Security researchers from German antivirus vendor G Data Software have identified a botnet that is controlled by attackers from an Internet Relay Chat (IRC) server running as a hidden service inside the Tor anonymity network.

This strategy offers several advantages to the botnet's operators, but also some disadvantages, the G Data researchers said Monday in a blog post.

For one, the botnet command and control server can't be easily shut down by researchers or law enforcement because its very hard to determine its real location,

The Tor system was specifically designed to provide anonymity for its users. When using Tor to access resources on the Internet, the requests sent from a user's computer are routed randomly through a series of nodes operated voluntarily by other Tor users.

In addition, the connections between users and the Tor nodes is encrypted in a multi-layered fashion, making it very hard for surveillance systems that operate at the local network level or the ISP level to determine the intended destination of a user.

Another benefit of using Tor for controlling malware infected computers is that the traffic cannot be easily blocked by intrusion detection systems, the G Data researchers said.

Intrusion detection systems commonly use signatures to identify traffic that is generated by infected computers present on the network. These signatures often look at the traffic's destination or its actual content. Because Tor traffic doesn't directly point to known malicious destinations and its content is encrypted, it's hard to flag it as malicious.

The botnet discovered by G Data researchers uses an IRC (Internet Relay Chat) server that operates as a so-called "hidden service" inside the Tor network.

Tor's Hidden Service Protocol allows people to run various types of services, such as websites or instant messaging servers, which can only be accessed from within the Tor network. These Tor services are accessible through a .onion address and not a real IP address, which makes them anonymous.

While the Tor network was built for legitimate purposes like protecting user privacy by preventing network-level surveillance, it does offer an opportunity for abuse. For example, the hidden service functionality of the Tor network was used in the past to host an online marketplace for illegal drugs.

The possibility of using the Tor network to host resilient botnet command and control servers has been discussed before. Dennis Brown, a security engineer at Tenable Network Security, discussed the strengths and weaknesses of this approach during a talk at the DefCon 18 security conference back in 2010.

"It has to be noted that malware like this suffers from the latencies that come with the Tor network," the G Data researchers said. "In other words: Tor tends to be slow and unreliable, and inherits these flaws to underlying botnets."