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Computerworld - The shutdown Tuesday of a California-based hosting company not only knocked down spam volumes but has also put a dent in malware-spreading botnets and other criminal activity, researchers said today.

While cybercriminals will face some short-term difficulties as they are forced to relocate their operations, the relief will be only temporary for the world's Internet users, the researchers added.

McColo Corp., the San Jose-based company that was cut off from the Web by its upstream Internet providers two days ago, hosted a staggering variety of cybercriminal activity, according to researchers familiar with its operation. Other than spewing out huge quantities of spam -- by some estimates, at times up to 75% of all spam -- McColo hosted the command-and-control servers of some of the biggest botnets, hosted child pornographic sites and domains that hustled users for money by scaring them into thinking that their PCs were infected with massive amounts of malware.

Among the world's largest botnets controlled from servers hosted by McColo, researchers have counted the Sinowal, Srizbi and Rustock networks.

The hosting service even harbored the server that RSA Security Inc. found that contained more than 500,000 stolen online bank and credit card accounts.

Paul Ferguson, a network architect at Trend Micro Inc., was one of 10 security researchers who put years of work into investigating McColo and documenting its criminal activities. "The work goes back two years," said Ferguson. "We did our due diligence and went through legitimate channels" in an attempt to get McColo to change its spots. "But they just played a shell game when they did respond, maybe change an IP address on one domain. They weren't serious. So we decided it was time to shine a light on the darkness."

Ferguson joined nine other researchers to publish a paper Wednesday called "McColo: Cyber Crime USA" that detailed their findings. The paper is available on the HostExploit.com site (download PDF).

Spam levels remained significantly lower today than before McColo's shutdown -- according to IronPort, spam volumes are down about 58% Thursday from Monday's numbers.

Although the shutdown may stymie online criminal activity for a time, Ferguson and others were only cautiously optimistic.

"I completely expect the criminal operators that were 'pulling the strings' in McColo to redeploy their operations elsewhere," said Ferguson. "That's almost a given." He added that there are signs the criminals are already shifting their servers and domains to other hosting companies.

Ben Feinstein, director of operations for the counterthreat unit of SecureWorks Inc., an Atlanta-based security company, echoed Ferguson. "In the short term, this may have a positive effect in reducing online crime, but in the medium- and long-term, they'll reorganize and move to other hosting providers."