AI-Powered Hackers Breach 2,250 Microsoft Tenants in Rapid Supply Chain Assault

An automated cyberattack is reshaping the landscape of digital security across the United States.

Microsoft has identified a large-scale supply chain attack involving the ConnectWise platform. The operation was carried out by a China-state-aligned group known as Storm-0940. This actor utilized ARTEX, an open-source framework designed for autonomous penetration testing. The tool employs large language model agents to conduct attacks with minimal human oversight. This approach significantly accelerated the intrusion process. The agents operated continuously, leaving defenders with very little time to react.

The group gained unauthorized access to the multi-tenant ConnectWise application. They then used stolen credentials to authenticate as the application itself. This method bypassed the need for interactive user sign-ins. The attackers attempted sign-ins at more than 2,250 different Microsoft 365 tenants. In some cases, the agents reached privileged access levels in under three hours. This speed marks a notable departure from traditional attack timelines. The use of AI agents allowed for rapid scanning and reconnaissance. It also facilitated efficient password spraying and OAuth application abuse.

Password spraying was a key component of the offensive. The group targeted 327 accounts across eight organizations. This campaign resulted in over 151,000 failed logon attempts. None of these attempts were successful. At its peak on October 11, the system made 2,900 attempts per minute. That day alone saw more than 111,000 failures. Forty-eight specific accounts logged over 1,000 failed attempts each. Almost 98% of this activity triggered lockouts. However, the attackers also used valid application credentials to sign in. They executed over 200 sign-ins in under four minutes using just four application credentials.

The targeted industries included aerospace, defense, semiconductor, government, and think tanks. A total of 14 sectors were listed in the report. Microsoft clarified that the breach did not stem from a vulnerability in its own systems. Instead, it resulted from the compromise of the third-party ConnectWise application. The group has been active since 2021. It has no known industry aliases. Its name follows the standard convention for developing threat actors.

Security firm Huntress observed specific malicious behaviors in one tenant on October 15. An application added itself to the top administrator role. This action triggered a specific alert in Microsoft Defender. The attackers also planted new secrets set to expire in 2028. By October 16, Huntress confirmed unauthorized sign-ins for 162 tenants. The following day, nearly 1,000 tenants showed sign-in activity from the attacking IP address. More than 300 of these sign-ins were successful. The sequential nature of the attacks suggested the use of a script working from a target list.

The use of ARTEX distinguishes this attack from many traditional methods. The framework can utilize any AI model. Threat actors in multiple regions are adopting this technology. Public reports this month linked similar tools to breaches at South Korean financial institutions. CrowdStrike indicated that the suspect in those separate attacks was likely based in China. They allegedly used ARTEX with Anthropic’s Claude Code. The developer of ARTEX, known as Autumn-27, announced on GitHub that the project would no longer be updated. It will become closed source, according to Reuters.

ConnectWise has suspended several services as a precaution. Cloud Backup, formerly known as SkyKick, is offline. SaaS Security and Cloud Management are also suspended. The company has begun a phased restoration process. Recovery is expected to take several days. There are no current indicators that partner backup data was compromised. Microsoft advises customers to keep affected app connections disabled until formal instructions are issued. Users should review activity logs from this month where possible. A successful sign-in does not automatically mean data was accessed or taken.

This incident highlights the growing role of AI in cyber operations. Autonomous agents can execute complex tasks at a speed that challenges traditional defense mechanisms. The reliance on third-party applications remains a critical vector for supply chain attacks. Organizations must monitor for unusual application behavior. Prompt response is essential to mitigate the impact of such rapid intrusions. The shift toward AI-driven attacks requires updated security strategies.