once. And if everyone's got an LLM that they're using to – especially if, maybe this is not really that probable because Anthropic is doing a great job of controlling access to these things, but I feel like if you're loosening the reins a little bit and giving more people access to these security models, that's going to open the door to someone misusing them too. Right?

At some point, I would think that a lot of this pressure would drive more people into sort of provably secure stuff. There are methodologies for doing it, it's just that almost no one spends the money to have their software provably correct. And I think it's very difficult when you have an ecosystem with so many moving parts and dependencies than some little piece of code that's maintained by a couple people somewhere. But I think that there's probably going to be more interest in that and if they can start doing that with some of the more critical pieces of infrastructure, it'll help.

That would be anything that can give defenders a better advantage, right? AI has not made anyone feel more safe, I don't think. I don't know if I would classify it as the security nightmare that a lot of people have been saying. Jess, you follow this stuff a lot more closely than I do. What's the general consensus in the sort of defender world about AI? Are people optimistic about its capabilities? Are they worried that it's just going to make things worse?

Pretty much within the security community, it's more a sense of "it could be safe if we actually secure it and that would prevent a lot of these worst case scenarios," but that hasn't been a priority at the AI companies. So until that starts happening, then we get the AI that we deserve. So hopefully all of these recent incidents will be a little bit more motivation to do a better jobm securing AI systems, but up until now it hasn't been.

And again, this is something that we've seen with pretty much any emerging technology – laptops, cloud, any emerging technology, security typically isn't the priority until bad things start happening. And then there's the call to do a better job securing them. At that point it's a little bit late in the game, but hopefully it happens.

Security isn't what makes these companies with this new emerging tech money, right? It's the afterthought of well we'll get the really cool things out there first and then we'll worry about protecting them later on. Right. Yep. And then we'll secure it. Right.

Once you've got cancer, then we'll cure it. We won't worry about trying to prevent it from happening. It's an interesting world we live in, and it's only being made more interesting by all this AI.

And you know what, chances are it's going to keep being interesting. We can't even get away from it on a week we're talking about security, of course. So, you know, hey,