Sophos, a global leader in innovative security solutions for defeating cyberattacks, recently released its report, “Operation Crimson Palace: Threat Hunting Unveils Multiple Clusters of Chinese State-Sponsored Activity Targeting Southeast Asia,” which details a highly sophisticated, nearly two-year-long espionage campaign against a high-level government target.
Sophos X-Ops has discovered links between five Chinese threat groups, including APT41 and BackdoorDiplomacy, for a two-year espionage campaign targeting a high-level government target in Southeast Asia. The attackers used a variety of malware and tools, including a persistence tool named PocoProxy, to gather reconnaissance on specific users and sensitive information. The campaign began in 2023 and involved tactics, techniques, and procedures overlapping with well-known Chinese nation-state groups, such as BackdoorDiplomacy, APT15, and APT41 subgroup Earth Longzhi.
The different clusters appear to have been supporting the interests of the Chinese state by gathering military and economic intelligence related to the country’s strategies in the South China Sea. In this particular campaign, we believe these three clusters represent distinct groups of attacks working in parallel against the same target under the overarching directive of a central state authority. Within one of the three clusters we identified—Cluster Alpha— we saw malware and TTPs overlap with four separately reported Chinese threat groups. It’s well-known that Chinese attackers share infrastructure and tooling, and this recent campaign is a reminder of how extensively these groups share their tools and techniques.
“As Western governments elevate awareness about cyberthreats from China, the overlap Sophos has uncovered is an important reminder that focusing too much on any single Chinese attribution may put organizations at risk of missing trends about how these groups coordinate their operations,” said Paul Jaramillo, director, threat hunting and threat intelligence, Sophos. “By having the bigger, broader picture, organizations can be smarter about their defenses.”
Sophos X-Ops first learned of malicious activity on the targeted organization’s network in December 2022 when they found a data exfiltration tool previously attributed to the Chinese threat group Mustang Panda. From there, the MDR team began a broader hunt for malicious activity. In May 2023, Sophos X-Ops threat hunting uncovered a vulnerable VMWare executable and, after analysis, three distinct clusters of activity in the target’s network: Cluster Bravo, Cluster Charlie and Cluster Alpha.
Cluster Alpha was active from early March to at least August 2023 and deployed a variety of malware focused on disabling AV protections, escalating privileges and conducting surveillance. This included an upgraded version of the EAGERBEE malware associated with the Chinese threat group REF5961. Cluster Alpha also utilized TTPs and malware that overlap with the Chinese threat groups BackdoorDiplomacy, APT15, Worok, and TA428.
Cluster Bravo was only active in the targeted network for three weeks in March 2023 and focused on moving laterally through the victim’s network to sideload a backdoor called CCoreDoor. This backdoor establishes external communications pathways for the attackers, performs discovery, and exfiltrates credentials.
Cluster Charlie was active from March 2023 to at least April 2024, focusing on espionage and exfiltration. This included the deployment of PocoProxy, a persistence tool that masquerades as a Microsoft executable and establishes communications with the attackers’ command and control infrastructure. Cluster Charlie worked to exfiltrate a large volume of sensitive data for espionage purposes, including military and political documents and credentials/tokens for further access within the network. Cluster Charlie shares TTPs with the Chinese threat group Earth Longzhi, a reported subgroup of APT41. Unlike Cluster Alpha and Cluster Bravo, Cluster Charlie remains active.
“What we’ve seen with this campaign is the aggressive development of cyberespionage operations in the South China Sea. We have multiple threat groups, likely with unlimited resources, targeting the same high-level government organization for weeks or months at a time, and they are using advanced custom malware intertwined with publicly available tools. They were, and are still, able to move throughout an organization at will, rotating their tools frequently. At least one of the activity clusters is still very much active and attempting to conduct further surveillance.
“Given how often these Chinese threat groups overlap and share tooling, it’s possible that the TTPs and novel malware we observed in this campaign will resurface in other Chinese operations globally. We will keep the intelligence community informed of what we find as we continue our investigations into these three clusters,” said Jaramillo.
Read more about this espionage campaign in “Operation Crimson Palace: Threat Hunting Unveils Multiple Clusters of Chinese State-Sponsored Activity Targeting Southeast Asia” on Sophos.com.
Learn more about the three activity clusters in “Operation Crimson Palace: A Technical Deep Dive” on Sophos.com.
