Nearly nine out of 10 federal civilian executive branch agencies failed to meet last summer’s deadline to implement cloud security directives from the Cybersecurity and Infrastructure Security Agency, a watchdog report published Wednesday found.

The conclusions from those results, according to the inspector general for the Department of Homeland Security: agencies “may encounter elevated security exposures that undermine the national cloud security posture and increase the likelihood of preventable cyberattacks and related threat,” and “CISA lacks the authority necessary to require full and timely implementation of Binding Operational Directives,” or BODs.

The latter is a question that has surfaced before about CISA directives, which the agency uses to pressure agencies into improving their cyber defenses. 

The IG took a look at the Secure Cloud Business Applications (SCuBA) project, created in response to the 2022 SolarWinds attack. It provides secure configuration baselines, settings and assessment tools to help agencies reduce the risk of breaches.

A December 2024 directive gave agencies a list of requirements to align with SCuBA, with a deadline of June 2025.

The IG found that 88 of 102 agencies, or 86%, didn’t implement all the mandatory SCuBA policies from BOD 25-01. As of February of this year, “compliance with BOD 25-01 had not improved. A total of 78 out of 102 (76%) [Federal Civilian Executive Branch] agencies were still not in compliance with implementing all mandatory SCuBA policies.”

“Some examples of baselines that FCEB agencies did not implement included blocking outdated authentication procedures, enforcing multifactor authentication, and implementing a policy to protect sensitive and personally identifiable information,” the IG report states. “Implementation of these baselines could mitigate vulnerabilities and threats from affecting the cloud business applications.”

That’s the result of CISA’s lack of power to enforce its BODs, which translates into greater risk, the IG concluded.

“Without defined enforcement oversight of SCuBA policy compliance, the Federal cloud security posture across the Federal enterprise is weakened,” the report states. “When agencies do not adopt required configurations or meet implementation deadlines, their cloud environments remain exposed to preventable threats.”

CISA didn’t respond to the report, according to the IG. 

The agency didn’t immediately respond to a request for comment from CyberScoop.

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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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Nearly two of every 10 U.S. water and wastewater organizations have identity data actively exposed from infostealers harvesting their credentials, according to research published Tuesday.

The study from identity risk firm SpyCloud follows months of reports about a wave of cyberattacks hitting targets in the sector, which U.S. government officials suspect are tied to Iran.

The company built a database of 66,845 Environmental Protection Agency-registered systems, examined internet domains and ultimately analyzed 10,000 organizations, finding that 1,787 showed active infostealer exposure.

In one case, a single infected device at a smart meter technology provider that SpyCloud didn’t name contained saved logins linked to roughly 167 different U.S. utility metering tenants — meaning that one exposure opened the door to many more. 

That “cascading supply chain exposure” was one of the biggest findings of the report that SpyCloud shared exclusively with CyberScoop, said Jason Lancaster, chief investigations officer at the cyber firm, along with the quantitative approach” to measure exposure overall.

“We talk about it a lot,” Lancaster said of the exponential risk that one exposure can present. “There’s examples here and there, but that was a standout example of, here’s a tangible thing that is an exposure right now.”

Generally, “Infostealer exposure means the attacker isn’t guessing anymore, they’ve got legitimate points of entry,” Lancaster said. “In the investigations I’ve worked, that log data usually contains stolen session cookies, credentials, and autofill info pulled straight off the infected device. That’s enough to walk right past [multifactor authentication] by hijacking an already-authenticated session, log into corporate email or VPNs without raising a single alert, and sit there quietly for weeks while they map out the network.”

Still, the study had limitations. It doesn’t address what apparently led to the cyberattacks that unfolded in Minnesota and elsewhere this summer: internet-exposed programmable logic controllers.

It’s “important to note that our research did not focus on OT devices which run the most critical processes within these utilities, and any exposure we cite herein should not be interpreted as exposure of specific OT devices,” the report said. It did, however, find that 258 of the 1,787 organizations with active infostealer exposure carried credentials to operational technology or remote-access systems.

