Chinese Hackers Attacking Microsoft Customers With Sophisticated Password Spray Attacks

Researchers have identified a network of compromised devices, CovertNetwork-1658, used by Chinese threat actors to launch highly evasive password spray attacks, successfully stealing credentials from multiple Microsoft customers. 

The stolen credentials are then leveraged by threat actors like Storm-0940 to gain unauthorized access to systems.

Storm-0940 has been an active threat actor since 2021 and primarily targets organizations in North America and Europe, including government, non-profit, and private sector entities. 

The group leverages brute-force attacks, exploits, and compromised network services to gain initial access, so Microsoft has notified affected organizations and provided mitigation and detection recommendations. 

It includes identifying and blocking malicious IP addresses, strengthening password policies, and implementing network segmentation.

Organizations can also use security analytics tools to detect suspicious activity associated with Storm-0940.

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A Chinese threat actor has compromised a large number of TP-Link SOHO routers, forming CovertNetwork-1658. By exploiting a vulnerability, the attacker gained remote access to these devices. 

After the network has been compromised, additional attacks, such as credential harvesting and computer network exploitation, are carried out using the compromised network. 

The threat actor leverages a compromised router to establish a covert network, where they first download and execute Telnet and xlogin binaries to gain remote access. 

Subsequently, a SOCKS5 server is deployed on the router, creating a proxy network, which obfuscates the origin of password spray attacks, making it difficult to trace the source of the malicious activity back to the compromised router.

CovertNetwork-1658, a malicious infrastructure, is actively launching low-volume password spray attacks against numerous organizations. It leverages compromised SOHO routers to mask its origin and employs a vast pool of rotating IP addresses to evade detection. 

By limiting sign-in attempts to a single attempt per account per day, CovertNetwork-1658 avoids triggering traditional security alerts, making it challenging to identify and mitigate these stealthy attacks. 

Security reports exposed CovertNetwork-1658, a botnet used for large-scale password spraying by a Chinese threat actor.

While the original infrastructure usage declined, recent activity suggests the actors acquire new infrastructure with different signatures. 

According to Microsoft, the network historically comprised 8,000 compromised devices, of which 20% actively sprayed passwords, allowing for widespread credential theft across various sectors. 

Observed user agent strings indicate attempts mimicking Windows and Internet Explorer. Storm-0940, leveraging compromised credentials obtained from CovertNetwork-1658, has infiltrated target organizations. 

Once inside, the threat actor has actively scanned networks, dumped credentials, accessed network devices, installed persistence mechanisms like proxy tools and RATs, and exfiltrated sensitive data, demonstrating a coordinated and efficient attack strategy.

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