Policymakers from Congress and the executive branch are looking for ways to further boost the U.S. quantum computing industry, including by growing industrial capacity to translate scientific breakthroughs into workable technology.

Deputy Secretary of Commerce Paul Dabbar said the American industry is “by far the greatest leader in quantum technologies,” with a tech stack that is the envy of the world. The challenge will be translating those technological gains into real, brick-and-mortar industrialization and manufacturing dominance.

Dabbar pointed to other examples of federal support, such as grant funding from the CHIPS and Science Act and letters of intent signed earlier this year with nine companies investing more than $2 billion into different quantum technologies.

But one of the primary questions that Commerce officials ask companies when making decisions on federal investments is “How do we move a bit further down the road from discovery towards actually supporting individual technologies that can commercialize?” he said.

That question is being driven by U.S. assessments that the country’s quantum technology edge is real but is being threatened by countries such as China that have more robust industrial capacity.

Dabbar said the federal government is also attempting to follow its own example, citing White House executive orders on quantum computing and more aggressive timelines for agencies to migrate to quantum encryption, measures that CyberScoop was first to report last year. Commerce is the first agency scheduled to deploy its post-quantum encryption.

The department also has the authority to place export controls on technologies, as it did for Anthropic’s Mythos and Fable AI models earlier this year. Dabbar expressed caution but suggested Commerce officials were willing to use such controls to advance the interests of American technology makers.

“We have to be very careful about American leadership on the frontier on all technologies, and quantum is certainly one of them,” Dabbar said. “We want to be very thoughtful about making certain that which is invented by people in this room are retained by people in this room and are not copied or stolen.”

Dabbar’s comments came the same day that the Commission on U.S. Quantum Primacy released a report detailing the major challenges facing the American quantum industry.

The report warned that while research, software and private investment are “major strengths” for U.S. industry in its global competition with China, China’s manufacturing and supply chain production threatens to erode that edge.

“American scientific strengths may not translate into leadership in deployment and industrial production,” the report stated.

Boosting American industrial capacity in quantum is among the report’s top recommendations, including investments in physical infrastructure such as factories, foundries and suppliers that can “turn future breakthroughs into reliable systems.”

“To date, many quantum milestones have rightfully been measured in technical and scientific terms,” the report stated. “But national leadership requires a broader ambition: quantum primacy—the ability to turn scientific advances into sustained strategic advantage across quantum technologies.”

The commission is due to issue a final report in Spring 2027.

Sens. Ben Ray Luján, D-N.M. and Todd Young, R-Ind., served as co-chairs of the commission.

Meanwhile, Luján pointed to an alleged national security incident involving Nvidia CEO Jensen Huang as evidence that U.S. private industry can’t be trusted to protect America’s tech secrets. According to media reports Huang, who is married, had an affair with Chinese tech executive Alice Huang, later identified by U.S. intelligence agencies as a foreign intelligence asset working for China.

When asked about how to maintain U.S. competitiveness in quantum computing and other technologies, Luján said tech executives “need to be smarter” about protecting America’s tech secrets.

“People need to make better decisions when you’re entrusted with that kind of power and responsibility,” he said.

Luján, who did not mention Huang by name, said tech executives “know that other countries, they send people here to do bad things and get people locked up into telling secrets and things of that nature.”

“That clearly happens, and now we’re learning about it and the stock market’s reacting…don’t be stupid,” Luján said.

Luján said that while Democrats taking control of Congress will involve efforts to “push back” against executive branch overreach, he is open to working with the Trump administration and Republicans on legislation focused on the workforce and bringing “substantial investments across the United States in this space to ensure that the United States is going to stay in the front” of quantum computing.

But he suggested those investments could be wasted if Congress does not intervene with “good policy” and if tech executives can’t self-police their behavior. He pointed to another emerging technology, AI, where an innovation-at-all-costs approach has left industry poorly positioned to deal with cybersecurity and safety concerns.

“As we’re learning now from whistleblowers and others from some AI companies that we also need policy and guardrails, and the United States is qualified in a few [of those] areas,” Luján said.

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Google and an assortment of partners shut down a botnet that an approved Android device manufacturer purposefully deployed across more than 1.3 million TV set-top boxes, the company said Monday. 

Videostrong Technology Co., a China-based Android original equipment and device manufacturer, implanted a backdoor into multiple devices it sold. Those backdoors established XCPE, an expansive botnet that cybercriminals used to conduct ad fraud, steal data and route malicious traffic through residential proxy networks, according to a Google Threat Intelligence Group report.

Google took legal action to shut down the domains and servers Videostrong used to control the botnet. The company also took down command-and-control domains that more than a dozen malware families ran as modules through the XCPE backdoor, claiming it disrupted access to at least 10 million additional compromised devices from various manufacturers.

Videostrong sold Android devices with pre-installed malware for years, slipping by Google’s security tests by loading the malicious code after the device’s first boot. “The XCPE operators constantly evolved its configurations to evade Google’s pre and post-launch detections,” Charley Snyder, head of disruption operations at GTIG, told CyberScoop.

Snyder declined to say when or how Google first became aware of the approved vendor running a botnet on Android-powered devices. 

“We found this malicious software built directly into many different device models and brands over multiple years, supported by dedicated infrastructure and constantly evolving configurations to evade detection and manage their affiliates,” Google researchers wrote in the report. “We believe this campaign wasn’t an isolated rogue insider or a development oversight.”

Google banned Videostrong and any future subsidiaries from building or selling certified Android devices, and said it changed its review process to detect and stop similar activities in the future. Yet, Snyder said the company isn’t sharing specifics on these changes because it doesn’t want to provide threat actors insights that might help them circumvent these additional protections.

Most of the devices comprising the XCPE botnet were Android TV set-top boxes, but researchers also observed infected Android-based telehealth devices, karaoke machines and digital signs. 

“Without users’ knowledge or consent, infected devices were offered as a distribution mechanism for a wide array of criminal actors,” researchers wrote in the report. “This led to a variety of malicious activities being conducted on and through the devices, including ad-fraud, data exfiltration, and routing malicious network traffic through the devices.”

The botnet spanned more than 170 countries, with the largest concentration of infected devices based in Malaysia, Brazil, Iraq, Mexico and Taiwan, according to TrendAI researchers. Nearly 44,000 infected devices were based in the United States between June and October.

Google also partnered with Japan’s National Police Agency, Lumen Technologies, Human Security, Plume and Synthient to study and disrupt the botnet. 

The company said the dismantling of XCPE “seriously impacted over a dozen malicious actors,” yet it warned that the underlying market for backdoors, ad fraud and residential proxy networks are resilient and operating as an interconnected supply chain.

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A China state-backed threat group is using ARTEX, the automated agentic AI penetration testing framework, to achieve remarkable speed, scale and success in a campaign that already compromised about 140 sensitive targets in 11 days, according to CrowdStrike. 

The threat group, which CrowdStrike tracks as Vapor Panda, targeted more than 200 organizations in at least 14 countries since Oct. 17, the security company said in a threat report Thursday. Targets and confirmed victims include foreign ministries, a European country’s presidency and prime minister’s office, defense and intelligence agencies; 19 U.S.-based organizations in the pharmaceutical, semiconductor, defense, nuclear and financial sectors; and telecom providers in the United States, Belgium and the Philippines. 

CrowdStrike told CyberScoop about 70% of Vapor Panda’s targets were confirmed compromised or had evidence indicating moderate confidence of a successful intrusion. 