Some of the report’s conclusions were about the limitations of the data itself.

“Exposure concentrated in larger operators and in the vendor supply chain; small utilities were largely underrepresented,” SpyCloud said. “That’s a pattern in the data, not a claim that every water system nationwide carries this risk — and it measures identity exposure, not confirmed intrusion.”

It’s the first study of its kind that SpyCloud has done for a specific industry, so the company doesn’t have comparisons to other industries, Lancaster said. SpyCloud has begun a responsible disclosure process for those affected within its report, he said, beginning with a briefing for the Cybersecurity and Infrastructure Security Agency.

“It’s important to remember, infostealer logs aren’t the end of an incident — they are often the beginning,” Lancaster said. “Access brokers sell these logs specifically because ransomware crews and other fraudsters want exactly this kind of entry point. So, the real question isn’t whether the exposure is dangerous. It’s how much time you have before someone weaponizes that stolen data against you.”

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A Cybersecurity and Infrastructure Security Agency program that provides tools and capabilities to other agencies has to get speedier so it can push them toward being able to move more quickly themselves, an agency official said Tuesday.

“We have to get faster,” said Richard Grabowski, acting branch chief of service delivery and deputy program manager for the Continuous Diagnostics and Mitigation program at CISA. “The way that we collaborated today wasn’t fast enough for the threats of yesterday, and they certainly aren’t going to be fast enough for the threats of tomorrow.”

That means pushing responsible automation of tasks that also can do so at scale, he said, so that experts “can focus more [on] dealing with the novel threats and adoption and tuning of advanced technology, and not hitting alerts every other day.”

Velocity is one of the three core goals for the CDM program, along with unification and data-driven risk management, Grabowski said at the Elastic Federal Cyber Defense Breakfast, produced by FedScoop.

Unification means keeping data out of silos so “we are connecting those deployments in a meaningful way to really stimulate reusable, actionable lessons learned,” Grabowski said. And data-driven risk management means that in the event of a crisis-level event, agencies are able to “see what is happening with timely, accurate, and trustworthy data, so that we are the tool of first response when the things hit the fan.”

One of CDM’s offerings is Security Information and Event Management (SIEM) as a Service, a cloud-based platform for threat analytics, incident response and more. Grabowski said there’s a three-year roadmap for expanding and enhancing it, including by ramping up staff and conducting training.

Mike Duffy, the acting federal chief information security officer, said at the same event that three principles should guide what comes next for CDM. One is aggregating demand across agencies that share common problems: “When agencies need the same capabilities, we should use federal scale to improve security, interoperability and value.”

Second, he said, “is buying outcomes, not product” by making it clear what outcomes the federal government is seeking and then allowing commercial markets room to innovate. 

Duffy said the third was to “design acquisition for continuous improvement,” meaning making sure that acquisition models promote competition and opportunities for new capabilities to enter.

“Now is not the time to set capabilities and move on for the next 10 years,” he said. “Mow that agile mindset of how we can continue to deliver and deploy capabilities based on the threats we’re seeing to reduce risk at scale across the federal government — that is absolutely key.”

CDM has been evolving since the SolarWinds breach that compromised at least nine federal agencies, said Matt House, CISA’s acting associate director and program manager for CDM.

“Post-SolarWinds, one of the things that that the government took away was, we lack what I would say is a common operating picture with respect to the operational visibility we need to be able to assess and coordinate response government wide,” House said at the event.

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The Trump administration rolled out a six-month test program in Texas on Monday that will draw on volunteer expertise and technology from cyber and artificial intelligence companies to protect the water sector.

“Project Watershed 250” is the first of the state-based, industry-centric pilot projects to cross the finish line that the Office of the National Cyber Director has previewed since the publication of its national cybersecurity strategy earlier this year. Water systems have long been viewed as among the most vulnerable and neediest critical infrastructure sectors, and in recent months the sector has been the victim of a spree of attacks.

