Microsoft Blames China Group for AI Attack

Microsoft has linked a widespread supply chain intrusion to Storm-0940, a threat actor aligned with the Chinese state. The company states the group utilized ARTEX, an open-source agentic AI penetration testing framework, to execute the attack.

The attackers gained unauthorized access to a multi-tenant ConnectWise application. They then attempted sign-ins at more than 2,250 Microsoft 365 tenants. In some cases, the intruders achieved privileged access within three hours of the initial targeting.

The operation relied on stolen credentials belonging to ConnectWise apps. This allowed the attackers to authenticate as the applications themselves without interactive user sign-ins. Microsoft described ARTEX as a system of LLM-driven agents that perform autonomous penetration tests. The framework accelerated scanning, reconnaissance, and the abuse of OAuth applications.

Storm-0940 has been active since 2021 and lacks known industry aliases. The campaign targeted 14 industries, including aerospace, defense, semiconductors, government, and think tanks. Microsoft noted the attack did not originate from a compromise or vulnerability in its own systems.

A parallel password-spraying effort targeted 327 accounts across eight organizations. This resulted in more than 151,000 failed logons. On October 11, the peak activity reached 2,900 attempts per minute, with over 111,000 failures recorded for the day. Approximately 98 percent of this activity resulted in account lockouts.

The identity takeover of ConnectWise cloud apps proved more effective. Using four application credentials, the AI agents signed in to customer tenants from the same IP range. They recorded more than 200 sign-ins in under four minutes. Within some tenants, the agents performed directory operations, changed app credentials, and modified privileged roles.

Huntress observed one tenant on October 15 where an app added itself to the Global Administrator role. The attackers planted new secrets set to expire in 2028. By October 16, Huntress confirmed unauthorized sign-ins at 162 tenants. A day later, the firm counted nearly 1,000 Entra tenants with sign-in activity from the attacking IP, with more than 300 successful.

ConnectWise suspended Cloud Backup, SaaS Security, and Cloud Management as a precaution. The company has begun a phased restoration expected to take several days. It reports no indicators that partner backup data was compromised.

Microsoft advised customers to keep affected app connections disabled until formal restoration instructions are issued. The company also recommended reviewing activity from the current month where logs permit.