Vapor Panda’s use of ARTEX, paired with DeepSeek, allowed it to accomplish more tasks with shocking speed — requests occurring as often as every 10 seconds — and pursue multiple attack paths concurrently. 

“This is the first time that we’re seeing an agentic adversary nation-state threat actor at this scale, and I think that this is probably, unfortunately, something we’ll see more of,” Adam Meyers, senior vice president of counter adversary operations at CrowdStrike, told CyberScoop.

Hands-on-keyboard activity tracked by CrowdStrike for the past 15 years typically involved up to 40 commands per hour. “Now, with ARTEX, we could see it exceed 1,500 commands an hour,” Meyers said.

“If you diversify that across 200 targets, it costs them very little to run a mass-exploitation campaign and drop a websell,” he added. “They can hit more targets in a faster period of time.”

Vapor Panda’s broad-access campaign, which remains active, has targeted think tanks and government agencies spanning defense, justice, finance and diplomacy.

“I would characterize it as a diverse operational mission that tends to focus on sectors and geographies that Beijing considers economically or politically important,” Meyers said.

The active campaign attributed to Vapor Panda is separate from the ARTEX activity Microsoft Threat Intelligence attributed to Storm-0940 earlier this month, including a supply-chain attack targeting ConnectWise customers. 

Adversarial use of AI is relatively new, yet also quickly becoming the new normal, Meyers said. “We’re scrambling because we’re seeing so many of these agentic adversaries.”

Agentic AI use for malicious purposes is growing month-over-month at a rate of almost threefold. CrowdStrike observed roughly 45 agentic adversary attacks in September and it’s already at 126 for October, and climbing.

Adversarial use of agentic AI isn’t an intractable problem, but rather another reminder that organizations need visibility into their endpoints, identities and cross-domain capabilities, Meyers said. 

These attacks aren’t showcasing anything new, “it’s just doing it at a speed and scale that we’re unaccustomed to,” he said. “It’s not hopeless, but you’ve got to take action. You can’t put your head in the sand.”

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Volt Typhoon, a China-government backed hacking group that has infiltrated America’s critical infrastructure networks for years, has consistently built and dismantled ephemeral malicious infrastructure to burrow into hundreds of sensitive systems undetected, Lumen Technologies’ Black Lotus Labs said in a Wednesday report.

The covert access operation that researchers call “Silent Train” isn’t a standalone network, but rather a series of compromised small office home office (SOHO) routers, internet of things (IoT) devices and enterprise infrastructure that Volt Typhoon has rapidly rotated through since late 2023. 

The Chinese threat group has used this chain of short-lived compromised infrastructure to exploit additional vulnerabilities, including zero-days, in network edge devices and gain deeper, persistent access into victim networks, researchers said. 

“Individual chains are assembled and dismantled every day, with infrastructure continually refreshed,” Michael Horka, principal information security engineer at Black Lotus Labs, told CyberScoop. “Volt Typhoon demonstrated a repeatable capability to rebuild a new chain with different infrastructure in less than two minutes, making the number of nodes at any one moment effectively close to zero.”

Black Lotus Labs has notified hundreds of victims since it first identified Silent Train activity, including telecom providers, government entities, defense contractors, communication services, universities and IT firms. Other victims spanning critical infrastructure include organizations in the water, energy, transportation, maritime, rail, aviation and emergency services sectors.

“The ephemeral nature of the framework means our observations should not be interpreted as a complete census of Volt Typhoon activity,” said Horka, who also was the lead researcher on the report.

The nation-state group’s investment in operational security and preserving access is remarkable, according to Black Lotus Labs.

“We observed infrastructure assembled in under two minutes, sessions averaging roughly four hours, extensive cleanup, compartmentalization and continued development of new access vectors,” Horka said. “That is considerable effort devoted not even to get into their end targets, but purely to making important operations difficult to discover and trace.”

Volt Typhoon relied more heavily on Silent Train after the FBI and Justice Department disrupted the KV Botnet in early 2024, researchers said. Earlier this year, U.S. and global authorities warned about a widespread shift in Chinese hacking groups’ use of covert networks riding on compromised common devices.

The reach of those efforts is extensive and ongoing. Volt Typhoon has exploited and abused more than 27 device classes in Silent Train operations, including edge devices, enterprise management tools, identity and access management systems, networking infrastructure and other technologies. 

“The diversity matters, but the discipline matters even more,” Horka said. “Specific device types were consistently reserved for particular positions in the chain. It operated less like a collection of randomly compromised devices and more like an organized inventory of capabilities.”

The threat group has successfully compromised devices and technologies from Fortinet, Cisco, ManageEngine, Ivanti, F5, Check Point, Palo Alto Networks, ServiceNow, TP-Link, Netgear and ArcGIS, researchers said. Black Lotus Labs also observed confirmed zero-day campaigns targeting Versa Director, N-Able N-Central, Cisco Catalyst SD-WAN and VeloCloud Orchestrator. 

“The exploitation patterns, victimology, and geographic targeting observed throughout our investigation point to a sustained focus on communications, defense, government, and critical infrastructure environments of enduring strategic value,” Black Lotus Labs researchers wrote in the report. “Through repeated targeting of centralized management platforms and control-plane technologies, Silent Train shows how Volt Typhoon systematically pursues and preserves access to some of the most consequential networks in the United States.”

Silent Train’s ephemerality and operational discipline means it can’t be measured in size. These attributes also make it “fundamentally difficult to disrupt because there isn’t one network to take down,” Horka said. 

“What exists today will be completely different tomorrow,” he added. “You can try to remove individual pieces, but removing the actor’s ability to continuously rebuild them is a much harder problem to solve.”

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Prosecutors announced charges against six alleged scammers based out of Africa who targeted Americans with fake non-fungible token (NFT) investment scams by posing as women on dating websites, netting hundreds of victims.

According to an affidavit for the arrest of of the six people — Chui Kok Wa, Gislen Neukeu, Shamusa Ninsiima, Clement Mugiraneza, Merveille Mudacumura and Nicodemus Hingima Monyancha — the criminal group with connections to China and Malaysia opened a scam compound in Madagascar early last year.

“In the scheme, scammers posed as beautiful women who met victims on dating websites, eventually enlisting them to connect their cryptocurrency wallets to fraudulent websites associated with the NFT investments,” the Justice Department said in a news release Tuesday. “Once connected, the scammers willed the victims to continue to fund their cryptocurrency wallets, and then surreptitiously pulled money from the victims’ wallets without their knowledge.”

The FBI identified approximately 74 cryptocurrency wallets associated with approximately 800 victims in the scheme, for an estimated loss of at least approximately $516,695, according to the affidavit and news release.

The U.S. District of Columbia’s Scam Center Task Force, the FBI’s field office in Honolulu and the U.S. Attorney’s Office for the District of Alaska made a trip to Madagascar in August to review electronic devices seized from scam compounds. Interviews with scam compound workers there revealed that Cambodian police activity and armed conflict between Thailand and Cambodia led to operations at a Cambodian scam compound being moved to Madagascar.

Phones for the alleged scheme leader, Wa, contained employment contracts and scripts for what scammers should say to victims, which said they would be committing “an emotional scam.” The devices that officials reviewed and the interviews also established further connections between the scammers and Southeast Asia and China.

After the initial interviews, though, Madagascar repatriated some suspects to China before the investigation was complete, according to the Justice Department.

