Perlroth & The First (Zero-Day) Broker

I am currently reading “This Is How They Tell Me The World Ends” by Nicole Perlroth, only on page 60 in Chapter 5, so a long ways to go before completing the 471 page tome. I hit chapter 4, titled “The First Broker” and it was of specific interest to me for sure, prompting this (second) blog on the book. A broker is defined as “a person who buys and sells goods or assets for others” so I was never a vulnerability broker by that definition. I am not trying to claim to be the actual first broker of zero-days in that context at all. Instead, I would like to share a couple of my own stories that are adjacent to the topic. This is all to the best of my recollection, but my memory isn’t the best due to being a diabetic and not having it under control for several years. If anyone involved in any of these stories has a different memory please feel free to comment or reach out directly and I will update this blog accordingly.


First, I was someone who ‘brokered’ deals in the sense of trading zero-day vulnerabilities for a few years in the mid-90s. As a member of multiple hacking groups, some an actual member and some an honorary member, one of my roles in several of those groups was not writing the zero-days because I simply wasn’t a coder and did not have that skill. Instead, it was to barter and try to gain access to specific zero-days one group or member wanted and my currency was other zero-days we had. While I couldn’t code, my social network of hackers was sizable.

Some of what I was authorized to trade for was toward the goal of obtaining e.g. “any remote zero-day in $target operating system” while in other cases it was “trade anything and everything we have for $specific-zero-day“. I acted as a go-between for the groups I was in and a liaison to the general hacker scene. Many knew me to have a well-rounded vulnerability collection and we already traded more pedestrian exploits, some of which weren’t public, but definitely more circulated in such groups.

Back then it was just hackers and groups, not companies, so we didn’t have “duffel bags stuffed full of half a million dollars in cash to buy zero-day bugs” (p.49). Instead we had other zero-day bugs which were just as valuable between groups and acted as the ideal currency. Just like Perlroth describes in her book relating the story of “Jimmy Sabien” (p.43), not his real name, the vulnerabilities had serious value back then too. Some were very closely guarded, to the point of not being shared with their group. For example, Sally may have shared 99% of her exploits and zero-days with her group but held one back because it was so valuable. That one she would use sparingly herself so as not to burn it or authorize it to be traded for a vulnerability of equal value. In those rare cases I would know just enough about the vulnerability to try to arrange a trade on her behalf, sometimes never seeing the vulnerability myself.

There were rumors at the time that some hackers had sold vulnerabilities to specific agencies in European governments. There were also rumors that some were trading zero-day exploits to a European law enforcement agency as a proffer or part of a plea to avoid being charged for hacking activity. But those were just rumors at that point. To me, that was the precursor to the more financial based zero-day market.


Later in the 90s, I was one of the two founders of a startup called Repent Security Inc. (RSI or RepSec). We were three people and started trying to be a penetration testing shop. This was still early in the world of commercial penetration testing and we were going up against companies that either had an established business reputation like a couple of the ‘Big 5’ at the time, or companies that were pioneers in the game like The Wheel Group. We also created software for securely streaming logs over an encrypted tunnel so if a system was popped, you had the logs on a remote host with timestamps including your shell histories (which didn’t have timestamps natively). That software was partially outsourced to a renowned “InfoSec luminary” who had it developed by one of his interns on a compromised .edu machine and later essentially stole the software after RSI imploded. But that story is for another day because it isn’t part of the zero-day world, it’s part of the Charlatan and Errata world.

One thing RSI had of real value was the vulnerability database that I had been maintaining since 1993. It was first maintained for the hacker group I was part of (TNo) where it was originated by other members. When I took over maintaining it I worked on further organizing it, adding several points of metadata, and expanding it. After that group drifted apart I kept maintaining it while a member of w00w00 and honorary member of ADM, where I brokered some trades. I did not maintain the databases for either of those groups which were separate from mine, but I was privy to some of their exploits and shared some of what I had. Members from both groups would frequently ask me to check my database for exploits specific to an operating system or service they were targeting, as this was before Google and Yahoo! didn’t aggregate much in the big picture. Even though a majority of vulnerabilities were posted to Bugtraq, you couldn’t just skim it quickly to determine what was there that you could use for your purpose. Someone that had them all sorted in a database with metadata was fairly valuable. To this day, many friends and colleagues still ask me to do vulnerability lookups, now with VulnDB.

Throughout my hacker days I maintained that database, and then continued to as I transitioned into a career doing penetration testing. Like Perloth documents in her book about the early days of iDefense and the outfit that “Sabien” worked for, we all scoured Bugtraq for our information primarily. I had the benefit of several circles of hackers and hackers-turned-legit that still traded vulnerability intelligence (vuln intel). Essentially the grey market back when the currency was still vuln intel not those duffels of cash. By that point, the database that RSI had was unparalleled in the commercial world. This was initially created before and maintained during Fyodor’s Exploit World and Ken Williams’ Packetstorm. The RSI database came before the ISS XForce database, before BID, before NIST’s ICAT Metabase, and before MITRE’s CVE. More importantly, it was heavy on exploit code but light on proper descriptions or solutions, so it was geared toward penetration testing and compromising machines rather than mature vulnerability intelligence.

