An anonymous reader quotes a report from The New York Times: Investigators at the Commerce Department were deep into a monthslong investigation of a Singaporean company that they suspected of smuggling Nvidia's artificial intelligence chips into China when their work came to a sudden halt late last year. The investigation centered on Megaspeed, a data center company led by an executive who U.S. officials now believe to be a Chinese spy who had a relationship with Nvidia's chief executive, Jensen Huang. But the case was abruptly transferred to the Justice Department last year. The shift came after Commerce Department investigators working on the case received an email from Nvidia's general counsel seeking information about the inquiry into Megaspeed. It is not necessarily unusual for Commerce Department agents working on a case to speak with a company's representatives about issues involving their firm. But what was unusual was the content of the message. Tim Teter, Nvidia's general counsel, said that Jeff Kessler, a top official at the department, had given Nvidia permission to reach out about the case. The agents were alarmed that Nvidia had invoked the name of Mr. Kessler, their superior, who was nominated to his role by President Trump. Some viewed Mr. Kessler's interaction with Nvidia as violating government procedure and potentially tainting the case, according to current and former government officials and others familiar with the incident. It is not clear what led to Mr. Teter's outreach to the department, but the recent revelations about Mr. Huang's acknowledged affair with a Megaspeed executive have only intensified scrutiny of Nvidia's role in influencing policy on chip sales to China. [...] The incident raised questions about what Mr. Kessler, who reports directly to Commerce Secretary Howard Lutnick, had discussed with Nvidia. It also raised the possibility that those discussions could become their own subject of inquiry. Perhaps inadvertently, some officials said, Mr. Kessler had opened himself to accusations of undue influence and potentially jeopardized his department's work on Megaspeed. The case was quickly transferred to the Justice Department in an effort to avoid any potential compromise of the government's investigation of Megaspeed, these people said. The Justice Department is conducting a criminal inquiry into Megaspeed, according to people familiar with the matter.

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Huawei has unveiled the Qingyun HM650, a desktop PC it claims is made entirely from Chinese-manufactured components, including its own 10-core Kirin X90 processor and an enterprise version of HarmonyOS. "While Huawei has reportedly claimed local companies manufactured 100 percent of the components in the machine, it is unclear if all those components use Chinese designs," notes The Register. From the report: A single Chinese government agency has reportedly signed up for 600 of the machines. That's not an indication this machine is a curiosity, because Beijing has ordered all government entities to shift from Wintel boxes to local alternatives. [...] Even if Huawei is using some parts that aren't entirely Chinese, the debut of the Qingyun HM650 is bad news for Intel, AMD, and Qualcomm, as all are suffering as the PC market shrinks due to the rising cost of memory. China's government is an enormous buyer, and losing the chance to bid for its business is unlikely to be helpful.

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CNBC reports new details about the relationship of alleged Chinese spy with Nvidia CEO Jensen Huang: Huang told Nvidia staff in a email on Sunday that he had an affair with the woman and that Nvidia's board of directors had opened an independent investigation into the spying allegations. "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did," Huang wrote in the message. "I am deeply sorry." Nvidia's board "said an independent committee, assisted by outside counsel, will investigate the matter," reports Axios: The board said it has no reason to believe national security or company secrets were compromised and expressed confidence in Huang's leadership... Huang has been a key voice in Washington pushing to loosen restrictions on AI chip sales to China. He argued that keeping American technology in the Chinese market strengthens U.S. competitiveness and prevented China from developing their own potentially more advanced chips. The board's statement added that their inquiry "will examine all available information," CNBC reports. But "An Nvidia spokesperson said that Huang was committed to continuing as CEO of Nvidia without interruption." "I love our country and our company," Jensen Huang wrote in his letter to Nvidia's staff (as reported by CNBC), "and I am committed to protecting NVIDIA and supporting America's national security. I am proud and grateful to be an American." But while U.S. lawmakers have requested Huang appear for closed-door committee briefing, Jensen has not confirmed he'll appear, notes CNBC: When asked by the New York Times whether Huang would appear before lawmakers to discuss the matter, Nvidia spokesman John Rizzo declined to comment. "Our chief executive has an outstanding security team that accompanies him where needed," Mr. Rizzo said in a statement to the Times... Rizzo said [Thursday] the Nvidia CEO's interactions with [alleged Chinese spy Alice] Huang were consistent with meetings he has had with any of Nvidia's customers.