“Today, [D.C.] U.S. Attorney Pirro called on the Madagascar government to cooperate with the United States, extradite the six charged defendants, and further noted that the government had obtained a material witness warrant to interview 15 employees of the scheme, who claimed they were human trafficked and abused by Wa, but are believed to be held in jail in Madagascar,” the release stated.

In the same release, DOJ said that the Scam Center Strike Force had crossed the $1 billion threshold in cryptocurrency recovered in its first year. 

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A 44-year-old Chinese national was extradited to the United States and arraigned in federal court for his alleged involvement in a sweeping investment scam network that tricked at least 174 U.S. residents out of nearly $37 million, the Justice Department said Friday. 

Zheng Zhao was extradited from the Netherlands to the United States to face a conspiracy to commit money laundering charge that could keep him in prison for 20 years. 

Prosecutors accuse Zhao and his co-conspirators of operating a global cryptocurrency investment scheme out of multiple countries, including scam centers in Cambodia. 

The cybercrime ring allegedly reached out to U.S.-based victims proactively via social media, phone calls, text messages and online dating sites to establish a deceitful relationship and build trust. Eventually, Zhao and his co-conspirators promoted cryptocurrency investments to the victims and directed them to send funds through fake sites that resembled legitimate trading platforms.

Victims were told their investments were growing in value, yet they were already transferred from U.S. bank accounts controlled by the co-conspirators to an account at Deltec Bank in the Bahamas, officials said. The crew allegedly converted the victim funds to Tether before transferring the assets to a digital wallet controlled in Cambodia.

The stolen funds were ultimately distributed to leaders of scam networks throughout the region, officials said.

Eight of Zhao’s co-conspirators previously pleaded guilty participating in the investment scam conspiracy, including Shengsheng He and Jingliang Su, who were sentenced to 51 months and 46 months in prison, respectively. 

Joseph Wong, a co-conspirator living in California, managed a network of money launderers in Los Angeles who registered shell companies, opened U.S. bank accounts and transferred stolen victim funds to international bank accounts.

“This case should serve as a warning to scammers in every corner of the world: there is nowhere to hide,” Todd Bratz, special agent in charge of the U.S. Secret Service Criminal Investigation Division, said in a statement. “Secret Service investigators and our law enforcement partners remain unwavering in their commitment to identify those who operate scam centers, disrupt their financial infrastructure and bring them to justice.”

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A new bipartisan House bill would charge the federal government with developing formal guidance for defending AI models against distillation attacks.

The AI Cyber Defense Act, shared exclusively with CyberScoop ahead of release, is sponsored by Reps. Pat Harrigan, R-N.C., and George Whitesides, D-Calif. It would direct the National Institute for Standards and Technology to develop voluntary industry standards and best practices for preventing distillation attacks from foreign entities from four countries: Russia, China, Iran and North Korea.

In an interview, Harrigan told CyberScoop it is “incredibly expensive” for the U.S. AI industry to maintain its six-to-12 month lead over other countries, and distillation attacks give other parties an incentive to copy other models while keeping their own spending low.

He said he believes countries such as China are making a strategic choice to hold back on full investment of their own AI industry, instead betting they can drift behind American companies as they perform the arduous and expensive research and development to advance the field.

“One of my concerns is that our adversaries just see it as much more beneficial and productive for them as this [U.S. industry] engine burns,” said Harrigan. “Where they actually just see it as more beneficial for themselves in the short term, to hang six to 12 months behind the United States, let us burn really hot and for 5 to 10% of the spend, they can just distill and steal, and they can do that up to until the point where our market kind of falters. At which point they can turn it into high gear, having not expended those resources yet in the past, and actually leapfrog us.”

As part of that mission, NIST will first have to define what a distillation attack is, and separate it from much of the sharing and collaboration between open-weight and open-source models that have also helped drive innovation.

Distillation attacks happen when one AI model is trained on the output data and reasoning of another, usually more powerful or advanced, model. The U.S. government, along with AI companies Anthropic, OpenAI and Google, has accused Chinese companies like Moonshot AI, DeepSeek and Alibaba, of carrying out “systematic” campaigns to distill and copy U.S. commercial models.

According to AI and cybersecurity experts, these campaigns involve the use of hundreds of burner and resold accounts and false identities to bypass geographic restrictions to access U.S. frontier models, and involve thousands, sometimes millions of prompts meant to extract valuable outputs and capabilities that can be used to train a foreign model.

Meanwhile, U.S. AI companies themselves face multiple ongoing lawsuits from media organizations, creators, artists and other laborers, who allege that commercial U.S. models were originally trained on their works without any compensation or permission.  

“AI is advancing at a breakneck pace, and every month we keep China and other adversaries from stealing our progress is a month we gain to build the safeguards this technology needs,” Rep. Whitesides said in a statement to CyberScoop.

The bill would also establish an “AI Cybersecurity Roundtable” at NIST composed of governments and AI industry stakeholders that would work to develop voluntary standards for defensive use of AI in cybersecurity in critical infrastructure.

Harrigan said he envisions the roundtable as including frontier AI companies including software and hardware security experts, who can add independent third-party voices in discussions on the best way to defend IT assets in critical infrastructure and other industries. A place “where you can go and pick an off-the-shelf set of standards that says these are the best practices as we know them all today, given the current state of technology development and the threats that are out there.”

The bill defines “entities of concern” as any foreign person or organization headquartered in one of the four listed countries of concern (Russia, China, Iran and North Korea), or one operating under the direction of a company based in those countries. The director of NIST would also have the ability to designate specific individuals or organizations as entities of concern.

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Microsoft researchers attributed the recent supply-chain attack targeting ConnectWise customers’ Microsoft 365 environments to a China-state aligned threat actor it tracks as Storm-0940.

“As early as September 2026, Storm-0940 used the agentic AI penetration testing framework ARTEX to automate attacks targeting hundreds of organizations globally across a broad range of industries,” Microsoft Security Research wrote in a blog post Wednesday. 

The nation-state group, which has been active since 2021, targeted organizations in aerospace and defense, automotive, chemicals, energy, financial services, government, legal, manufacturing, media, military, semiconductors, software, technology, think tanks and non-profits. 

Storm-0940 initiated a widespread, but ultimately unsuccessful, password-spraying campaign immediately preceding the compromise of ConnectWise’s Cloud Backup service. During a four-day stretch ending Oct. 14, Storm-0940 targeted 327 Microsoft 365 and Exchange Online accounts across eight organizations, researchers said.

During that short campaign, Microsoft observed more than 151,000 failed logon attempts, peaking at 2,900 failures per minute. Storm-0940 set its sights on ConnectWise the next day, using AI agents and the same malicious infrastructure to compromise a series of ConnectWise Cloud Backup customers’ Microsoft 365 environments. 

Storm-0940 gained significant advantages in the ConnectWise supply-chain campaign by using ARTEX to accelerate scanning, conduct password-spray attacks and abuse OAuth applications in downstream victims, according to Microsoft. 

“In some of these environments, the AI agents (on behalf of the threat actor) progressed beyond authentication to Microsoft Graph and directory operations, including reconnaissance, application credential modifications to establish persistence, and changes involving identities, groups, and privileged roles,” researchers wrote. “Microsoft identified multiple customer environments with evidence of follow-on activity, highlighting how a compromised third-party application with high privileges could provide access beyond its originally intended purpose.”