“Project Watershed 250 is a commitment from the states, industry and federal government that we will continue to prioritize our nation’s safety and deliver on America-first policies for the American people,” National Cyber Director Sean Cairncross said at a rollout event in San Antonio Monday.

“U.S. companies are providing world-class cyber capabilities, red teaming that tests utilities’ current defenses, system hardening using the latest private sector cyber tools and AI tooling that helps utilities’ frontier cyber defenders to protect Texas water systems and scale proven solutions across the country,” he said. “This six-month pilot program is designed to make our water and wastewater critical infrastructure more resilient and resistant to cyber attacks by proactively finding and fixing system weaknesses.”

The pilot program, featuring collaboration between federal and state governments, stands in contrast to how the Biden administration tried to tackle the issue, with audit requirements that some GOP states challenged in court, forcing Biden’s Environmental Protection Agency to withdraw its rule.

“For too long, at least on the federal level, the government has admired the problem of cybersecurity in water systems,” Cairncross said. “We are going to find out what works. We’re going to target that, and we are going to scale off of this and learn lessons.”

A dozen companies — Parsons, Microsoft, Fortinet, Google Cloud, Palo Alto Networks, Amazon Web Services, Reflection AI, Cloudflare, Zscaler, Forescout, Abnormal AI and Dragos — appeared at the rollout Monday to praise the initiative and tout their contributions to it.

Not everyone praised the initiative elsewhere, however. One cyber professional who works on water security issues, speaking on condition of anonymity, said the program was “all smoke” and that “there’s no real money behind it.”

“The White House did what it always does — reached out to industry with their hands out asking for industry to pay for things the government should be doing, at least in part,” the person said.

Texas Gov. Greg Abbott said the program would be overseen by Cairncross’s office and Texas Cyber Command, which was established just last year. Abbott cited the need for the program by mentioning “an Iranian-backed cyberattack” on 30 water systems across 12 states and a 2024 attack on the water system in Muleshoe, Texas, suspected to be the work of Russian hackers.

“The need for cyber resilience is overwhelming,” Abbott said. “Many rural providers simply don’t have the resources they need to be able to protect themselves.”

Watershed 250 isn’t the only federal effort to bolster water cybersecurity, with lawmakers introducing legislation in the aftermath of the recent attacks. Past legislation that Congress has enacted also sought to tackle the problem.

Updated 8/31/26: with comment from cyber professional.

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In less than four hours early Tuesday, an attacker compromised a GitHub maintainer account and unleashed a self-replicating piece of malware which injected malicious code into more than 440 distinct npm packages, according to multiple security firms. 

The worm, built on the open-source Mini Shai-Hulud repository that TeamPCP published in May, was initially let loose in keyv, a data management interface software package with more than 600 million monthly downloads. The attacker spent the next 30 minutes compromising additional packages controlled by the same maintainer, including cacheable, flat-cache, file-entry-cache.

The attack spread to other maintainers, eventually compromising more than 860 packages with a “combined total of over 2 billion monthly installs,” Ilyas Makari, malware researcher at Aikido Security, wrote in a blog post. 

Wiz researchers told CyberScoop it hasn’t observed any new malicious packages since the initial wave moved through a massive footpoint of cloud and code environments in those first four hours. 

“This is the most critical initial compromise, with over 155 million weekly downloads on the root packages,” Wiz Research said in an email. 

Some of the compromised packages, including keyv, flat-cache and file-entry-cache, are present in more than 46% of all cloud environments, according to Wiz. “By comparison, back in the Shai-Hulud 2.0 campaign the most prevalent packages were only in about 28% of environments,” the company said. 

“Time will tell whether the eventual cost and impact outpaces past attacks, or whether adoption of hardening mechanisms such as package aging, and the usage of the relatively less aggressive Mini Shai-Hulud code as basis, will defray the final toll here,” Wiz Research added. 

