Sophos, an antivirus company, has details exposing the first known iPhone worm to be released on the public. This worm ONLY affects Jailbroken iPhones with SSH installed, that have not changed the default password. At this time, this worm appears to be a harmless exploit that changes users background to a photo of Rick Astley, although it could have malicious implications in the future. Yep you heard it right, people in Australia who have jailbroken iPhones, have been Rick-Rolled.

The worm, which could have spread to other countries although we have no confirmed reports outside Australia, is capable of breaking into jailbroken iPhones if their owners have not changed the default password after installing SSH. Once in place, the worm appears to attempt to find other iPhones on the mobile phone network that are similarly vulnerable, and installs itself again.
Sophos analyzed the worm, and has found that it has multiple variants, and some of those variants have developer comments in the code, which suggests this is a ploy to expose the dangers of not properly securing their iPhones.
The source code is littered with comments from the author suggesting the worm has been written as an experiment. One of the comments berates affected users for not following instructions when installing SSH, because if they had changed the default password the worm would not have been able to infect them.
ike_x a regular poster at the forum where the worm was first discovered, has taken credit for this attack, and is helping affected users remove the worm from their devices.
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