Microsoft Threat Intelligence said multiple threat actors from various regions are using ARTEX to strengthen capabilities and speed up the tempo of attacks. 

The open-source penetration testing framework works with any AI model to automate various offensive security workflows, the company said. “ARTEX is a system of LLM-driven agents that run an autonomous penetration test from reconnaissance through data exfiltration with little needed human interaction.”

In the ConnectWise campaign, Microsoft said “Storm-0940 used ARTEX to reach more than 2,250 tenants at 2,900 sign-in attempts per minute, a pace that leaves defenders with little time to detect and respond.”

Microsoft did not say how many customers were compromised, adding that successful authentication doesn’t necessarily indicate Storm-0940 accessed or stole data. Yet, researchers said the threat group’s AI agents could also gain persistent access and establish backdoors by modifying credentials in targeted victims’ environments. 

ConnectWise, which temporarily shut down services Saturday in the wake of the attacks, said it began restoring services in phases Wednesday. The company advised customers to keep connections disabled and said it expects the recovery process to take several days.

“Since early October, a wave of AI-driven cyberattacks has been ongoing,” Igor Tsyganskiy, executive vice president at Microsoft, wrote in a LinkedIn post Wednesday. The ConnectWise supply-chain attack is just “one of many,” he added.

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The Department of Homeland Security is banning the use of Chinese AI model DeepSeek and its affiliates by civilian federal agencies.

The notice, set to publish Tuesday in the Federal Register, cites the Federal Acquisition Supply Chain Act and a review by the Federal Acquisition Security Council to bar federal agencies from buying all information technology products and services from parent company Hangzhou DeepSeek Artificial Intelligence.

The notice includes a copy of a letter from Secretary of Homeland Security Markwayne Mullin ordering the exclusion of DeepSeek products on June 26, indicating the ban has been in place for months.  

Mullin claimed that DeepSeek’s models present “multiple threat vectors” to civilian federal agency IT systems. Some are unique to the company’s country of origin, while others identify potential privacy and mass data collection concerns that could also apply to other Chinese and U.S. AI models.

He said DeepSeek models store data in servers based in China, where national security laws give the Chinese government wide latitude to request and obtain data from domestic companies. Models hosted directly by DeepSeek collect personally identifiable information from users and trace their “digital fingerprints” online. And like every other major AI model on the market, DeepSeek relies on a “prompt and response” process, something Mullin said “may result in the transfer of sensitive data” to the Chinese government.

“The transfer of the aforementioned information to the [People’s Republic of China], either independently or in combination with publicly available data, could produce actionable intelligence on U.S. persons and/or government programs,” Mullin wrote.

CyberScoop had reached out to CISA and DHS for further details.

The decision will exclude federal agencies from using one of the most popular and powerful Chinese open-weight AI models more than a year after U.S. frontier AI companies and the federal government accused DeepSeek’s makers of “systematically” distilling their models.

The order requires civilian agencies to exclude DeepSeek products from future procurements while removing any versions that might have been put in place prior to the ban. In the past, federal agencies have used their own discretion to block the use of models like DeepSeek, as the Department of Commerce confirmed to FedScoop last year.

Agencies can request exceptions, but must submit their request 60 days in advance and must provide a “compelling justification” for the action, like an inability to fulfill a mission-critical function, or other national security considerations.

Mullin also said agencies that remove DeepSeek from their IT are “encouraged” to enhance their security controls to protect against the possibility that their networks were compromised through the Chinese AI tool.

“During the period between the issuance of this order and full removal of covered articles from agency systems, federal agencies are encouraged to take steps to address risk to their systems, such as monitoring the flow of traffic in and out of the agency, implementing enhanced logging and controls on data exfiltration for the relevant systems, and detecting and flagging anomalous activity,” he wrote.”

DeepSeek is the only Chinese AI model named in the order, but it’s just one of several Chinese open weight AI models that have worried national security officials or have been accused of illegally distilling U.S. models, along with Moonshot AI, the makers of Kimi and Alibaba, makers of Qwen.

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Suspected Chinese hackers with a proven knack for exploiting zero-days in security products are at it again, targeting BeyondTrust customers in attacks that researchers have traced back to late August. 

Mandiant researchers said a likely Chinese government-backed espionage group it previously tracked as UNC5221, and now calls Armory Castle, exploited the critical defect — CVE-2026-102764 — then showcased multiple tactics to escalate privileges, hop around the compromised network and evade detection. 

The same threat group has repeatedly exploited a series of defects in Ivanti products since 2023, a Citrix NetScaler zero-day widely known as CitrixBleed, and last year’s Brickstorm campaign that had an average dwell time of 400 days — all resulting in sweeping attack sprees.

“We are aware of only a small number of impacted organizations at this time, but given the stealth of the activity, and the use of a zero-day, it is possible that additional organizations were also compromised prior to the disclosure,” Kelli Vanderlee, senior analyst at Google Threat Intelligence Group, said in an email.

Mandiant warned organizations to “prepare for potential widespread exploitation,” adding that Armory Castle and other threat groups previously conducted broad, opportunistic exploitation following public vulnerability disclosures.

Mandiant and GTIG released their analysis of Armory Castle and its latest campaign as BeyondTrust publicly disclosed the vulnerability in its Remote Support product Thursday. The company’s security said it released a patch for the exploited defect for self-hosted customers Oct. 8 and automatically applied the update to cloud-based versions of the product that same day.

BeyondTrust, which conducted its own investigation and coordinated with Mandiant on an investigation involving a self-hosted customer that was compromised, noted Armory Castle’s prowess.

“This threat actor rotates its infrastructure and tooling for every victim, so attribution here rests on behavior. The indicators from one intrusion rarely survive to the next,” the company’s security team wrote in a blog post. “The threat actor has historically demonstrated a high degree of operational security awareness, professional practices, and tradecraft.”

A BeyondTrust spokesperson declined to answer questions about how many customers are already compromised or why it didn’t publicly disclose the actively exploited zero-day sooner, and instead referred back to its security advisory. 

The company said the first known instance of zero-day exploitation occurred Aug. 29, which it detected and contained Sept. 28. 

BeyondTrust also said it detected the malicious activity after zero-days were confirmed to be exploited in another security vendor’s product Sept. 27. That timing matches a round of zero-days Citrix NetScaler disclosed, following nearly two days of rampant worry and unconfirmed rumors. 

BeyondTrust did not say if there is any link or overlap between the attacks targeting Citrix NetScaler, which went undetected for more than three weeks, and its remote access product. 

GTIG researchers said there isn’t enough evidence to assess an overall targeting trend, but encouraged all potentially vulnerable organizations to apply the patch and hunt for pre-disclosure activity. 

The threat group’s previous targets include business-process outsourcers, government, legal services, technology companies and software-as-a-service providers.

“Armory Castle remains one of the most prominent China-nexus threat actors due to its persistent targeting of various edge device technologies, use of zero-day vulnerabilities for widespread exploitation across multiple industries and regions, and its continuously expanding and evolving arsenal of tools,” said Dan Perez, technical lead at GTIG.

“This is a well-established pattern for Armory Castle,” Vanderlee said. “Targeting edge devices, which typically do not support endpoint detection and response (EDR), allows the threat actor to minimize opportunities for detection and maintain stealthy, persistent access to targeted networks.”

