Schneier, Team Hack 'Invisibility Cloak' for Files

It may not be possible after all to conceal the existence of a sensitive file on a machine. BT security expert Bruce Schneier and a group of researchers have hacked an ultra-paranoid feature in the TrueCrypt open-source disk encryption tool that lets users hide secret files from detection by attackers or others.

This “deniability” feature is a sort of extreme file-protection function that first encrypts the file and then hides it within an encrypted area on the disk drive like an invisibility cloak. But Schneier, chief security technology officer with British Telecom and researchers from the University of Washington found that Microsoft Vista, Word, and Google Desktop each can blow the cover of files using this so-called “deniable file system” (DFS) feature.

The researchers were able to get around DFS in versions 5.0 and below of TrueCrypt’s encryption-on-the-fly tool, and will present their findings on the hack at the Usenix HotSec ’08 summit next week in San Jose, Calif.