Dutch police have arrested three people for building a worldwide zombie network of more than 100,000 PCs used to launch internet attacks on companies and to hack into bank and Paypal accounts.

The main suspect, a 19 year-old man, and his alleged accomplices, a 22 year-old and a 27 year-old, were collared in raids on their homes. Police seized "several computers, documents, a bank account, bare cash and a sports car". More arrests are expected.

The compromised PCs were hacked using a trojan horse, called W 32.Toxbot, according to the police, who say that "some thousands" of the victims were based in the Netherlands.

Investigators have identified at least one distributed denial of service (DDoS) attack, targeting an unnamed American company, emanating from the zombie botnet. DDoS attacks are often used by extortionists to unleash a barrage of computer-generated request to victim websites to cripple their operations. Online gambling firms and web retailers are typical victims.

The suspects are also thought to have hacked into a "large number of PayPal and eBay accounts, enabling them to order several goods over the internet, without actually paying for them".

The gang controlling the zombie botnet played cat and mouse with the anti-virus vendors, Dutch police say: "The Toxbot registers all keyboard actions of the infected computers and sends this information to the cyber-criminals. Anti-virus software has been available for some time. The hackers, however, frequently revised the virus, in a catch up game with the anti virus producers".

The botnet has now been dismantled, courtesy of GOVCERT.NL, the Computer Emergency Response Team of the Dutch government, in tandem with XS4All Internet and other unidentified providers. ®