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Microsoft collaborated with Japanese authorities, Health-ISAC and several cybersecurity companies to dismantle an expansive, seemingly disconnected ecosystem of Chinese-language cybercrime tools and services, the company announced Wednesday.

Since the start of the year, a vast collection of customized phishing kits developed and sold by Chinese-speaking threat actors — a cluster Microsoft tracks as Storm-2990 — have delivered more than 1 billion phishing emails and SMS messages to more than 75,000 organizations globally. More than three-quarters of those malicious messages targeted Microsoft customers, the company said.

Cybercriminals purchased the phishing kits, tools and infrastructure from an interconnected network Microsoft and Japanese authorities started investigating in early 2025. The kits were used to target individuals and organizations in healthcare, financial services, logistics and IT predominantly in the United States and Japan.

Microsoft said it and Health-ISAC, working with a federal court order, seized and redirected domains that powered the underlying infrastructure of these cybercrime tools and services known as YAM Store, CoGUI and Iron Man. 

The company said it also disabled more than 20,000 accounts connected to YAM Store and continues to disrupt the operation by removing infrastructure hosted on its services and blocking more than 100,000 domains used for impersonation and fraud.

“Most people have opened their messages to find a suspicious alert urgently telling them that a package cannot be delivered, a toll remains unpaid, a bank account needs attention, or a tax bill is overdue. The details may change, but the goal is the same: to get someone to click, share personal information, or pay,” Steven Masada, general counsel and general manager of Microsoft’s Digital Crimes Unit, wrote in a blog post.

“These messages are relentless,” he added. “Delete and block one, and another takes its place. Ignore them, and more will follow. Fall for one, and the floodgates open. What appears to be a simple scam message is often the visible end of a much larger transnational cybercriminal operation.”

The phishing kids included templates impersonating legitimate brands that cybercriminals used to facilitate high-volume campaigns. Researchers said similar infrastructure and overlapping activity suggested the tools shared development origins, code reuse or close collaboration among developers.

Microsoft said cybercriminals used the phishing kits to steal credentials, financial data and abuse the device code authentication process to obtain authentication tokens and access compromised accounts. Researchers said cybercriminals primarily used the tools for financial fraud, typically using stolen payment data to make fraudulent purchases of high-end goods or transactions on legitimate financial platforms. 

Resecurity, which aided the investigation, gained access to Iron Man’s infrastructure and found 2,360 phishing templates impersonating banks, retailers, healthcare providers, transportation authorities, police departments and government agencies across 130 countries. Cloudflare, Oracle, Proofpoint and TRM Labs also provided research and investigative support.

“What began with scam activity targeting people and organizations in Japan led investigators to an underground service economy supplying criminals around the world,” Masada wrote. 

“YAM Store, CoGUI and Iron Man are only part of that larger criminal network, but disrupting them makes it harder for criminals to obtain the accounts, tools and infrastructure they rely on,” he added. “The scam message is often the only part victims see. The businesses behind it are what make it possible.”

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The Justice Department and FBI announced that they had seized two hacking tools connected to the Chinese government-linked group Flax Typhoon and a China-based company that the U.S. government has repeatedly taken action against, including with a new multi-agency advisory Thursday.

The domain name seizures were meant to deny hackers access to the vulnerability scanning tool Microscan and the spearphishing tool FishHub created by the Chinese firm Integrity Technology Group, which the United States sanctioned last year. The U.S. government in 2024 also made the company the focus of a takedown operation, saying it was behind a massive botnet.

Authorities were granted the court-authorized seizures in the Western District of Pennsylvania, the FBI and DOJ announced Thursday in unsealing documents in the case.

U.S. agencies paired the announcement of the seizures with an advisory from the FBI, Cybersecurity and Infrastructure Security Agency and National Security Agency.

“Chinese government-linked cyber threat actors, enabled by the Integrity Technology Group, are combining automated scanning tools, large-scale botnets, and hands-on exploitation techniques to target and steal sensitive data from organizations worldwide, including U.S. critical infrastructure sectors,” the advisory reads. “These actors exploit vulnerabilities by using scanning tools, cross-site scripting attacks, and password spraying on Microsoft Exchange servers, while establishing persistence through VPN software and exfiltrating emails and credentials using scripts.”

Similar to previous allegations, law enforcement said Integrity Tech leaned on a Mirai-variant botnet of internet-of-things devices, in this case to facilitate Microscan.

Microscan targets have included a South Carolina power company, airports in Japan and Poland, critical infrastructure companies and universities in Taiwan and others, according to the FBI and DOJ. Victims of FishHub, which downloads malware on their networks after gaining access through spearphishing, include Taiwanese universities.

“Chinese government-affiliated actors continue to position themselves within critical infrastructure networks, including operational technology (OT) systems, with the aim of disrupting critical functions at a future time of their choosing,” said Chris Butera, acting executive assistant director for cybersecurity at CISA. 

“Under the FBI Cyber Strategy, we pursue both the actors who threaten critical infrastructure and the enterprises that support them,” said Brett Leatherman, head of the FBI’s Cyber Division. “Integrity Technology Group, a China-based company with ties to the Chinese government, is one of those enterprises, acquiring or developing cyber tools and hosting infrastructure for actors targeting networks worldwide.”

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The country is consumed right now with debating artificial intelligence and whether increasingly powerful AI systems could escape human control. Those are valid concerns, but lawmakers are overlooking another technological threat: quantum computing. Unlike AI safety debates, this risk could render today’s encryption obsolete – compromising everything from emails to financial transactions to government communications and military systems.

Quantum computers harness unusual properties of quantum physics to solve certain problems far faster than conventional computers. That potential offers major scientific and economic advances. But a sufficiently powerful quantum computer could crack widely used forms of encryption protecting sensitive digital information globally.

This threat differs from AI safety concerns. Quantum computers won’t develop goals or outsmart humans. The risk is simple: extraordinarily fast quantum machines could break the mathematical “locks” securing data.

Researchers now believe breaking some encryption may require fewer resources than previously thought. This spring, Caltech spinout Oratomic published research suggesting a cryptographically relevant quantum computer could need dramatically fewer physical resources than earlier estimates. Google has accelerated its own preparations, setting 2029 as its target for transitioning to post-quantum cryptography.

To use a rough analogy, researchers are increasingly asking whether a task once thought to require every lightbulb in Chicago might instead be accomplished with the power needed for one office building. If a company like Google, with some of the world’s deepest quantum and cryptographic expertise, is preparing for 2029, Congress should treat that deadline seriously.

The federal government has begun responding. The National Security Agency has selected quantum-resistant algorithms for National Security Systems and is moving classified and other sensitive systems toward its CNSA 2.0 standards. In June, the White House accelerated the broader federal transition, directing high value federal systems to adopt post-quantum cryptography for key establishment by the end of 2030 and digital signatures by the end of 2031.

But some dangers exist now. Foreign adversaries can steal encrypted information today, store it, and wait until they possess the computing power to decrypt it later. Cybersecurity experts call this “harvest now, decrypt later.” The White House identified that threat in its June order. Intelligence reports, military communications, corporate secrets, financial information, and other data that must remain private for years face risk long before a quantum computer capable of decrypting it exists.

Congress has devoted enormous attention in recent years to AI and social media in recent years. The post-quantum cryptography transition demands equal urgency. Lawmakers must identify national vulnerabilities and coordinate the transition across all government agencies.