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An anonymous reader quotes a report from The New York Times: A Chinese businesswoman who had a close relationship with the chief executive of one of the most important artificial intelligence companies in the United States was a spy for China's Ministry of State Security, Beijing's top intelligence agency, according to people briefed on U.S. surveillance. The businesswoman, Alice Huang, was recruited by the ministry to collect intelligence on Jensen Huang, the chief executive of Nvidia, as part of a drive to learn more about American A.I. chips and potentially influence the company to push for its most advanced chips to be made available to China, the people said. [...] The New York Times reported last week that Mr. Huang was a target of a Chinese intelligence operation, and that U.S. intelligence agencies were conducting electronic surveillance of Ms. Huang, a Chinese citizen, for at least a year. The Times reported that Mr. Trump had been briefed last year about Mr. Huang's relationship with her, but chose not to do anything about it. Ms. Huang speaks English well and has relationships with executives at the highest levels of the A.I. chip industry, including Mr. Huang and the leaders of Gigabyte, one of the top assemblers of Nvidia supercomputers, said people who have met her. She has attended industry conferences and private executive dinners. It is unclear when Ms. Huang first met Nvidia's leader. In 2024, around the time the two of them were photographed together at a bar in Taipei, her company, Megaspeed, began a multibillion-dollar purchase of advanced A.I. microchips. To many in the industry, the well-funded push by Megaspeed into A.I. appeared to come out of nowhere. Ms. Huang was connected to a network of companies and investors clustered around Shanghai and Zhejiang province that had used their ties to local officials in Shanghai to push aggressively from mobile video games into data centers, which provide the computing power behind artificial intelligence. Megaspeed has been building data centers in Southeast Asia and then renting their computing power to Alibaba, the giant Chinese internet firm, giving China a backdoor way of getting access to advanced Nvidia chips. Nvidia is restricted by the United States from selling those chips directly to China. Beyond its local connections, the network also has a financial link to the Chinese military establishment, through an investment in a cybersecurity subsidiary of China Electronics Technology Group, one of the country's largest makers of military technology. Following the report, top Republican lawmakers have asked Jensen Huang to appear before Congress to answer questions. "Recent reports raise significant national security concerns regarding the People's Republic of China's access to sensitive US technology and information," representatives John Moolenaar, Brian Mast, and Rick Crawford said. "The issue of PRC infiltration and access to cutting-edge US technology is core to the investigative work of our three committees this Congress. It is vital that Congress determines the extent to which US national security has been placed at risk," the lawmakers added.

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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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At the Seventh Manned Spaceflight Conference in Beijing, Chinese space officials publicly outlined the most detailed roadmap yet for landing astronauts on the Moon "before 2030." Ars Technica reports: China's lunar landings will involve a lunar-orbit rendezvous similar to what NASA did in the 1960s and early 1970s with the Apollo program. However, lacking a rocket as powerful as the Saturn V vehicle, the crew and lunar lander will launch separately to the Moon. According to slides shared on social media, the current plan involves: - An uncrewed test of the Long March 10A rocket (a single-stick variant, with no boosters) and the Mengzhou spacecraft to low-Earth orbit. Target: early 2027 - An uncrewed test of the larger Long March 10 rocket (a core stage with two boosters) and the Lanyue lunar lander, including descent/ascent from Moon's surface. Target: 2028 - A concurrent launch of two Long March 10 rockets, one carrying uncrewed Mengzhou and the other the Lanyue vehicle; they will dock in lunar orbit. Target: 2029 - Dual launch of Long March 10 rockets, this time with crew on the Mengzhou spacecraft, leading to crewed landing mission. Target: "Before 2030" The public release of this new information provides a timeline for gauging China's technical progress in its efforts to land humans on the Moon before 2030 and beat NASA and the United States back to the lunar surface. Notably, the plan (for now, at least) omits a mission similar to Apollo 8 or Artemis II, which involved a crew flying out to the Moon and either entering orbit or passing close by before returning to Earth. The Mengzhou vehicle should still get a workout closer to Earth with humans on board as part of missions carrying astronauts to Tiangong, China's space station in low-Earth orbit.