As RSI struggled to get penetration testing gigs and opted to work on the “Secure Remote Streaming” (SRS) product, we had taken a trip to Atlanta to talk to ISS about selling a copy of our database to their relatively new X-Force penetration testing team (I forgot who we met there, but I would love remember!). That deal did not happen and we soon found ourselves in talks with George Kurtz at Ernst & Young, one of the ‘Big 5’. While most or all of the ‘Big 5’ had penetration testing teams, their reputation wasn’t the best at the time. That was primarily due to their testers frequently being traditional auditors turned penetration testers, rather than being a ‘real’ tester; someone that came up through the hacking ranks.

It is also important to remind everyone that back then these companies “did not hire hackers“. They literally printed it in advertisements as a selling point that they did not hire and would not consort with so-called black hats. This was almost always an outright lie. Either the company knew the background of their team and lied, or they did not know the background and conveniently overlooked that their employees had zero experience on their resume around that skillset, yet magically were badass testers. Years of companies claiming this also led to what we see now, where many security professionals from that time still refuse to admit they used to hack illegally even 25 years later.

Anyway, back to George and E&Y. It made sense that a shop like that would want to get their hands on RSI’s database. If their testers were primarily from the auditor / bean-counter side of things they would not have had their own solid database. Even if they had hackers it didn’t mean they came with the same vuln intel we had. As best I recall, the negotiations went back and forth for a couple weeks and we settled on a one-time sale of the RSI database for $75,000 with the option to revisit selling ‘updates’ to it as we continued to maintain it. This would have become the first commercial vulnerability intelligence feed at the time I believe, in early 1999. Then, disaster.

The FBI raided the offices of RSI, which was my apartment. At the time that was a death sentence to a penetration tester’s career. Regardless of guilt, the optics were one of black hat / criminal hacking, and finding someone to trust you to break into their systems was not happening. RSI dissolved and I found myself struggling to find work of any kind. So I reached back out to George about the deal we had on the table that we were close to signing and said I was fine with the price, let’s do it. Suddenly, Kurtz had a change of heart.

He didn’t have a change of heart as far as doing the deal, his change was in the price. Instead of $75,000 he came back and said we could do the deal for $25,000 instead, just a third of what we had agreed to. He knew I was in a tight spot and needed the money and he took full advantage of that. This is someone who had a reputation of being a friend to hackers, someone that had bridged the gap between the business world and hackers to put together a reputable team at E&Y. He even had his name on a book about penetration testing, co-authored with names other hackers recognized. He was also very explicit that he knew I had no real power at that point and refused to budge on his one-third offer.

So when he had a chance to honor the deal we originally worked on, a chance to be a friend to a hacker, at no expense of his own? He opted to screw me. Since I was out of options and my limited savings were dwindling I had to accept the offer. That takes me full circle, via a meandering path I know, to likely making one of the largest vulnerability sales at the time. While it wasn’t a single exploit, a $25k deal that was originally set to be $75k is pretty impressive for the time. If RSI had made it, odds are we would have become a software (SRS) and vulnerability intelligence shop rather than a penetration testing shop.

Many aspects of how Perlroth describes the early days of iDefense and “Sabien’s” shop, we were already doing. With a lot fewer people than they claimed, but we were aggregating information from Bugtraq and other sources, writing exploits for some of the vulnerabilities, and then we began to try to sell that information. I guess it isn’t a big surprise I ended up in the vulnerability intelligence business eventually.

Zero-days: Two Questions from Perlroth

I am currently reading “This Is How They Tell Me The World Ends” by Nicole Perlroth, only on page 17 in Chapter 2, so a long ways to go before completing the 471 page tome. While only 17 pages in, there are already some annoyances to be sure, but the tone, scope, and feel of the book is enjoyable so far. I am not sure if I will do a full review at the end or perhaps write some blogs specific to topics like this one. It obviously didn’t take long at all to get to the point where I thought a quick blog with my perspective might be interesting to some.


At the end of Chapter 1, Perlroth summarizes what she sees as the long road ahead for her to tackle the subject of zero-day exploits. This follows her describing one dinner with a variety of security folks from all sides of the topic but seems to center around two zero-day exploit writers not answering some ‘basic’ questions like “who do you sell to?” She uses this to enumerate a list of questions around the topic of zero-day exploits that she would have to face to cover the topic thoroughly. Of the 28 questions she posed to herself, two stood out to me but requires two more to better set the stage:

Who did they sell their zero-days to?
To whom would they not?
How did they rationalize the sale of a zero-day to a foreign enemy? Or to governments with gross human rights violations?

Depending on who you ask, or when you ask them, you may be told these are simple questions and answers, very complex, or like an onion.


