Experts Link Sidewalk Malware Attacks to Grayfly Chinese Hacker Group

A previously undocumented backdoor that was recently found targeting an unnamed computer retail company based in the U.S. has been linked to a longstanding Chinese espionage operation dubbed Grayfly.

In late August, Slovakian cybersecurity firm ESET disclosed details of an implant called SideWalk, which is designed to load arbitrary plugins sent from an attacker-controlled server, gather information about running processes in the compromised systems, and transmit the results back to the remote server.

The cybersecurity firm attributed the intrusion to a group it tracks as SparklingGoblin, an adversary believed to be connected to the Winnti (aka APT41) malware family.

But latest research published by researchers from Broadcom's Symantec has pinned the SideWalk backdoor on the China-linked espionage group, pointing out the malware's overlaps with the older Crosswalk malware, with the latest Grayfly hacking activities singling out a number of organizations in Mexico, Taiwan, the U.S., and Vietnam.

"A feature of this recent campaign was that a large number of targets were in the telecoms sector. The group also attacked organizations in the IT, media, and finance sectors," Symantec's Threat Hunter Team said in a write-up published on Thursday.

Known to be active at least since March 2017, Grayfly functions as the "espionage arm of APT41" notorious for targeting a variety of industries in pursuit of sensitive data by exploiting publicly facing Microsoft Exchange or MySQL web servers to install web shells for initial intrusion, before spreading laterally across the network and install additional backdoors that enable the threat actor to maintain remote access and exfiltrate amassed information.

In one instance observed by Symantec, the adversary's malicious cyber activity commenced with targeting an internet reachable Microsoft Exchange server to gain an initial foothold into the network. This was followed by executing a string of PowerShell commands to install an unidentified web shell, ultimately leading to the deployment of the Sidewalk backdoor and a custom variant of the Mimikatz credential-dumping tool that's been put to use in previous Grayfly attacks.

"Grayfly is a capable actor, likely to continue to pose a risk to organizations in Asia and Europe across a variety of industries, including telecommunications, finance, and media," the researchers said. "It's likely this group will continue to develop and improve its custom tools to enhance evasion tactics along with using commodity tools such as publicly available exploits and web shells to assist in their attacks."

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