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FBI Hacks 4,200 Computers to Remove PlugX Malware Linked to Chinese Hackers

 

The FBI has successfully hacked and removed PlugX malware from approximately 4,200 computers across the US in a large-scale cybersecurity operation. The malware, allegedly deployed by the China-based hacking group known as “Mustang Panda” or “Twill Typhoon,” has been used since at least 2012 to steal sensitive information from victims in the US, Asia, and Europe. 

The Department of Justice announced the takedown on Tuesday, highlighting the collaborative efforts with French law enforcement to mitigate the cyber threat and prevent further damage. PlugX malware, which infects Windows computers via USB ports, allows hackers to gain unauthorized access and remotely execute commands on compromised systems. The malware operates stealthily in the background, enabling cybercriminals to exfiltrate data, monitor activity, and take control of infected machines. 

According to the FBI, compromised computers establish a connection with a command-and-control server operated by the attackers, with the malware’s IP address embedded directly into the code. Since September 2023, at least 45,000 US-based IP addresses have communicated with the server, indicating the widespread reach of the cyberattack. To eliminate the malware, the FBI leveraged the same exploit used by the attackers. After gaining access to the command-and-control infrastructure, agents retrieved the IP addresses of affected devices and issued a native command that instructed PlugX to delete itself from compromised systems. 

This command removed all files created by the malware, stopped its operation, and ensured its permanent deletion from the infected machines. The successful execution of this operation marks a significant step in neutralizing the ongoing cyber threat posed by Mustang Panda. This coordinated effort was not the first time the FBI has intervened remotely to remove malicious software from infected systems. 

In 2023, the agency dismantled a network of Quakbot-infected computers by deploying an uninstallation tool to affected devices, effectively neutralizing the botnet. Similarly, in 2021, the FBI took proactive measures to counter the Hafnium hack, which targeted Microsoft Exchange servers, by remotely patching vulnerabilities and securing affected systems. These operations demonstrate the FBI’s evolving approach to addressing cyber threats through direct intervention and international cooperation. 

Despite these successful operations, cybersecurity experts warn that PlugX and similar malware strains continue to pose a significant risk, especially given their ability to spread through USB devices. Organizations and individuals are advised to remain vigilant by implementing strong cybersecurity practices such as regularly updating software, disabling USB autorun features, and using endpoint protection tools to detect and prevent unauthorized access. 

The FBI’s decisive action highlights the persistent threat posed by state-sponsored hacking groups and underscores the importance of international collaboration in combating cybercrime. Moving forward, law enforcement agencies are expected to adopt more aggressive measures to counter cyber threats and protect sensitive information from being exploited by malicious actors.

New ShrinkLocker Ransomware Exploits BitLocker to Encrypt Files

 

The new ransomware strain, ShrinkLocker, is creating significant concerns by using Windows BitLocker to encrypt corporate systems through the creation of new boot partitions.

ShrinkLocker, named for its method of creating a boot volume by shrinking available non-boot partitions, has been targeting government entities and companies in the vaccine and manufacturing sectors.

Using BitLocker to encrypt computers isn't new. Previously, threat actors have used this security feature to encrypt 100TB of data on 40 servers at a Belgian hospital and to target a Moscow-based meat producer and distributor. In September 2022, Microsoft warned about an Iranian state-sponsored attacker using BitLocker to encrypt systems running Windows 10, Windows 11, or Windows Server 2016 and newer.

Kaspersky reports that ShrinkLocker includes previously unreported features designed to maximize damage. Written in Visual Basic Scripting (VBScript), ShrinkLocker detects the specific Windows version on the target machine using Windows Management Instrumentation (WMI) and proceeds only if certain conditions, like the current domain matching the target and the OS version being newer than Vista, are met. If not, ShrinkLocker deletes itself.

If the target meets the requirements, the malware uses the Windows diskpart utility to shrink each non-boot partition by 100MB, creating new primary volumes from the unallocated space. Kaspersky researchers noted that on Windows 2008 and 2012, ShrinkLocker saves the boot files along with the index of other volumes. The resize operations are carried out with different code on other Windows OS versions.

ShrinkLocker then uses the BCDEdit command-line tool to reinstall boot files on the new partitions. Additionally, it modifies registry entries to disable remote desktop connections and enable BitLocker encryption on hosts without a Trusted Platform Module (TPM), a security chip.

Dynamic malware analysis by Kaspersky confirmed the following registry changes made by ShrinkLocker:

- fDenyTSConnections = 1: disables RDP connections
- scforceoption = 1: enforces smart card authentication
- UseAdvancedStartup = 1: requires BitLocker PIN for pre-boot authentication
- EnableBDEWithNoTPM = 1: allows BitLocker without a compatible TPM chip
- UseTPM = 2: uses TPM if available
- UseTPMPIN = 2: requires a startup PIN with TPM if available
- UseTPMKey = 2: uses a startup key with TPM if available
- UseTPMKeyPIN = 2: uses a startup key and PIN with TPM if available
- EnableNonTPM = 1: allows BitLocker without a TPM chip, requiring a password or startup key on a USB flash drive
- UsePartialEncryptionKey = 2: requires a startup key with TPM
- UsePIN = 2: requires a startup PIN with TPM

The threat actor behind ShrinkLocker does not drop a ransom note but instead provides a contact email address within the label of the new boot partitions. This label is only visible through a recovery environment or diagnostic tools, making it easy to miss. After encrypting the drives, the attacker deletes the BitLocker protectors, such as TPM, PIN, startup key, password, recovery password, and recovery key, preventing the victim from recovering BitLocker’s encryption key, which is sent to the attacker.

The encryption key is a 64-character string generated by combining numbers, special characters, and the holoalphabetic sentence "The quick brown fox jumps over the lazy dog." This key is transmitted via the TryCloudflare tool, a legitimate service for experimenting with Cloudflare’s Tunnel without adding a site to Cloudflare’s DNS.

In the final stage, ShrinkLocker forces a system shutdown, leaving the user with locked drives and no BitLocker recovery options. BitLocker’s custom message feature, which could display an extortion message, is not used, suggesting these attacks may be more destructive than financially motivated.

Kaspersky discovered multiple ShrinkLocker variants used against government entities and organizations in the steel and vaccine manufacturing sectors in Mexico, Indonesia, and Jordan.

Cristian Souza, an incident response specialist at Kaspersky, advises companies using BitLocker to securely store recovery keys, maintain regular offline backups, use a properly configured Endpoint Protection Platform (EPP) to detect BitLocker abuse, enable minimal user privileges, and monitor network traffic and script executions.