When you ask if an exploit broker will sell to governments with “gross human rights violations“, that gets complicated in today’s world of geopolitics while remaining much more simple as far as morals and ethics go. If gross human rights violations are the line in the sand, meaning regular human rights violations are acceptable (?), then it cuts out all of the biggest players in the game; United States, China, Russia, North Korea, and Iran. Before any of my European friends head straight to the comment section, I am not forgetting or neglecting you. Some of the European countries maintain teams that are extremely accomplished and arguably better than the countries I listed. Why? You don’t see their names being splashed in every other headline and attribution claim. Further, some of the most elite zero-day writers from the late 80’s and early 90’s were European. I used to be privy to a handful of some of those exploits and on occasion, brokered (traded, not sold) them between groups. Further, I don’t associate most European countries with the other five as far as gross human rights violations, at least not in recent history.

Since zero-day exploit writers do sell to some of those countries at least (US, CN, RU), and presumably some sell to the other two (IR, KP), now we’re talking shades of grey or onions, depending on your favorite analogy. You’re left trying to draw a line in the sand as to which human rights violations you can accept and at that point, does the question even have relevance? I don’t want to get into a pissing war over who is holier or more evil than the other because each of the five countries above has their long list of sordid atrocities.


Let’s jump back to the third question there, the notion of “foreign enemy”. This is peculiar since the book had already thrown around the term “mercenary” several times in the prologue, and that scenario answers the question simply. A mercenary sells their services to the highest bidder typically, ethics takes a seat in the trunk if it even comes along for the ride. So a simple summary is that some will sell to the highest bidder, end of story.

But does any of the above really matter? Long ago I heard a great quote that is both funny and sardonic, that I think has relevance to the other question:

“We refuse to join any organization that would have us as a member.”

If we’re discussing the notion of being involved with another group (country in this case), isn’t the ethics of selling a zero-day that you know will potentially be used against your own country a lesson in abject self examination? If you are willing to sell to such an organization, one that might cause a power outage, risk human life, or undermine security and privacy as only a nation-state can, is that the kind of organization you want to be a part of? If such an organization or country is willing to buy zero-day exploits from you to use for those purposes, is that the type of organization you want to be affiliated with?

If the answer is no, then Perlroth has the beginning of her answer. If the answer is yes, then we’re back to square mercenary. Pretty simple maybe?

The curiously creeping value of the iOS vulnerability…

[This was originally published on the OSVDB blog.]

The market for vulnerabilities has grown rapidly the last five years. While the market is certainly not new, going back well over ten years, more organizations are interested in acquiring 0-day / private vulnerabilities for a variety of needs. These vulnerabilities cover the gambit in applications and impacts, and range from the tens of dollars to $100,000 or more. While such transactions are sometimes public, high-end vulnerabilities that sell for large sums generally are not a matter of public record. That makes it difficult to track actual sale prices to gauge the value of such vulnerabilities.

In the vulnerability market place, the seller has the power. If they hold a 0-day vulnerability that is in demand, they can set their own price. For the few vulnerability brokers out there, the perception of vulnerability value is critical for their business. In March, 2013, a Forbes piece by Andy Greenberg covered this topic and told of the sale of an iOS vulnerability that allegedly sold for $250,000.

Even with the $250,000 payout [the Grugq] elicited for that deal, he wonders if he could have gotten more. “I think I lowballed it,” he wrote to me at one point in the dealmaking process. “The client was too happy.”

As expected, there is no validation of the claim of the sale. The price tag comes from the vulnerability broker who has an interest in making such prices public, even if they are exaggerated. Jump to July, 2013, and a New York Times article by Nicole Perlroth and David Sanger makes a vague reference to an iOS vulnerability that sold for $500,000.

Apple still has no such program, but its vulnerabilities are some of the most coveted. In one case, a zero-day exploit in Apple’s iOS operating system sold for $500,000, according to two people briefed on the sale.

Given the vague details, it is fairly safe to assume that it references the iOS vulnerability sale from a year earlier. The NY Times article sources many people regarding vulnerability value, including thegrugq on the first page. This means the vague reference to the “two people briefed on the sale” were likely people briefed by thegrugq as well. Ultimately, this means that both articles and both figures, all source to the same person who has a decided interest in publishing high numbers. Without any detail, the journalists could have contacted one or both sources via email, meaning they could have just as well been thegrugq himself.

I find it interesting that in the span of 1 year and 4 months, the price of that iOS vulnerability jumped from $250,000 to $500,000. More to the point, the original $250,000 price is way out of the league of the prices of vulnerabilities at that time, on any market. Some of us were speculating that a (truly) remote vulnerability in a default Windows installation would go for around $100,000, maybe more. Even if you double our suspected price, it wouldn’t surprise me that a nation-state with a budget would purchase for that amount. But an iOS vulnerability, even remote without user interaction, a year ago? That doesn’t make sense given the user-base and distribution.

Even more interesting, consider that 4 days after the NYTimes article, another outlet was reporting the original $250,000 price.

As I mentioned before, none of this is close to being verified. The only source on record, is someone who directly benefits from the perception that the price of that vulnerability is exceedingly high. Creating the market place value of vulnerabilities through main-stream media is brilliant on his part, if what I suspect is true. Of course, it also speaks to the state of journalism that seemingly no one tried to verify this beyond word-of-mouth.