AI-powered hackers hit thousands of business accounts in rapid supply chain attack

A China-aligned hacking group has used artificial intelligence agents to launch a large scale supply chain attack that targeted more than 2,250 Microsoft 365 tenants. According to a report published by Microsoft, the group, known as Storm-0940, leveraged an open source framework called ARTEX to automate the intrusion process. This development marks a significant shift in how cyber threats are executed, as the AI agents performed reconnaissance and credential abuse at a speed that traditional human led teams could not match. Some of the initial targets gained privileged access in less than three hours, highlighting the rapid pace of modern cyber operations.

The attack relied on stolen credentials from ConnectWise, a multi tenant application. The hackers used these application credentials to authenticate into customer environments without requiring interactive user sign ins. This method allowed the AI agents to bypass standard user verification steps. Microsoft noted that the use of ARTEX, a system of large language model driven agents, sped up scanning, password guessing, and OAuth application abuse. The agents operated with little human interaction, creating a continuous pressure on defenders that left little time for detection and response.

Beyond the primary credential abuse, the group conducted extensive password spraying campaigns. These automated attempts targeted 327 accounts across eight organizations, resulting in over 151,000 failed logon attempts. On the peak day of October 11, the campaign generated 2,900 attempts per minute, with a daily total exceeding 111,000. While almost 98 percent of these attempts were locked out, the volume of traffic demonstrated the scale of the automated effort. The attack did not stem from a vulnerability in Microsoft’s own systems but rather from the compromise of third party application identities.

The targeted industries included aerospace and defense, semiconductor manufacturing, government agencies, and think tanks, with 14 specific sectors listed in total. Storm-0940 has been active since 2021 and is described as a developing actor with no known industry aliases. The use of AI in this campaign is not an isolated incident. Public reports this month linked the same ARTEX framework to breaches at South Korean financial institutions. CrowdStrike indicated that the suspect in those separate attacks was likely based in China and used the tool with Anthropic’s Claude Code.

Security firm Huntress observed specific behaviors in one tenant on October 15, where an application added itself to the top administrator role. This action triggered alerts for unauthorized role assignments. By October 16, Huntress confirmed unauthorized sign ins for 162 tenants. The following day, the number of affected tenants with sign in activity from the attacking IP address rose to nearly 1,000, with over 300 successful logins. The sequential nature of the attacks, occurring just seconds apart, suggested a script working from a predefined target list.

In response to the incident, ConnectWise suspended several of its cloud services, including Cloud Backup, SaaS Security, and Cloud Management, as a precautionary measure. The company has begun a phased restoration process, with recovery expected to take several days. So far, there are no indicators that partner backup data was compromised. The developer of ARTEX, who uses the handle Autumn-27, announced on GitHub that the project will no longer be updated and will become closed source. This decision may impact future threat actors who have relied on the open source tool.

Microsoft advises customers to keep affected application connections disabled until formal restoration instructions are issued. The company notes that a successful sign in does not automatically mean data was accessed or taken. Businesses are encouraged to review activity logs from this month where possible to identify any anomalies. The incident underscores the growing importance of monitoring third party application access and the increasing speed at which AI driven threats can penetrate corporate networks.