The intelligence community should conduct a comprehensive assessment of its exposure to quantum decryption, building on the work at NSA. The Defense Department should assess military networks, satellites, communications systems, and critical infrastructure, ensuring future systems can upgrade encryption without replacing entire platforms. Navy and Space Force, which depend on secure communications and undersea cables carrying much of the world’s data, must be included.

The transition cannot stop at the federal level.  States and localities need resources to protect election systems. Hospitals, banks, utilities, communications networks, and critical infrastructure rely on technology that may need to remain secure for decades. Congress should help them identify vulnerable systems and begin upgrades before a crisis forces the issue, while funding the research to maintain U.S. technological superiority.

No single technology will solve this permanently. Quantum-resistant encryption is essential, but the U.S. should develop additional security layers, including hardware-based protections and emerging physical or molecular authentication technologies. Defenses must evolve as computing power advances.

China is not standing still. Through my work on the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, I have observed that America retains an enormous innovation advantage. However, the U.S.-China Economic and Security Review Commission has warned that Beijing is likely pursuing quantum capabilities that could threaten existing encryption. China’s 15th Five-Year Plan identifies quantum technology as a future industry, while three state-backed regional venture funds, totaling roughly $17.5 billion, include quantum among the strategic technologies they are intended to support. The amount specifically allocated to quantum has not been disclosed.

Waiting would be a mistake, regardless of China’s current quantum progress.

America has repeatedly recognized technological vulnerabilities too late. The nation was slow to understand how foreign adversaries could exploit social media and discovered critical computer system weaknesses only after foreign governments penetrated them. Congress should not repeat those mistakes.

No one knows exactly when quantum computers will become powerful enough to break today’s encryption. That uncertainty is not a reason to wait. America’s strength has always been in our ability to invent new technologies, master them, and use them to protect our country. Congress should make sure we do that before our encryption becomes vulnerable, not after.

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Former National Security Agency Director Paul Nakasone said a reported broad reorganization of the agency is “probably necessary” as it confronts faster-moving cyberthreats, artificial intelligence and competition with China, but he cautioned that the outcome will depend on how the changes are carried out.

Speaking Tuesday at VulnCheck’s ThreatCon1 conference, Nakasone addressed a recent report that the NSA is undergoing a major restructuring centered in part on artificial intelligence and China. According to a report last month from the Washington Post, the agency is creating five new organizations focused on artificial intelligence, China, cybersecurity, combat support, and global intelligence, with each led by a newly elevated “mission director.”

Nakasone, who led the NSA and U.S. Cyber Command from 2018 to 2024, said he found it encouraging that agency leaders recognized the need to adapt. 

“I think that the world has changed so dramatically, so it’s hard to imagine [the NSA] not changing,” he said.

But he said large-scale institutional changes can take time, especially in an agency with broad intelligence, cyber and military responsibilities. 

“When you’re a big bureaucrat, how effective is that change? I think it depends,” Nakasone said. “It’s not necessarily the change, because I think that’s a good thing. I think it’s how you implement the change.”

Nakasone’s comments reflected a central tension in the current national security environment: Intelligence agencies are under pressure to reorganize around emerging technologies, particularly balancing the need to keep the United States as a leader in AI, while also defending against adversaries like China that will look to use the technology for their own strategic goals. 

He specifically highlighted how AI has sharply reduced the time defenders have to detect and respond to cyber intrusions. When he assumed command in 2018, he said, CrowdStrike data showed that an adversary took hours to move laterally through a system after an initial intrusion. As of 2025, that dwell time has dropped to an average of 29 minutes. 

“Remember the old mantra, we’d say, ‘Hey, we have one minute to be able to recognize something has happened, 10 minutes to figure out what we’re going to do, and 60 minutes to really enact it,” Nakasone said. “We’re well past that, and this is the challenge that we have as we think about our opportunities to have better defense in the future.”

That attack timeline is particularly significant as organizations are figuring out how AI can be used to defend their networks and systems. Nakasone, who sits on the board of OpenAI, said defenders have a temporary advantage, which he called a “defender’s window,” before adversaries fully exploit AI’s capacity against critical infrastructure and sensitive organizations.

“I think there’s a defender’s window right now within AI that really our adversaries haven’t caught up and used the capacity that really could be utilized against our critical infrastructure and most sensitive organizations,” he said.

The ability to adapt also depends on personnel, Nakasone said, pointing to agencies competing with private companies for technical talent. Citing figures for the government’s national security workforce, he said the average age is 47, with half the workforce older than 50, 10% younger than 30 and 13.5% could retire immediately.

DefenseScoop reported last week that federal employees in cybersecurity roles could face significant pay cuts.

“I think our government has to create the atmosphere that wants to make sure that people see that their work for the government is valued,” Nakasone said. “I think that there’s probably no one in this room that wouldn’t say that we can be more efficient in our government, but I also think there are a lot of people in this room that have had [their] government service attacked to say, ‘That’s just for people that can’t get jobs on the outside.’ That’s not right. I think there’s a way that we can talk much more effectively about our service and our work in our government.”

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Collaboration with industry is key to balancing AI security risks and benefits, as well as staying ahead of China and other adversarial nations, National Cyber Director Sean Cairncross said Thursday.

The Trump administration is facing pressure from some quarters of Capitol Hill and even some artificial intelligence executives to establish regulations or embrace legislation to guard against the technology’s risks, something the president himself has rejected.

“We’ve never faced a world where our adversaries have the frontier in this space, and so our attempts to optimize that innovation and security is is something that is ongoing, but is increasingly efficient, and it depends on our relationship with industry and our ability to work collaboratively among the the interagency,” Cairncross said at the AI Edge event hosted by The Washington Post.

That collaboration is ever-increasing, he said, such as with the National Institute of Standards and Technology’s Center for Advancing Innovation and Standards for Super Intelligence (CAISSI).

“Industry coordination on this, across critical infrastructure sectors, is improving both on industry-to-government and within industry,” he said. “There is collaboration with CAISSI and others as well to do evaluation and testing on these models. That includes work on guardrailing, sandboxing, et cetera.”

But “we’ve seen in the past, once the government is introduced into this space directly, there is a tendency for the government to start to want to adjust the dials directly, and it is difficult to reverse that,” he said. “I think that would slow, at this point, the innovation cycle that is to our benefit.”

One of the things that has increased the calls for stronger government action is when OpenAI acknowledged that its AI agents went outside testing to hack Hugging Face in July.

“Since that incident,” Cairncross said, “the engineering work that’s gone into improving systems awareness of that has increased by an order of magnitude.”

But the AI companies need to secure themselves against China for the United States to stay in the lead, he said.

“Both on the hardware side and on the computer science side and engineering, we’re in the lead. I think our lead is significant,” Cairncross said. “The Chinese have designed a sort of fast follow that relies quite a bit on distillation efforts … And I think industry is increasingly aware of this: that their systems are secure, that the technology, as it’s being developed, is protected.”

Other administration officials have called out China for allegedly using distillation to train its models. In July, Michael Kratsios, who leads the White House Office of Science and Technology Policy, claimed that Moonshot AI, a Beijing, China-based AI company, had distilled Anthropic’s recently released Fable model to develop its own K3 model.

On Wednesday, OpenAI said clusters of activity tied to Moonshot AI were part of a “coordinated” distillation campaign.

Cairncross said earlier this week that the U.S. government is collaborating with industry to integrate AI into critical infrastructure for security purposes. 

