An update on the home page for The Neo Project says the group is no longer working on the Xbox "due to legal reasons."
Project founder Mike Curry said in an e-mail interview that he couldn't elaborate. "We cannot comment on anything that has happened in the last 24 hours; we can only say that we can no longer participate in the Xbox challenge," he said.
Microsoft representatives did not immediately respond to requests for comment.
The Neo Project is a group of computing enthusiasts devoted to cracking security challenges using distributed computing techniques, in which heavy-duty computing tasks are divvied up among a number of PCs. The group's initial software release focused on a $10,000 challenge from computer security firm RSA Security to crack a 576-bit encryption code.
A subsequent software release wasat cracking the 2,048-bit encryption code used by the Xbox. A cracked encryption code could allow hackers to run homemade Linux software on an unmodified Xbox, satisfying a $100,000 hacking challenge by Michael Robertson, chief executive of Linux software company Lindows.
Curry said The Neo Project will continue to work on RSA's 576-bit challenge and may expand to work on another RSA bid to crack a 2,048-bit encryption key, an effort that could aid Xbox hackers.
"We were disappointed to see (the Xbox) project came to a short end," he said. "But looking ahead, we are going to continue plans to implement a better-known method into our client and maybe fill the Xbox void with the RSA-2,048 bit challenge."