The keys to the thefts were as follows. First, carbon credits are maintained at the ETS in electronic form in national registries. Second, thieves managed to gain access to accounts where those credits were kept, and then to transfer them to other accounts, from whence they were sold off to generate cash. These registries were consequently closed down on January 19, 2011, and will only be re-opened when better security measures can be enforced. The details of the actual exploit are unclear, probably because the ETS would prefer not to divulge too many of its inner workings even if they are about to be overhauled substantially.
But the fact that fraudulent account access and credits transfers took place strongly suggests — at least as far as we're concerned here at KnowBe4.com — that some kind of credential fiddling was involved, perhaps even a phishing attack of some kind. If security was indeed lax as The Economist tells us, and the thieves had access to target information for people with ETS accounts, we can think of no easier way for them to have obtained account access, gobbled up various carbon credits, and moved them out of the system and into liquid form, with both ease and dispatch.
For us, the moral of the story is that there are no online assets that cannot be phished, especially if security is loose, and users haven't been trained to look out for and avoid such attacks. Hopefully, the revised trading regime will not only use improved technical measures (which should definitely include fraud detection software), but will also devote some time and effort to educating traders on how to handle their credentials and logons properly and safely.