⚡ Weekly Recap: Chinese Spy Proxy, AI Agents Go Off

Ravie LakshmananAug 31, 2026Cybersecurity / Hacking

The boring parts caused most of the trouble.

A router shipped ready to listen. A fake check turned the user into the installer. Trusted systems collected traffic and passwords, then cleaned the logs. Old bugs formed new attack chains. Even an AI agent decided its assigned task was optional.

Elsewhere, fake apps, helpful support calls, cheap banking kits, exposed systems, and weak defaults kept things moving. Different attacks, same useful mistake: something familiar was trusted without a second look.

Here is the week...

⚡ Threat of the Week

U.S. Disrupts Chinese Proxy Network Enabling Cyber Espionage — The U.S. Federal Bureau of Investigation (FBI) disrupted infrastructure associated with a technical quartermaster who sold reconnaissance, proxy management, and operational routing capabilities for Chinese cyber espionage activities. The QTYF group is said to have created and operated the QScan and QTRouter frameworks, which have been used to target U.S. critical infrastructure networks. It's employed by the China-based Nanjing Xinjiuwei Network Technology Company.

🔔 Top News

• OpenAI Says Reward Hacking Drove AI Agents to Breach Hugging Face — OpenAI revealed that reward hacking was a key driver behind the artificial intelligence (AI)-powered hack of Hugging Face last month, adding that it found evidence of misaligned behavior as early as late May. The incident took place during cybersecurity evaluations of several OpenAI models, and it was mainly fueled by what it described as a "highly capable, internal-only research model" comparable in scale to GPT‑5.6 Sol. "The models, operating under reduced safeguards, took actions that were misaligned with the goals of their assigned tasks – they communicated through unauthorized channels, exploited vulnerabilities in shared infrastructure, gained internet access, and accessed third-party systems," it said.
• TerminalFix Uses Fake Cloudflare CAPTCHAs to Drop Reverse Tunnel Implant — A new ClickFix variant, dubbed TerminalFix, aims to trick users into running a malicious command in Windows Terminal or PowerShell instead of directing them to the Windows Run dialog. The campaign, targeting organizations across multiple sectors, leverages compromised websites as a starting point to serve fake Cloudflare CAPTCHA verifications that prompt unsuspecting site visitors to copy and execute a malicious PowerShell command. The attack chain, according to Microsoft, is a sophisticated multi-stage process that leverages DLL sideloading, steganographic payload extraction, extensive Active Directory reconnaissance, and a bespoke custom reverse-tunnel implant that grants the attacker persistent, network-level proxy access through the infected machine.
• PaperCut Flaws Under Attack — Threat actors are chaining together two new security flaws in PaperCut NG and MF to execute arbitrary code on susceptible instances. "CVE-2026-81578 allows you to bypass authentication, and from there, you can edit a configuration file to exploit CVE-2026-82078 and gain Remote Code Execution," Jake Knott, head of threat intelligence at watchTowr, told The Hacker News. Huntress said it observed limited exploitation on two customer environments, with the attackers executing Base64-encoded commands on the targeted server as part of post-exploitation activity to determine user account and operating system using a chained command "whoami & ver."
• China-Made ZBT Routers Ship with 2 Backdoors — A firmware analysis of ZBT Deep Orange 3G/4G/LTE Router uncovered two new backdoors called SPEAKINGSTONE (CVE-2026-74233, CVSS score: 9.3) and DARKLANTERN (CVE-2026-74232, CVSS score: 9.3). The development came after at least 21 firmware images from the Chinese company were found to contain another backdoor called ENDLESSDOORS (CVE-2026-66747, CVSS score: 9.3) that's designed to start automatically and attempt to beacon to Chinese command-and-control (C2) infrastructure as often as every 35 seconds. The two new backdoors predate ENDLESSDOORS. "SPEAKINGSTONE, like ENDLESSDOORS, is a phone-home implant that connects back to ZBT's cloud infrastructure and accepts remote commands," VulnCheck said. "DARKLANTERN is a backdoor that listens on the WAN and executes arbitrary commands. No authentication required. Both are written in Nim. Both communicate over UDP. Both are launched by the same binary, a connectivity watchdog called inetdetect."
• Fire Ant Targets Trusted Infrastructure in 2026 — The China-linked threat actor known as Fire Ant (aka UNC3886) has continued to remain active in 2026, going beyond hypervisors to target trusted infrastructure, including routers (including Cisco IOS XR routers), TACACS servers, authentication systems, and Linux management hosts to maintain covert access, collect credentials and traffic, and reach connected high-value environments. "The compromise impacted both the direct and third-party environments," Sygnia said. "Its trusted infrastructure relationships created potential reachability into connected external environments, including high-value networks and critical infrastructure. Fire Ant appeared to use this trusted position to explore access paths beyond the initially compromised environment." Compromised routers were used for covert connectivity, traffic collection, command-output manipulation, and suppression of logging. In addition, the threat actor used deployed long-lived implants across Linux management infrastructure, including Medusa rootkit-related components, custom SSH backdoors, Zabbix-masquerading malware (aka BridgeAgent) that acts as a pathway for actor-controlled access into connected environments, and packet-triggered backdoors. Another tool in Fire Ant's arsenal is TacTap, which is used for TACACS credential collection. "The actor also manipulated the evidence sources defenders depend on," Sygnia added. "It suppressed router logging, altered command output, captured administrative credentials, tampered with host logs, and deployed multiple persistent backdoors."

