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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A portion of ConnectWise’s customers have been adrift for days, and hundreds are compromised, as the company’s efforts to restore its Cloud Backup service remain underway with no confirmed timeline for when customers can regain access.

The company temporarily shut down multiple services Saturday after a threat actor gained access to a highly sensitive credential that allowed its customers to connect the vendor’s application with Microsoft 365 environments. 

The threat actor, which hasn’t been identified, used the application programming interface (API) secret to compromise a series of ConnectWise Cloud Backup customers’ Microsoft 365 applications, including Exchange Online, Microsoft Teams, SharePoint Online, Cloud Backup, MS Graph and Partner Center, according to Huntress.

Researchers observed an initial wave of attacks Friday, and by late Saturday Huntress “had seen sign-in activity from the malicious infrastructure across almost 1,000 Entra tenants, with more than 300 of those sign-ins appearing to succeed,” Jonathan Semon, principal security operations analyst at Huntress, told CyberScoop.

The cybersecurity company, which primarily supports small- to mid-sized businesses, confirmed unauthorized sign-ins in 162 tenants and said additional compromises beyond its telemetry are likely. 

ConnectWise suspended its Cloud Backup, SaaS Security and Cloud Management services about two days after researchers observed an initial wave of unauthorized sign-ins. 

“ConnectWise is continuing its investigation and remediation following unauthorized access to application identities associated with ConnectWise Cloud Backup, formerly known as SkyKick,” a company spokesperson wrote in an email.

“We are monitoring our entire environment around the clock,” the company said in a security advisory. “Since mitigations began on October 17 at 05:00 UTC, we have not observed successful threat activity in the environments we monitor. This does not establish whether individual partner or customer Microsoft 365 tenants were affected; each potentially affected tenant still requires review.”

Microsoft Threat Intelligence said it observed broad successful sign-ins from a malicious IP address on Oct. 15. “Follow-on activity included Microsoft Graph API reconnaissance and attempts to add additional credentials on the related service principal in target tenants to maintain direct access as a backdoor,” the company said in a LinkedIn post. 

The root cause of the breach and ensuing fallout remains under investigation, and the company declined to answer questions about how attackers obtained the credential for ConnectWise Cloud Backup.

Researchers at Huntress and Todyl, which conducted its own investigation, characterized the secret and its chain of command as critical.

“Because it’s a multi-tenant application, anyone holding that credential can request access tokens in any tenant where the application is installed, without any action by the customer,” Semon said.

Sign-ins, which were performed by an automated tool, also gave the attacker the technical ability to read and write mail and files across various Microsoft 365 applications, Todyl wrote in a blog post. 

Highly privileged access granted by the credential for ConnectWise Cloud Backup allowed attackers to bypass security controls, including multi-factor authentication, and establish additional access.

“In the tenants where we saw post-compromise activity, the account associated with the application elevated its own privileges and added new credentials to other applications in the tenant. That would let someone keep access even after the original application was disabled,” Semon said.

ConnectWise and researchers haven’t attributed the attacks to any known threat actors and none have publicly claimed responsibility. The company said restoration efforts remain underway, but it hasn’t provided a timeline for when customers can regain access.

ConnectWise and researchers shared indicators of compromise to help potentially exposed customers hunt for malicious activity in their systems. Yet, the vendor and third-party companies responding to confirmed attacks, encouraged customers to disable any affected applications even if they don’t see anything unusual in their logs.

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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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Microsoft, along with a group of industry partners, disrupted EvilTokens, a short-lived but highly consequential cybercrime platform that investigators linked to more than 12,000 compromised Microsoft customer email inboxes across more than 10,000 organizations globally, the company said Tuesday.

Acting on federal court order Sept. 15, Microsoft and partners seized 50 websites the phishing-as-a-service used for operations and disabled more than 175 domains linked to EvilTokens’ supporting infrastructure. 

EvilTokens, launched in February 2026, was “a powerful cybercrime platform that used AI at every step of the attack chain — from compromising email accounts to designing intricate roadmaps for financial fraud and scams,” Steven Masada, associate general counsel and general manager of Microsoft’s Digital Crimes Unit, wrote in a blog post.

