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IN PHOTO: A new system update for the Xbox One has been released, bringing with it an onslaught of requested features. People play a Kinect boxing game on an XBox 360 gaming console at the Microsoft booth during the first day of the 2011 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 6, 2011. Reuters/Steve Marcus

It's a case of the hunter being hunted. The walls seem to be closing on the black hat hacker collective known as Lizard Squad. After multiple arrests of suspected members, the group has drawn the ire of fellow hackers. The website for the group's DDOS service has been brought down and passwords belonging to its customer base has been compromised.

Lizard Squad had gained notoriety for successfully bringing down the Xbox Live and PSN networks during Christmas holidays leaving scores of gamers in the lurch. The DDOS attack on Sony's and Microsoft's live services turned out to be an exceedingly effective marketing strategy for the hacker collective, according to Geek.com. The group's endgame was to ride their wave of popularity to launch the LizardStresser service. The service employs an attack-for-hire model designed to bring down user-nominated web domains for a price.

The revenge hack on the Lizard Squad's website revealed that the hacker group was quite sloppy in securing its own servers. While it had chastised Sony and Microsoft for laxity in their security protocols, it's been revealed that the hackers had themselves stored their own stored their own users’s data—complete with passwords and addresses—in a plain text file. This is at odds with the basic industry practice of encrypting passwords to mitigate damage following a security compromise. Details of all 14,241 subscribers of the service are now out in the open.

Gizmodo reports that customers of the LizardStresser service had paid anywhere between $6 and $500 in bitcoin for customised DDOS attacks on the domains of their choice. Most of these requests were aimed at taking down "Minecraft" servers. This transaction had netted Lizard Squad a cool $11,000 in a short period of time. Apparently, it's speculated that the hackers who compromised their data may also have hijacked their bitcoin wallet. Worse yet, even the addresses belonging to LizardStresser customers have been compromised.

The development comes close on the heels of the arrest of an 18 year-old hacker in U.K., who is believed to be associated with the group. Shortly before its series of recent misfortunes, Lizard Squad had focused its attention on compromising the Tor network. This was followed by a warning from the vigilante hacker collective Anonymous, according to Neowin. Although Anonymous hasn't officially claimed responsibility for the attack on Lizard Squad yet, there's little reason to believe otherwise.