‎️‍🔥 Trending CVEs

Bugs drop weekly, and the gap between a patch and an exploit is shrinking fast. These are the heavy hitters for the week: high-severity, widely used, or already being poked at in the wild.

Check the list, patch what you have, and hit the ones marked urgent first — From CVE-2025-30237 through CVE-2025-30241, CVE-2025-15628, CVE-2026-9254, CVE-2026-16348, CVE-2026-78541 (TP-Link), CVE-2026-17106 aka CopyEscape (Docker), CVE-2026-70426 (Jenkins), CVE-2026-15307, CVE-2026-15337, CVE-2026-15830, CVE-2026-15920 (Django), CVE-2026-19598 (Pods), CVE-2026-19874 (Konami Metal Gear Online 3), CVE-2026-75149, CVE-2026-67618 (Marimo), CVE-2026-77775, CVE-2026-77776 (Headroom LLM Proxy), CVE-2026-0251 (Palo Alto Networks GlobalProtect App), CVE-2026-59568, CVE-2026-59567, CVE-2026-59565 (Zscaler Client Connector), CVE-2026-69251, CVE-2026-73601, CVE-2026-69253, CVE-2026-69256, CVE-2026-73602, CVE-2026-69259, CVE-2026-69264, CVE-2026-73484, CVE-2026-69255, CVE-2026-70477, CVE-2026-73485, CVE-2026-73486, CVE-2026-73487, CVE-2026-70470, CVE-2026-69254 (Flowise), CVE-2026-19912, CVE-2026-19913 (Kaltura HTML5 Player Library), CVE-2026-79282, CVE-2026-79290, CVE-2026-79054, CVE-2026-79121, CVE-2026-79224, CVE-2026-79052, CVE-2026-79150, CVE-2026-78935, CVE-2026-79012, CVE-2026-79200 (Google Chrome), CVE-2026-77537, CVE-2026-77550, CVE-2026-77554 (Ubiquiti UniFi), CVE-2026-18431 (Avada WordPress theme), CVE-2026-7791 (Amazon Skylight Workspace Config Service), CVE-2026-73554 (DoltHub), CVE-2026-19516 (Grafana MCP), CVE-2026-75604, GHSA-2xp9-vwfh-vxw4 (Next.js), CVE-2026-65643 (cPanel and WebHost Manager), CVE-2026-76639, CVE-2026-76640 (Unitree G1 EDU), CVE-2026-18885, CVE-2026-18886, and CVE-2026-74820 (ServiceNow AI Platform).