About 1,000 cybercriminals used EvilTokens over the course of its operation, a Microsoft spokesperson told CyberScoop.

The service was centered on an AI-style chatbot that cybercriminals used to analyze victims’ inboxes, identify trusted relationships, payment authorizations and other sensitive details that could facilitate fraud.

“AI was not simply helping attackers write more convincing messages. It helped them decide who to target, who to impersonate, and how to most effectively exploit the relationship to extract as much money as possible,” Masada wrote. 

EvilTokens was one of the most widely used phishing-as-a-service platforms prior to its takedown. It facilitated business-email compromise campaigns by stealing session tokens that allowed cybercriminals to sift through a victim’s inbox and maintain persistent access.

“We cannot estimate the total fraud attributable to all EvilTokens activity. However, we were able to correlate at least 13 complaints filed with the FBI’s Internet Crime Complaint Center to EvilTokens-linked activity, representing approximately $1.7 million in reported losses,” a Microsoft spokesperson said. “Because many incidents go unreported and not all victims can be definitively linked to specific campaigns, we believe this is a conservative estimate.”

Victims of EvilTokens were largely concentrated in the United States, Canada, the United Kingdom, Australia, India and France, according to Microsoft. SpyCloud, which supported the takedown, identified compromised email domains spanning 79 countries.

Microsoft said it also identified two men behind EvilTokens — Felix Utomi and Waidi Segun Adams — and attributes the development and support of the platform to Storm-2992, a threat actor unaffiliated with any other known cybercrime groups.

The United Kingdom’s Metropolitan Police acted on that information Sept. 18 when it served warrants in the greater London area, arrested the men accused of making articles for use in fraud and money laundering and seized their digital devices.

The Metropolitan Police said it received information from Microsoft about EvilTokens’ administrators in August. Utomi and Adams were released on bail as the investigation continues. 

“The two primary operators identified in our investigation were residing in the U.K.,” a spokesperson for Microsoft told CyberScoop. “While our investigation focused on those individuals, we believe others may have supported the operation in various capacities.”

Microsoft’s legal filing in the U.S. District Court for the Eastern District of Virginia refers to five additional unidentified people allegedly acting as support personnel and users.

Microsoft and others involved in the EvilTokens takedown, including Health-ISAC, Cloudflare, OpenAI, Shadowserver and TRM Labs, didn’t fully quantify how much fraud the service enabled, but it gained popularity quickly among cybercriminals and was lucrative for its operators.

Coinbase, which also aided the investigation into EvilTokens, said it traced about $1.1 million in revenue for EvilTokens from its paying customers. The virtual currency company’s threat researchers found more than 1,000 deposits to EvilTokens from more than 700 distinct addresses through June 2026. 

Operators sold access to the service through Telegram for a $1,500 initiation fee and a recurring $500 subscription. EvilTokens significantly lowered the barrier to entry for cybercriminals by including specialized tools for identity attacks, cloud systems, social engineering and financial fraud in a single interface.

The service allowed cybercriminals to map organizational structure and permissions in Microsoft Graph, which enabled lateral movement, researchers said. With active tokens gained through a collection of highly-targeted phishing lures, cybercriminals consistently bypassed multi-factor authentication, email gateways and endpoint security tools.

Microsoft said the platform’s creators developed portions of the platform with AI and it uncovered capabilities from multiple AI models. 

“It packaged much of the criminal process into a commercially run service, complete with subscription pricing, customer support, management dashboards and tools designed to move customers from account access toward financial exploitation,” Masada added.

The companies and organizations involved in the globally-coordinated takedown identified and notified potential victims, shared indicators of compromise and shared intelligence with law enforcement about EvilToken’s operators and some of its customers.

Experts advised organizations and employees to treat unsolicited device codes as a red flag, assume compromised accounts are fully cataloged in minutes, and independently verify requests to change payment information or redirect funds.

“The infrastructure supporting EvilTokens has been disrupted, but the model it demonstrated will not disappear with it,” Masada warned.

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