Cairncross said the Trump administration wants to make sure national security systems do the same. One of his office’s pilot programs is with the Defense Department and the Cybersecurity and Infrastructure Security Agency “that touches on the defense infrastructure in particular,” in addition to a pilot on rural hospitals.

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A China-aligned cyber espionage group targeted U.S. artificial intelligence policy experts through phishing emails that impersonated prominent officials, economists and an employee of AI company Anthropic, according to research released Thursday by Proofpoint.

The campaigns, which the cybersecurity company attributed to a group it calls TA419, sought access to cloud accounts held by people at think tanks, universities and law firms. The activity comes amid growing U.S.-China competition over AI development, export controls, semiconductor supply chains and military uses of the technology.

Proofpoint said the group began a campaign in July by impersonating Lynne Parker, a former principal deputy director of the White House Office of Science and Technology Policy, and economist and foreign policy expert Heidi Crebo-Rediker. The emails invited recipients to join a supposed AI policy advisory committee or contribute to a report on AI export controls and supply chains.

The initial messages did not immediately request passwords or direct recipients to a sign-in page. Instead, they appeared designed to begin a conversation and establish trust. After a target replied, the group sent a shortened link said to contain more information.

The link redirected recipients through several websites before leading to a false Microsoft OneDrive sign-in page. Proofpoint said the setup was intended to capture account credentials and active browser sessions.

The firm described the operation as an adversary-in-the-middle phishing attack. In such attacks, the victim interacts with genuine Microsoft infrastructure during part of the process, looking and behaving like a legitimate sign-in. The person may enter a password, complete a multifactor authentication prompt and pass access checks while the attacker captures the session information created by the login.

Proofpoint said TA419 used a modified version of an open-source phishing tool known as Frameless BitB. The tool creates a false browser window within a webpage, imitating a familiar sign-in prompt. In this case, it was used to present a fake Microsoft login window over a page that resembled a OneDrive document-sharing site.

Proofpoint also identified a February campaign in which the same group impersonated a senior Anthropic employee. That message asked an AI policy analyst at a U.S. think tank for feedback on the military’s use of Anthropic’s Claude AI models, which was a highly controversial topic at time.

The report did not identify victims or state whether any accounts were compromised.

Proofpoint said TA419 has targeted individuals connected to U.S. and Japanese think tanks, defense contractors, universities and law firms since at least April 2025. Its interest in AI policy, the firm said, appears to extend an existing focus on defense, national security, energy, international relations and foreign policy. The group also registered domains resembling real organizations, including the Heritage Foundation, the World Economic Forum and the Japan-Taiwan Exchange Association.

The report does not directly link the activity to the Chinese government. China has repeatedly denied conducting cyber espionage, while accusing the United States of cyber operations against Chinese interests.

The White House, along with several AI companies, have also accused China of distilling U.S. models in order to power open-weight models run by Chinese companies.

Indicators of compromise can be found on Proofpoint’s website.

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OpenAI said it disrupted a “coordinated campaign” to distill and extract reasoning capabilities from its AI models, pointing the finger at a Chinese rival.

On Wednesday, OpenAI said it first spotted low-level activity on July 1 that gradually increased until July 24 and 25, when it observed 16,000 prompts from 4,000 users that fit a similar “relevant extraction pattern.” The number of suspicious users had climbed to 15,000 by July 28, when OpenAI said it “fully disrupted” the operation.

The company called the attackers’ method “novel.” They copied encrypted reasoning data from one conversation, then asked the model in a separate conversation to decrypt the content and transcribe it in plain text. Outside researchers reported a similar vulnerability to OpenAI in August.

“The operators did not break our encryption, compromise a database, or gain direct access to stored user conversations,” OpenAI wrote in an unsigned blog post. “Instead, they manipulated model interactions so that protected reasoning could be reproduced in forms visible to the requester in a coordinated, scaled manner that violated our terms of service.”

OpenAI said it’s unclear whether all the activity is related, but individuals working on behalf of Moonshot AI, a China-based rival AI company that has, in the past, been accused of distilling U.S. models, were behind a “core cluster” of the activity.

OpenAI’s blog post does not cite any technical evidence or reasoning for its attribution. Moonshot AI’s Kimi is one of several Chinese open-source AI models that are offering users and organizations good-enough performance for free or at a low cost.

American AI companies and the U.S. government have accused Chinese companies like Moonshot AI of conducting “systematic” distillation attacks on their latest models. Cybersecurity experts at Google and other cybersecurity firms say Chinese companies rely on black or gray markets to acquire thousands of individual accounts for models like Claude and ChatGPT. They then flood those models with millions of prompts and data requests that help them copy model capabilities and training data.

OpenAI told CyberScoop that it was not sharing any additional information “for security reasons.” CyberScoop has reached out to Moonshot AI for further comment.

According to OpenAI, the same vulnerability exists in other AI models, and it has shared information about the incident with groups like the Frontier Model Forum.

Beyond banning offending accounts, OpenAI said it improved signup and infrastructure controls and expanded network monitoring. It also fixed a bug that allowed users to take encrypted data from one conversation and decrypt it in another. 

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The computers that automate water treatment systems across the country were built for durability, not for an internet-connected world. Many still accomplish their fundamental function, but as cyberattacks on the sector mounted this summer, water industry officials say those aging systems, especially internet-exposed operational technology and programmable logic controllers, remain among the easiest ways for adversaries to break in.

Tom Dobbins, executive director of the Water Information Sharing and Analysis Center or WaterISAC, told CyberScoop the sector’s biggest ongoing weaknesses include exposed OT, vulnerable PLCs, insecure connections through integrators and poor cyber hygiene at smaller utilities, which have pushed the center to make threat sharing faster across the sector.

“We have been under attack, and our enemies, the threat actors, are stepping up their activity as the U.S. is involved in a number of conflicts around the world,” Dobbins said.

That includes not only threats from Iran, the nation the U.S. government reportedly believes is behind this summer’s water facility attacks, but also China and Russia, he said.

WaterISAC is announcing a partnership with Cyware Wednesday to use its threat intelligence platform, selecting the company in part because of its existing relationships with other industry ISACs, Dobbins said. The ISAC already has a partnership with the National Rural Water Association to serve 20,000 of the water sector’s smallest utilities, and Dobbins said Cyware would help its analysts further.

It’s a sector that faces myriad challenges, seen by many as further behind on protecting its systems due to financial and technological constraints.

“OT systems that are exposed to the internet are a major challenge, and many of these systems that are older generation need to be not accessible to the internet,” Dobbins said.

Furthermore, programmable logic controllers (PLCs) are “obviously” a “vulnerability point,” he said. 

Those two vulnerabilities were the ones most commonly linked to this summer’s attacks.

Across the sector, PLCs have been the “main point of entry” for hackers, in part because they date back to a “simpler, gentler time,” Dobbins said.

“A lot of the equipment was developed pre-cyber threats and activities,” he said. “The equipment, it’s still valuable, it still is operational, so there’s not a huge reason for or incentive for utilities to upgrade it.”

President Donald Trump has disputed the notion that Iran was behind this summer’s attacks, despite alerts from the Cybersecurity and Infrastructure Security Agency.

“Let’s put it this way: I saw a recent CISA release that pointed to Iran as threat actors, and I know that the president kind of implied that it was not Iran, but I’ll say that CISA maybe is more expert in this area than maybe the president,” Dobbins said. “The president may not have been fully briefed when he made that comment.”

