Update 9/14/16: Avira just posted a very informative article on the offline mode of Locky here. Locky ransomware goes on Autopilot. Based on that article and from information directly from Moritz Kroll, a Avira Software Developer & Researcher, I had some of the info about the RSA key wrong. I have updated the article below to include the relevant info.

According to security researcher Timothy Davies, a new version of the Locky Ransomware, aka Zepto, has been circulating since around the September 5th 2016 that includes an embedded RSA key and no longer communicates with C2 servers. While the embedded RSA key has been occurring since July, the removal of the C2 communication is very recent.

Using an embedded key allows Locky to encrypt a victim's computer without having to contact their Command & Control server. As many system administrators block Command & Control servers on their firewalls, by using an embedded RSA key, Locky can encrypt a computer regardless of what has been blocked at the edge.

You can see the RSA key in the image from an article by Avira below.

Embedded RSA Key

Source: https://blog.avira.com/locky-goes-offline/

According to Moritz Kroll, a security researcher for Avira, the good news is that by embedding the public key it also adds a weakness to the ransomware. This is because anyone who was infected with the same sample would be able to decrypt their files using the same key. This means, if someone purchased the decryptor, anyone encrypted using the same encryption key could use that decryptor as well. Unfortunately, the chances of being able to match up multiple victims to the same key is not an easy task.

The good news is that version being distributed at the time of this writing is having distribution problems as there attachments are not being named properly. For example, a current campaign is using ZIP attachments that contain JS files. When executed, these files are giving an error as seen below.

Scripting Error

This error is occurring because the attachments are actually HTA files and not JS files. Once the file is renamed to HTA, it works properly.

Other than that, this version continues to append the .ZEPTO extension to encrypted files and create ransom notes that are named %Desktop%\[number]_HELP_instructions.html, %Desktop%\_HELP_instructions.html, and %Desktop%\_HELP_instructions.bmp.

This version is targeting the following extensions for encryption:

.ARC, .CSV, .DOC, .DOT, .MYD, .MYI, .NEF, .PAQ, .PPT, .RTF, .SQLITE3, .SQLITEDB, .XLS, .aes, .apk, .asc, .asf, .asm, .asp, .asset, .avi, .bak, .bat, .bik, .bmp, .brd, .bsa, .cgm, .class, .cmd, .cpp, .crt, .csr, .d3dbsp, .das, .dbf, .dch, .dif, .dip, .djv, .djvu, .docb, .docm, .docx, .dotm, .dotx, .fla, .flv, .forge, .frm, .gif, .gpg, .hwp, .ibd, .iwi, .jar, .java, .jpeg, .jpg, .key, .lay, .lay6, .lbf, .ldf, .litemod, .litesql, .ltx, .max, .mdb, .mdf, .mid, .mkv, .mml, .mov, .mpeg, .mpg, .ms11 (Security copy), .odb, .odg, .odp, .ods, .odt, .onetoc2, .otg, .otp, .ots, .ott, .pas, .pdf, .pem, .php, .png, .pot, .potm, .potx, .ppam, .pps, .ppsm, .ppsx, .pptm, .pptx, .psd, .pst, .qcow2, .rar, .raw, .sav, .sch, .sldm, .sldx, .slk, .sql, .stc, .std, .sti, .stw, .svg, .swf, .sxc, .sxd, .sxi, .sxm, .sxw, .tar, .tar.bz2, .tbk, .tgz, .tif, .tiff, .txt, .uop, .uot, .upk, .vbs, .vdi, .vmdk, .vmx, .vob, .wallet, .wav, .wks, .wma, .wmv, .xlc, .xlm, .xlsb, .xlsm, .xlsx, .xlt, .xltm, .xltx, .xlw, .xml, .zip

Update: 9/9/16 - It appears that Locky has been embedding the RSA key since July but only recently stopped communicating with C2 servers. It is unsure if this is a coding mistake or if they are truly going offline.