Microsoft Blames Chinese Group for AI-Driven ConnectWise Intrusion

Microsoft has identified Storm-0940, a threat actor aligned with the Chinese state, as the entity behind a significant supply chain attack. The intrusion targeted a multi-tenant application from ConnectWise, allowing the group to probe over 2,250 Microsoft 365 tenants. In several instances, the attackers achieved privileged access within three hours of initial targeting.

The operation relied on ARTEX, an open-source framework that utilizes large language model agents to conduct autonomous penetration tests. According to Microsoft, these agents accelerated scanning, reconnaissance, and the abuse of OAuth applications. The system allowed for continuous activity with minimal human oversight, reducing the window available for defenders to detect and respond to the intrusions.

Storm-0940 has been active since 2021 and targets sectors including aerospace, defense, semiconductors, and government entities. The company clarified that the attack did not originate from a vulnerability in its own systems but rather from compromised credentials belonging to ConnectWise apps. These stolen credentials enabled the attackers to authenticate as the applications themselves, bypassing standard interactive user sign-ins.

A separate password spraying campaign targeted 327 accounts across eight organizations, resulting in over 151,000 failed logons. At its peak on Oct. 11, the effort reached 2,900 attempts per minute. Nearly 98% of these attempts were locked out, indicating that the identity takeover via ConnectWise apps was the more effective vector. Using just four application credentials, the AI agents recorded more than 200 sign-ins in under four minutes.

Security firm Huntress observed specific malicious behaviors, including an app adding itself to the Global Administrator role on Oct. 15. The attackers also planted new secrets set to expire in 2028. By Oct. 16, Huntress confirmed unauthorized sign-ins at 162 tenants. A day later, the count rose to nearly 1,000 Entra tenants with activity from the attacking IP address, with over 300 successful logins. The rapid, sequential movement through tenants suggested the use of a scripted target list.

The use of ARTEX distinguishes this campaign from traditional attacks, as the tool can function with various AI models. Public reports this month linked the framework to breaches at South Korean financial institutions, where the suspect allegedly used it with Anthropic's Claude Code. The developer of ARTEX, known as Autumn-27, stated on GitHub that the project would become closed source and no longer receive updates.

ConnectWise has suspended several services, including Cloud Backup and SaaS Security, as a precaution. A phased restoration process is underway and is expected to take several days, with no current indicators that partner backup data was compromised. Microsoft advises customers to disable affected app connections until formal instructions are issued and to review recent activity logs where possible.