| Tuesday July 22nd 2014

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One Hacker’s Audacious Plan to Rule the Black Market in Stolen Credit Cards


The heat in Max Butler’s safe house was nearly unbearable. It was the equipment’s fault. Butler had crammed several servers and laptops into the studio apartment high above San Francisco’s Tenderloin neighborhood, and the mass of processors and displays produced a swelter that pulsed through the room. Butler brought in some fans, but they didn’t provide much relief. The electric bill was so high that the apartment manager suspected Butler of operating a hydroponic dope farm.

Max Butler Black market planBut if Butler was going to control the online underworld, he was going to have to take the heat. For nearly two decades, he had honed his skills as a hacker. He had swiped free calls from local telephone companies and sneaked onto the machines of the US Air Force. Now, in August 2006, he was about to pull off his most audacious gambit yet, taking over the online black markets where cybercriminals bought and sold everything from stolen identities to counterfeiting equipment. Together, these sites accounted for millions of dollars in commerce every year, and Butler had a plan to take control of it all.


Settling into his chair and resting his fingers on his keyboard like a concert pianist, Butler began his attack. Most illegal online loot was fenced through four so-called carder sites—marketplaces for online criminals to buy and sell credit card numbers, Social Security numbers, and other purloined data. One by one, Butler took them down. (This story, like the rest of this article, has been reconstructed using court documents and conversations with friends and associates; Butler declined to be interviewed.) First, he breached their defenses, tricking their SQL database servers into running his own commands or simply slipping in with a hacked password. Once inside, he sucked out their content, including the logins, passwords, and email addresses of everyone who bought and sold through the sites. And then he decimated them, wiping out the databases with the ease of an arsonist flicking a match. He worked for two straight days; when he tired, he crashed out on the apartment’s foldaway bed for an hour or two, then got up and went back at it. Butler sent an email under the handle Iceman to all the thieves whose accounts he had usurped. Whether they liked it or not, he wrote, they were now members of his own site, CardersMarket.com. In one bold stroke, Butler had erected one of the largest criminal marketplaces the Internet had ever seen, 6,000 users strong.

The takeover was all business. The stolen-data market had become fractured across too many sites, and they were pocked with snitches and security holes. By taking control of the entire underworld, Butler had created a marketplace he could trust. Even more important, it satisfied his competitive urge. Offline, Butler was a gentle giant with a generous nature and hippie sensibilities. But in the privacy of his hidden redoubt, Iceman pursued his online enterprise with ruthless zeal. He wasn’t after money, not really. He just wanted to prove that he was smarter, bolder, and tougher than everyone else.

The hostile takeover was Butler’s crowning achievement, but it also marked the beginning of his downfall. His actions made him a target of law enforcement, to whom he represented the epitome of a new kind of computer criminal: mercenary cybercrooks who were emerging as a far greater Internet scourge than recreational hackers. The growth of carder forums allowed thieves around the world to purchase data, equipment, and services. Since 2005, hackers and corrupt insiders have stolen more than 140 million records from US banks and other companies, accounting for some $67 billion in losses each year, according to the FBI. In 2002, FBI director Robert Mueller listed cybercrime as one of the bureau’s top priorities, below only terrorism and foreign espionage. Butler’s power grab planted him directly in the Feds’ kill zone.

In the days to come, his vanquished competitors raged against the forced merger, fought to regain their users, and staged limp counterattacks. If Butler was at all intimidated by the forces mobilized against him, he didn’t show it. “Basically,” he wrote later, the consolidation “was long overdue.” He was fearless and doomed, just as he had always been.

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