Researchers from multiple firms sprung into action to monitor the widening attack spree and published indicators of compromise to help potential victims hunt for malicious activity in their systems. 

The Mini Shai-Hulud variant used in these attacks scoops up a trove of sensitive data, including npm, GitHub, AWS and continuous integration credentials. It also steals AI-related configuration files and cryptocurrency wallets, researchers said. 

Microsoft, Aikido, Socket and Wiz all said the same payload and pattern was observed across all affected packages, indicating a single attacker or threat cluster was behind the supply-chain attack and using multiple stolen tokens. 

The malware showcased a few pieces of new functionality, but retained the same core mechanisms that are hallmarks of Mini Shai-Hulud. 

“The evolution is consistent with what we’ve seen from them in past waves, however we don’t yet have the hard links” to confidently attribute the attacks to TeamPCP, Wiz Research said.

The notorious threat actor, which Google previously told CyberScoop it attributes to one core operator that was located in South Africa during at least some of the attacks, compromised and injected malicious code into more than 1,000 software packages in less than four months earlier this year.

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Malware targeting AI coding assistants and software developers’ automated workflows is spreading into more environments with more capabilities, placing defenders at a growing disadvantage.

A malware strain dubbed Sandworm_Mode, first discovered by Socket in February, represents a growing threat to software development. According to a CrowdStrike report, the self-propagating worm can spread through code repositories with minimal detection, raising alarms about software supply chains.

The malware’s capabilities are extensive, but not especially unique compared to the series of supply-chain worms known as Shai-Hulud, and more recently Mini Shai-Hulud.

“This is the new trend,” Adam Meyers, senior vice president of counter adversary operations at CrowdStrike, told CyberScoop. “This is something we’re seeing more and more. It’s the new hotness right now.”

Sandworm_Mode targets and steals sensitive data, including credentials, keys and secrets that unlock paths to additional services and dependencies throughout the AI toolchain. This includes AI assistants, cloud providers, API keys for nine major LLM providers, CI/CD pipelines and automated systems that build, test and publish code.

These actions blend in with tens of thousands of other commands occurring daily in any given environment infused with AI development tools. 

“Trying to find the signal of something malicious happening is very difficult because there’s so much noise out there,” Meyers said. 

The worm also paces itself, setting multi-day delays to separate initial access from follow-on malicious activity — creating a gap in victims’ telemetry windows, which makes it even more challenging for defenders to detect and attribute the chain of infection properly. 

“AI agents are pulling down all of these different dependencies continuously throughout the day,” Meyers said. “When you’re looking downrange from the perspective of the security operations team, you’re just seeing everybody pulling down these dependencies, and these dependencies self-unpacking and executing, so it just gets really, really noisy to try to find something bad happening.”

The malware covers its tracks further with a bit of a mean streak, by automatically destroying compromised environments if it can’t spread or accomplish its objectives.

“It’s well thought-through, and well developed, so somebody spent some time caring and feeding this thing,” Meyer said.

Despite CrowdStrike’s four-month review of Sandworm_Mode, the cybersecurity firm has yet to gain a firm handle on its intent, but Meyers said it is designed to attain a strong foothold, which could enable long-term access.

CrowdStrike hasn’t determined who is responsible for the malware, yet Meyers said he doesn’t think TeamPCP, a threat group that’s been on a rampage through open-source software this year, is involved. 

“It could be a nation-state threat actor, or it could be an e-crime actor that’s looking to use this to then sell access to other organizations,” he said. “We don’t really know what the intention is.”

The state of Sandworm_Mode and whether it remains active is also unclear. CrowdStrike said it continues to observe recently active malicious supply-chain packages that follow similar but technically divergent patterns.

Ultimately, “the world has changed,” Meyers said, adding that many attackers are pursuing similar paths in the AI toolchain, requiring defenders and threat hunters to place a greater focus on this burgeoning mode of aggression.

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