But CISA has also warned of potential threats from Russia and China, he said.

Two other sources of vulnerability for the sector are external — integrators — and internal — employees.

“If those integrators are working and they have a connection into an OT system that’s not managed discretely, then a threat actor can come in through an integrator and get into a system,” he said. 

Then there’s someone “who’s actually a good employee who’s tried to do the right thing and opens an email that has a malicious link in it, so they become subject to a phishing attack,” Dobbins said.

At smaller utilities, it can be difficult to keep up with basic cyber hygiene as well, he said: changing passwords, implementing multifactor authentication.

One way that Cyware might be able to help is by leveraging its relationships with other ISACs, said Tom Stockmeyer, managing director of government and critical infrastructure at Cyware.

“We’re thrilled to add water to the portfolio and start enabling cross-sector sharing,” he said.

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Volexity researchers spotted another state-aligned Chinese threat group exploiting a triple-link chain of zero-day vulnerabilities across multiple campaigns, the company said in a blog post Monday.

The threat group it tracks as UTA0565 exploited the vulnerabilities in Chrome and Microsoft between Sept. 3 and 4 before the defects were disclosed or patched, researchers said.

The timing of the malicious activity mirrors other spikes threat hunters observed and attributed to multiple Chinese espionage threat groups. Yet, Volexity noted UTA0565’s campaigns differed from those attacks by using multiple fake websites to deceive victims.

Volexity shared phishing emails UTA0565 sent to Asian government entities urging them to publicly support imprisoned Hong Kong activist Chow Hang-tung. The group spoofed domains impersonating the Center for American Progress and China Digital Times in other phishing emails.

While UTA0565 showcased a variance in tactics, it used the same components researchers observed in previous instances of the exploit kit across multiple Chinese threat groups.

“This seemingly widespread adoption across multiple threat actors suggests a coordinated effort within the Chinese computer network exploitation community, where the core kit was likely shared, customized, and weaponized by multiple groups,” Volexity wrote in the blog post. “The activity reported so far reflects only two organizations’ observations; the full scope and impact are likely far broader.”

The vulnerabilities include: CVE-2026-85046 and CVE-2026-87491, remote-code execution defects in the JavaScript engine for Chromium-based browsers; and CVE-2026-85880, a privilege-escalation zero-day that Microsoft disclosed Sept. 8 in Windows Advanced Local Procedure Call. 

Proofpoint, which previously observed multiple state-aligned threat groups chaining the vulnerabilities together in attacks since last August, said a limited group of organizations were exposed to all three vulnerabilities in a short window. 

Proofpoint previously attributed attacks involving the zero-days to APT31, UNK_LateNight, UNK_DoubleCheck and UNK_QuietRacket. At the time it warned that attackers of other origins and motivations could strike soon as well.

Volexity said UTA0565 used a payload from a previously undocumented malware family it tracks as “CLEANGULP.” Researchers also found several domains likely used by UTA0565 in similar campaigns targeting media organizations, halal restaurant search websites and corporate training organizations. 

“UTA0565’s use of the zero-day vulnerabilities shows technical and operational improvements over other campaigns observed by Volexity, both in the mechanics of the exploitation and the presentation to end users,” researchers wrote. “Using real content from legitimate websites as decoy material continues to be an effective way to reduce user suspicion.”

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President Donald Trump continued to defend his administration’s hands-off approach to AI regulation in the wake of hacks carried out by U.S. commercial frontier models that have rattled policymakers and industry veterans and spurred calls for more regulatory oversight.

In a Truth Social post Monday, Trump dismissed worries from critics that “AI is going to kill us,” comparing them to complaints from environmentalists about climate change, which he also alleged was a false narrative. He also posited that nothing may matter more than future U.S. dominance of the technology over geopolitical rivals like China.

“Whoever wins AI, WINS!” Trump posted. “We are leading now over China, and everyone else, and I’m going to keep it that way! I’m not going to stifle Growth, of something that will be bigger than the Industrial Revolution, or the internet, itself.”

Trump has previously suggested that good leadership is the only regulation the U.S. needs for artificial intelligence. He later claimed the Department of Justice was ready to “rein things in” if companies overstepped, but offered no specifics on enforcement, legal authority, or where he would draw that line.

“We will be careful, and that’s why we have the Department of Justice, and other Law Enforcement bodies, that will rein things in if we have to, but I will only encourage AI or, SI (SUPER INTELLIGENCE)!” Trump concluded.

Secretary of the Treasury Scott Bessent recently told Congress that private lawsuits could force AI companies to institute better security, saying it’s clear what the government “shouldn’t do on safety is to give these labs a liability exemption, which is what they are asking for.”

“The best way to guarantee safety is that the creators are liable for what they build and generate,” Bessent said.

Beyond existential fears, critics also argue that inadequate regulation or cybersecurity controls in current AI systems make them impossible to fully control or monitor.

Recently, former President Barack Obama criticized the argument from Trump administration officials that the free market will naturally push industry toward self-regulation and that “these companies will solve the safety issues because they have every incentive to do so.”

“If it turns out to be dangerous, people will just sue them and they’ll be worried about financial liability,” Obama said last week in remarks at Colgate University in New York. “That’s not how we treat airlines or drug companies or food companies.”

The Trump administration issued an executive order earlier this year that set up a voluntary testing regime for some commercial frontier models, largely at private industry’s discretion. That order was significantly delayed and altered by AI industry boosters to ensure that governmental review did not cause companies to postpone their release timelines for new models.

That agreement did not last long before fast-moving events caused the administration to strike another, non-public agreement with frontier AI companies like OpenAI, Anthropic and others governing pre-release testing for models.

But the Trump administration has consistently argued that regulation will harm, not help, U.S. innovation and global competitiveness, and the threat of China frequently looms large in those discussions.

Experts believe China’s AI models are behind U.S. models at the top of the market, where OpenAI and Anthropic have consistently pushed the frontier limits of model capabilities. But Chinese lower and “middle class” models are often cheaper, more efficient and can even outperform more powerful models because users can dedicate exponentially more tokens for their tasks.

The U.S. government has accused Chinese AI companies of conducting widespread, “systematic” distillation of U.S. frontier models, with the implicit encouragement of Beijing.

In defending the administration’s approach, David Sacks, co-chair of the President’s Council of Advisors on Science & Technology and a top adviser on AI issues, specifically cited the threat from China and other countries that he claimed would not be subject to similar restrictions.

“We’re not the only country that has advanced AI labs, and as the president declared…we have to win this AI race,” Sacks told Politico in May, later adding “I think that’s the first thing to recognize is that if somehow we slow down or stop AI development, it doesn’t mean that AI progress is going to stop. It just means it’s going to happen in other countries and specifically China.”

Some observers have alleged that despite their larger differences, top leaders in the U.S. and China may view AI similarly at the strategic level, specfically that increased adoption – and risks – of AI are inevitable.

Ronan Murphy, director of the tech policy program at the Center for European Policy Analysis, posited that while there may not be a formal agreement between the two countries, “they share views both in Beijing and in Washington, particularly in the White House, of: you have to allow this to happen.”

“Clearly there’s a call for regulation from many quarters of AI in the U.S. and elsewhere, but in the White House – and we heard David Sacks talking about it [recently] – It’s ‘let them cook,’ and the Chinese approach seems to be the same,” said Murphy in a press briefing. “So there might be consensus at that level, if nothing else.”

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