The other two suspects are Alexsey Alexseyevich Belan, a Russian national, and Karim Baratov, a Canadian and Kazakh national.
Yesterday, prosecutors announced two Russian intelligence officials and two criminal hackers have been indicted on charges related to the hack that began in 2014.
One of the two Russian officers of the FSB, Dmitry Dokuchaev, was reportedly arrested in Russia in December and faces treason charges, raising questions about his allegiances and to whom the Kremlin thinks he was passing information.
The US Justice Department has essentially accused the FSB of being behind the Yahoo hack which essentially implies that the Russian Government, and Vladimir Putin would have been involved in some capacity.
We are certainly seeing more and more use by nation states of criminal hackers.
At a news conference in Washington, Mary B. McCord, acting assistant attorney general, said, "The involvement and direction of F.S.B. officers with law enforcement responsibilities makes this conduct that much more egregious". Though intelligence agencies have said that the hacking of Democratic emails were carried out by Russian Federation to help President Trump's campaign, the latest charges are not related to the matter.
US authorities and cyber security specialists have long said the Kremlin employs criminal hackers for its geostrategic purposes. Yahoo merely notified 26 users that they there information may have been taken and also consulted with law enforcement. "There are no free passes for foreign state-sponsored criminal behavior". In exchange for protection, Humpty Dumpty handed the FSB compromising material from hacked email accounts.
"If you illegally target US citizens or USA companies you will be identified, pursued, and held to account - wherever you are." said Paul Abbate, FBI Assistant Director.
The other hacker, Karim Baratov, was born in Kazakhstan but is now a nationalized Canadian, and was arrested in Canada on Tuesday.
Recent events at the FSB only add to mysteries.
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"It's a very high profile worldwide investigation touching hundreds of millions of people, and so we're particularly pleased to have played an important role in locating and arresting one of the people".
Once Aleksey Belan, a Latvian hacker hired by the Russian agents, started poking around the network, he looked for two prizes: Yahoo's user database and the Account Management Tool, which is used to edit the database. Belan allegedly targeted anyone searching for erectile dysfunction medication.
The defendants targeted Yahoo accounts of Russian and USA government officials, including cyber security, diplomatic and military personnel, Russian journalists and employees of financial services and other commercial entities. He was paid $100 for each victim's credentials that he passed on to Dokuchaev. The Kremlin intelligence officials' targets included Russian journalists and government officials as well as senior officials of foreign governments and corporations.
Pugash said Baratov was handed over to the RCMP and will likely be extradited to the U.S.as he is named in a Department of Justice indictment.
It was June 2013, and US law enforcement thought they were finally getting their hands on a slippery target: Russian hacker Alexsey Belan, indicted in Nevada and California for computer intrusions at three USA e-commerce companies, had been arrested in Europe.
But when Baratov's friend saw news reports on the arrest, "It kind of just clicked right away", the friend said.
Furthermore, Belan is one of the US' most wanted cyber criminals having been indicted twice by USA federal grand juries but fled to Russian Federation. Yahoo cooperated with the Federal Bureau of Investigation from the start, officials said.
Neighbours say they do not know Baratov well. They allegedly recruited a pair of third-party hackers to breach Yahoo and steal information on 500 million user accounts and helped the hackers carry out the crime.
The hacking of the 500 million Yahoo accounts was in many ways a by-product of the information on specific individuals the Russian government was looking for.
Alexander Glazastikov, a member of a hacking group that blackmailed top Russian officials after stealing personal details, said earlier this year that the group, known as Humpty Dumpty, cooperated with the FSB.