AI-Driven Intrusion: China-Linked Hackers Exploit ConnectWise in Massive Cloud Attack

A group of hackers linked to the Chinese state has launched a significant cyberattack against Microsoft 365 customers by exploiting a supply chain vulnerability in ConnectWise. The operation, attributed to the actor known as Storm-0940, utilized an open-source artificial intelligence framework called ARTEX to automate parts of the intrusion. Microsoft’s security team reported that the attackers attempted to sign in to more than 2,250 different tenants using stolen application credentials. In several instances, the AI agents secured privileged access within three hours of the initial targeting.

The attackers leveraged ARTEX, a system of large language model agents designed for autonomous penetration testing. This technology accelerated scanning, reconnaissance, and password spraying. The agents operated continuously with minimal human input, creating a pace that left defenders with little time to react. While it remains unclear exactly how the ConnectWise credentials were stolen or how many tenants suffered data loss, the scale of the effort was substantial. The password spraying campaign alone targeted 327 accounts across eight organizations, resulting in over 151,000 failed login attempts with no successful guesses.

Storm-0940 has been active since 2021 and is described as a developing actor with no known industry aliases. The current campaign focused on 14 industries, including aerospace, defense, semiconductors, government agencies, and think tanks. Microsoft clarified that the breach did not stem from a vulnerability in its own systems or services. Instead, the compromise originated from the unauthorized access to the multi-tenant ConnectWise application. At its peak on October 11, the password spray activity hit 2,900 attempts per minute, with nearly 98 percent of these activities being locked out by the system.

Despite the failures in password guessing, the AI agents successfully used the stolen ConnectWise app credentials to sign in to customer tenants. From a single IP range, more than 200 sign-ins were recorded in under four minutes using just four application credentials. Once inside, the agents performed various operations, including directory changes, reconnaissance, and modifications to privileged roles. In one specific case on October 15, the security firm Huntress observed an app assigning itself the top administrator role, a behavior that triggered specific alerts in Microsoft Defender.

Huntress confirmed unauthorized sign-ins for 162 tenants by October 16. By the following day, the count had risen to nearly 1,000 Entra tenants with activity from the attacking IP, with over 300 of those sign-ins succeeding. The systematic nature of the sweep, moving through tenants in sorted order with seconds between actions, suggested a script working from a predefined target list. This method of using AI agents to drive the attack differs from many traditional campaigns, as ARTEX can utilize various AI models. Other threat actors in different regions are also employing similar technology, with recent reports linking it to breaches at South Korean financial institutions.

The developer of ARTEX, who uses the handle Autumn-27, announced on GitHub that the project would stop receiving updates and would transition to closed source. In response to the incident, ConnectWise suspended several of its services, including Cloud Backup and SaaS Security, as a precaution. The company has begun a phased restoration process, with full recovery expected to take several days. To date, there are no indicators that partner backup data was compromised. Microsoft advises customers to keep affected app connections disabled until formal restoration instructions are issued and to review their activity logs from this month where possible.