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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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Cisco Talos linked SD-WAN key-stealing malware to infrastructure overlapping Volt Typhoon’s Silent Train network, which Lumen detailed.

The post Cisco SD-WAN Zero-Day Exploitation Tied to Volt Typhoon’s ‘Silent Train’ Network appeared first on SecurityWeek.

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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The attackers chained PHP2Shell and Fragnesia exploits and hacked two servers of a US government-affiliated organization.

The post China-Linked Hackers Exploit PHP2Shell to Root Firewalls appeared first on SecurityWeek.

An anonymous reader quotes a report from Reuters: While global tech stocks teeter, in China they have already crashed as lofty valuations collapse under worries about AI demand and curbs on Chinese exports. The meltdown, tanking the mainland STAR50 index of AI and semiconductor leaders by 40% in less than four months and vaporizing some $480 billion in market value, is an ill omen for wobbly world markets and a dampener on China's efforts at encouraging its savers into stocks to fund the AI boom. It has also slammed the brakes on a rally running two years, since economic stimulus promises sent shares soaring, and has stalled Beijing's push to break with a long boom-bust pattern and drive a "slow bull" market that delivers reliable performance. China's broad blue-chip index has dropped about 20% from highs made in June. "The stock market later evolved into a speculative crazy bull," said Beijing-based fund manager Dong Baozhen. "And now we see the bubble bursting." There was no clear trigger for the selloff in China, though traders pointed to high valuations, tax bills, and the threat of foreign bans on Chinese data center equipment. According to Goldman Sachs, AI stocks account for 42% of China's market capitalization and 57% of trading turnover, leaving investors widely exposed to the downturn. "What's happening is now going to put a stop for many of the companies trying to get themselves listed," said Hong Hao, managing partner and chief investment officer at Lotus Asset Management in Hong Kong. "Overemphasising the 'technology content' -- that is, the weighting of tech companies by market value in major indexes -- leads to a deviation, even a distortion, in capital behavior," said Leo Wang, partner at Beijing-based Qianchuang Capital. "This created a severe bubble in certain sectors and a serious drain on others." "Just like all other Chinese manufacturers, (chipmakers and AI suppliers) will eventually end up in a price war," said fund manager Wang Zhuo, partner at Shanghai Zhuozhu Investment Management. "There's no exception," he said. "All bubbles inevitably burst."

Read more of this story at Slashdot.

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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Xint says a flaw in OpenAI’s compaction process let researchers move reasoning traces between models, potentially making it cheaper to distill a rival AI.

The post Stolen AI Reasoning Could Help China Build Cheaper Rivals appeared first on SecurityWeek.

The state-sponsored hackers targeted hundreds of organizations and gained privileged access to some environments.

The post China APT Uses AI Pentest Tool Artex in ConnectWise Attacks appeared first on SecurityWeek.

A Chinese government-aligned hacking group used automated tools to carry out the recent supply chain attack on IT management software company ConnectWise and is using the same techniques to try to compromise organizations around the globe, Microsoft said.

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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The DHS said agencies should remove DeepSeek products as well as third-party products and services developed using DeepSeek from their IT systems.

The post China Defends DeepSeek After US Ban of Its AI From Government Systems appeared first on SecurityWeek.

Tasked with writing an application for a US defense contractor, the model made the code 19% more likely to be hackable.

The post Chinese AI Model Writes More Hackable Code When Told It’s for US Contractor appeared first on SecurityWeek.

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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