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.