Hackers Sold Counterfeit Xbox One After Infiltrating Microsoft

Two hackers have pleaded guilty, and another two have been charged, of participating in an elaborate international scheme to build a counterfeit Xbox One from data stolen online.

David Pokora, 22, of Ontario, Canada, and Sanadodeh Nesheiwat, 28, of Washington, New Jersey have admitted to being involved in a hacker ring which dates back to January 2011.

During that month, the group infiltrated the internal network of Epic Games and stole code for the then-unreleased game Gears of War 3. Then, in September 2011, some of the team illegally accessed Valve's internal network and stole a beta build of Activision's Call of Duty: Modern Warfare 3.

Another two defendants (Nathan Leroux, 20, of Maryland and Austin Alcala, 18, of Indiana) have not pleaded guilty but are charged of acting in the conspiracy.

Escalation

The team is accused of gaining unauthorised access into Microsoft's employee network in August 2012, spending "hundreds of hours" searching for files containing intellectual property on the Xbox One, which at the time had not been revealed to the public or confirmed by Microsoft.

Assembly instructions, software designs, and source code for the next-gen system were found and stolen, which Leroux then used to build a counterfeit version of the system.

That console was then sold onto another unnamed person, who at the time was based in Mahe, Republic of Seychelles. The system was eventually sold on eBay, reportedly for about $20,100.

Then, in September 2013, just a few weeks ahead of the Xbox One launch, two unnamed individuals used Microsoft employee data to break into the company's Redmond campus to steal three beta versions of the Xbox One. The hackers are accused of providing the data to the burglars.

The cost of damages associated with the hacking ring is believed to total more than $100 million in intellectual property and data.

According to an indictment, published on Scribd and unearthed by Kotaku, the team's thefts extended to a whole range of confidential and lucrative software.

Assistant Attorney General Leslie R. Caldwell, of the Justice Department’s Criminal Division, said "the American economy is driven by innovation. But American innovation is only valuable when it can be protected. Today's guilty pleas show that we will protect America's intellectual property from hackers, whether they hack from here or from abroad."

He added: "As the indictment charges, the members of this international hacking ring stole trade secret data used in high-tech American products, ranging from software that trains U.S. soldiers to fly Apache helicopters to Xbox games that entertain millions around the world."

The full indictment can be found below.