I had my suspicions about this contest, and was rather suprised about how much publicity it was getting. It's clear now that this so called "Defacement Challenge" was in actuality a hoax, leveraging FUD (Fear, Uncertainty, and Doubt) that the news media ate up and spewed out.
Richard Forno and Brian Martin do a good job detailing the hoax, so I direct you to their page if you're interested in further commentary. You'll find that they include a very thorough timeline, plus links to a couple of good resources if you're ever in need of determining whether there may be an actual threat. See Deconstructing the Defacer Challenge Hoax/FUD for all of the details.
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