Despite Microsoft’s security measures, the extensions remained publicly accessible for a significant period, highlighting potential gaps in the company’s review process.
The “ahban.cychelloworld” extension was first uploaded on October 27, 2024, followed by “ahban.shiba” on February 17, 2025. The VSCode Marketplace, designed to provide developers with additional tools for Microsoft’s popular coding platform, has come under scrutiny for failing to identify these threats.
Researchers at ReversingLabs determined that both extensions included a PowerShell script that connected to a remote Amazon Web Services (AWS) server to download further malicious code. This secondary payload functioned as ransomware, though evidence suggests it was still in a testing phase.
Unlike traditional ransomware that encrypts entire systems, this malware specifically targeted files stored in C:\users%username%\Desktop\testShiba. Once the encryption was complete, victims received a Windows notification stating: “Your files have been encrypted. Pay 1 ShibaCoin to ShibaWallet to recover them.” However, no further instructions or payment details were provided, suggesting the malware was not yet fully developed.
Although Microsoft eventually removed the extensions, security researcher Italy Kruk from ExtensionTotal disclosed that their automated detection system had identified the malicious code much earlier. Kruk stated that they had alerted Microsoft about the issue but received no response. Further analysis revealed that the initial version of “ahban.cychelloworld” was clean, but the ransomware was introduced in version 0.0.2, which was released on November 24, 2024. ExtensionTotal flagged this version to Microsoft on November 25, yet the extension remained available for months.
During this time, five more versions were uploaded, all containing the same ransomware.
This case has intensified concerns about Microsoft’s ability to monitor third-party extensions effectively. The security lapse within the VSCode Marketplace highlights the risk developers face when downloading extensions, even from official sources. Microsoft has previously faced criticism for both slow responses to security threats and for mistakenly removing non-malicious extensions.
A notable example involved two popular VSCode themes, ‘Material Theme – Free’ and ‘Material Theme Icons – Free,’ which were taken down due to suspected obfuscated JavaScript. However, after further review, Microsoft determined the extensions were safe, reinstated them, and apologized, promising improvements to its security screening process.
The presence of ransomware in widely used developer tools underscores the need for stronger security measures. Developers must stay cautious, regularly update security protocols, and carefully evaluate third-party extensions before installing them, even when they come from official platforms like the VSCode Marketplace.
