AI Agents Speed Up Supply Chain Breach

Microsoft revealed that a Chinese state-aligned hacking group used an open-source artificial intelligence framework to execute a significant supply chain attack on ConnectWise. The incident demonstrates how automated tools are changing the speed and scale of corporate breaches. By leveraging this technology, the attackers were able to move through security defenses far faster than traditional human-led operations.

The group, identified as Storm-0940, utilized a tool called ARTEX. This is an open-source system that employs large language models to perform autonomous penetration testing. According to Microsoft, the AI agents handled scanning, reconnaissance, and password guessing with minimal human intervention. This automation allowed the attackers to operate around the clock, leaving defenders with very little time to detect and react to the intrusion.

Once the hackers gained unauthorized access to the multi-tenant ConnectWise application, they used stolen credentials to attempt sign-ins across more than 2,250 Microsoft 365 tenants. In some instances, the attack reached privileged access levels less than three hours after the initial targeting began. This rapid progression highlights the efficiency of the AI-driven approach in compromising complex identity systems.

In addition to the credential abuse, the attackers conducted massive password spraying campaigns. They targeted 327 accounts across eight organizations, generating over 151,000 failed login attempts. At its peak on October 11, the campaign saw 2,900 failed attempts per minute. While nearly 98 percent of these attempts were locked out, the sheer volume created a significant burden for security monitoring teams.

The attack focused on specific high-value sectors, including aerospace and defense, semiconductors, government agencies, and think tanks. Microsoft clarified that the breach did not stem from a vulnerability in its own systems, but rather from the compromise of the third-party ConnectWise platform. The attackers swept through tenants in a sorted order, suggesting a script-driven approach from a pre-defined target list.

Security firm Huntress observed specific malicious behaviors in one tenant on October 15. An application added itself to the top administrator role, a trigger for Microsoft Defender alerts. The attackers also planted new secrets set to expire in 2028. By October 17, Huntress had confirmed unauthorized sign-ins for nearly 1,000 tenants, with more than 300 of those sign-ins succeeding.

The use of ARTEX is part of a broader trend, as public reports this month linked the tool to breaches at South Korean financial institutions. CrowdStrike indicated that the suspect in those cases was likely based in China and used the framework with Anthropic’s Claude Code. In response to the growing adoption of the tool, the developer of ARTEX announced that the project will stop receiving updates and transition to closed source.

ConnectWise has suspended several of its cloud services as a precaution and has begun a phased restoration process. Recovery is expected to take several days, and the company has not yet found indicators that partner backup data was compromised. Microsoft advises customers to disable affected app connections and review recent activity logs until formal restoration instructions are provided.