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Espionage: a Chinese state-sponsored cyber actor targets US critical infrastructure sectors

Malicious activity are pursuing the development of capabilities that could disrupt critical communications infrastructure between the United States and the Asian region during future crises

Focus on cybersecurity

G Iuvinale

Today, May 24, Microsoft has uncovered stealthy and targeted malicious activity focused on post-compromise credential access and network system discovery aimed at critical infrastructure organizations in the United States. The attack is carried out by Volt Typhoon, a state-sponsored actor based in China that typically focuses on espionage and information gathering. Microsoft assesses with moderate confidence that this Volt Typhoon campaign is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and Asia region during future crises.

Volt Typhoon has been active since mid-2021 and has targeted critical infrastructure organizations in Guam and elsewhere in the United States. In this campaign, the affected organizations span the communications, manufacturing, utility, transportation, construction, maritime, government, information technology, and education sectors. "Observed behavior suggests that the threat actor intends to perform espionage and maintain access without being detected for as long as possible," Microsoft said.

To achieve their objective, the threat actor puts strong emphasis on stealth in this campaign, relying almost exclusively on living-off-the-land techniques and hands-on-keyboard activity. They issue commands via the command line to (1) collect data, including credentials from local and network systems, (2) put the data into an archive file to stage it for exfiltration, and then (3) use the stolen valid credentials to maintain persistence. In addition, Volt Typhoon tries to blend into normal network activity by routing traffic through compromised small office and home office (SOHO) network equipment, including routers, firewalls, and VPN hardware. They have also been observed using custom versions of open-source tools to establish a command and control (C2) channel over proxy to further stay under the radar.

In this post, Mirosoft shared information about Volt Typhoon, their campaign targeting critical infrastructure providers, and their tactics for achieving and maintaining unauthorized access to target networks. Because this activity relies on valid accounts and living-off-the-land binaries (LOLBins), detecting and mitigating this attack could be challenging. "Compromised accounts must be closed or changed" Micosoft said.

In the post, Microsoft also shared more mitigation steps and best practices, as well as provide details on how Microsoft 365 Defender detects malicious and suspicious activity to protect organizations from such stealthy attacks.

The U.S. National Security Agency (NSA) has also published a Cybersecurity Advisory [PDF] which contains a hunting guide for the tactics, techniques, and procedures (TTPs) discussed by Microsoft.

Photo: National Security Agency/Central Security Service

To assist network defenders to hunt and detect this type of PRC actor malicious activity on their systems, NSA is leading U.S. and Five Eyes partner agencies in publicly releasing the “People’s Republic of China State-Sponsored Cyber Actor Living off the Land to Evade Detection” Cybersecurity Advisory (CSA) today.

"Cyber actors find it easier and more effective to use capabilities already built into critical infrastructure environments. A PRC state-sponsored actor is living off the land, using built-in network tools to evade our defenses and leaving no trace behind,” said Rob Joyce, NSA Cybersecurity Director. “That makes it imperative for us to work together to find and remove the actor from our critical networks.

“For years, China has conducted operations worldwide to steal intellectual property and sensitive data from critical infrastructure organizations around the globe,” said Jen Easterly, CISA Director. “Today’s advisory, put out in conjunction with our US and international partners, reflects how China is using highly sophisticated means to target our nation’s critical infrastructure. This joint advisory will give network defenders more insights into how to detect and mitigate this malicious activity. At the same time, we must recognize the agility and capability of PRC cyber actors, and continue to focus on strong cybersecurity practices like network segmentation and ongoing investments in promoting the resilience of critical functions under all conditions. As our nation’s cyber defense agency, CISA stands ready to aid any organization affected and we encourage all organizations to visit our webpage for guidance and resources to make their networks more resilient.”

“The FBI continues to warn against China engaging in malicious activity with the intent to target critical infrastructure organizations and use identified techniques to mask their detection,” said Bryan Vorndran, the FBI’s Cyber Division Assistant Director. “We, along with our federal and international partners, will not allow the PRC to continue to use these unacceptable tactics. The FBI strives to share information with our private sector partners and the public to ensure they can better protect themselves from this targeted malicious activity.”

“It is vital that operators of critical national infrastructure take action to prevent attackers hiding on their systems, as described in this joint advisory with our international partners,” said Paul Chichester, NCSC Director of Operations. “We strongly encourage UK essential service providers to follow our guidance to help detect this malicious activity and prevent persistent compromise.”

“The Canadian Centre for Cyber Security joins its international partners in sharing this newly identified threat and accompanying mitigation measures with critical infrastructure sectors,” said Sami Khoury, Head of the Canadian Centre for Cyber Security. “The interconnected nature of our infrastructures and economies highlights the importance of working together with our allies to identify and share real-time threat information.”

The CSA provides an overview of hunting guidance and associated best practices. It includes examples of the actor’s commands and detection signatures. The authoring agencies also includes a summary of indicators of compromise (IOC) values, such as unique command-line strings, hashes, file paths, exploitation of CVE-2021-40539 and CVE-2021-27860 vulnerabilities, and file names commonly used by this actor.

As one of their primary tactics, techniques, and procedures (TTP) of living off the land, the PRC actor uses tools already installed or built into a target’s system. This allows the actor to evade detection by blending in with normal Windows systems and network activities, avoiding endpoint detection and response (EDR) products, and limiting the amount of activity that is captured in default logging configurations.

NSA recommends network defenders apply the detection and hunting guidance in the CSA, such as logging and monitoring of command line execution and WMI events, as well as ensuring log integrity by using a hardened centralized logging server, preferably on a segmented network.

Defenders should also monitor logs for Event ID 1102, which is generated when the audit log is cleared.

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