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📰 Around the Cyber World

• Play Ransomware Encryption — The closed ransomware group known as Play (aka PlayCrypt) has been found to employ a double extortion model, encrypting systems after exfiltrating data and threatening to publish stolen data on their Tor-hosted data leak site if ransom is not paid. In one incident observed in early 2026, the threat actor deployed SystemBC after gaining initial access, followed by reconnaissance, lateral movement, data exfiltration, and abusing SentinelOne's own legitimate removal tool to uninstall the product. "The threat actor gained initial access via a compromised SonicWall VPN, consistent with the group's well-documented pattern of exploiting external remote services," GuidePoint Security said. "What makes this case particularly instructive for defenders is the combination of three specific behaviors: Domain-wide tool staging via the SYSVOL share rather than per-host delivery, EDR removal using the victim's own SentinelOne uninstallation utility rather than a kernel-level driver exploit, and the recovery of a crash dump from a host where the encryptor failed to complete, an artifact that provides a rare forensic window into the encryption execution itself."
• Email Bombing and Quick Assist for Ransomware Deployment — ZeroBEC disclosed details of an email bombing campaign targeting at least 10 users inside an organization, causing them to receive about 3,000 messages per day. "The messages were not a conventional phishing blast. Many were genuine verification, registration, deployment, and inquiry confirmations generated after the victims' email addresses were submitted to unrelated public platforms," the email security company said. About a day and a half after the email flooding, some of the users were contacted via Microsoft Teams by attackers masquerading as IT help desk personnel to help them tackle the problem. One of the employees, who was a local administrator, granted Microsoft Quick Assist access, enabling the attackers to deploy Xray-core, a reverse proxy tool, and expand their access. "The credential-theft step was woven directly into social engineering," ZeroBEC said. "The attacker mimicked the installation of a Windows security update and launched a local credential prompt from the compromised endpoint. The victim, who was still listening to the person he believed was IT, entered domain credentials into that prompt. The tooling validated and captured the credentials and then uploaded the resulting credential/configuration artifacts to an external Microsoft Dev Tunnel." Through the reverse tunnel, the threat actor conducted domain reconnaissance and attempted NTLM relay against certificate enrollment, all hallmarks of pre-ransomware deployment. It's worth noting the modus operandi shares overlaps with that of Aurora ransomware. (Update: Michael Gorelik, CEO and Founder of ZeroBEC, confirmed to The Hacker News that the attack was carried out by the same threat actor against two different victims. "The overlap is much more specific than the use of email bombing alone," Gorelik said. "Both investigations show the same broader modus operandi and highly specific implementation details, including Xray-core deployed as ConnectivityHost.exe under the same ConnectivityService/Agent path, VLESS/REALITY tunneling, and dl.google[.]com used as the TLS server name." In the attack chain documented by ZeroBEC, while the attack was neutralized before it could reach the ransomware deployment stage, the tradecraft until that point remains the same: email bombing, IT impersonation, Quick Assist abuse, credential theft, persistent Xray tunnels, and subsequent Active Directory and internal-network activity. "Given the combination of the intrusion sequence and the very specific tooling and configuration overlap, we assess the connection with high confidence," Gorelik added.)
• ValleyRAT Delivered via Rogue Installer — A malicious installer disguised as adware has been observed deploying a modified version of the Chinese desktop wallpaper management tool, QN Wallpaper, which then performs DLL sideloading to establish persistence on Windows systems by dropping a file to the Startup folder and ultimately launching ValleyRAT, a backdoor linked to a threat actor known as Silver Fox. The malware, besides taking steps to protect its process, can collect system information, reboot/shut down the computer, take screenshots, wipe logs, update command-and-control (C2) addresses, download additional modules, and send keylogger logs along with clipboard contents. Per Kaspersky telemetry, ValleyRAT and its related components have been detected more than 100,000 times, with more than 1500 unique users affected, mainly in China and India.
• Brazil Fines ByteDance $29.81M for Privacy Violation — Brazil's data ‌protection authority, ANPD, fined TikTok's owner ByteDance 153.8 million reais ($29.81 million) for allegedly violating the country's General Data Protection Law. ANPD said that the local unit of China's ByteDance had processed personal data of teenagers aged 13 to 18 without ​a valid legal basis. The regulator estimated that TikTok may have processed the data of at ​least 8 million children during the review period.
• DeepMind Debuts Double-Blind AI Evaluations — Google's DeepMind division launched a pilot of double-blind AI evaluations with an aim to keep external evaluations in a cryptographic "box" to stop benchmark contamination and protect intellectual property. To that end, Google said it's partnering with the Singapore AI Safety Institute, OpenMined, AVERI, and MLCommons, to test a Gemini Flash Lite model against confidential benchmarks in a privacy-preserving environment to increase evaluation integrity. "By using Confidential Space within Google Cloud’s Confidential Computing portfolio, we can cryptographically verify that both the external evaluation data and the proprietary model remain private to their respective owners," DeepMind said. "The evaluator cannot see the Gemini model weights, and Google cannot see the evaluator’s test prompts."
• 34 Malware Families Targeting Banking Apps — Zimperium found 34 mobile malware families actively targeting more than 1,243 mobile banking and fintech apps across 90 countries globally. "The concentration of targeted applications across EMEA reflects where threat actors anticipate the highest return on investment, focusing heavily on the region's major financial centers," it said. Some of the active malware families in the EMEA region are TsarBot, CopyBara, HOOK, Nexus, Flubot, Eventbot, and MaliBot.
• Fake KYC Apps Target Indian Customers to Deliver Ghost Penal — A new malware-as-a-service (MaaS) operation on Telegram, dubbed Ghost Penal, is selling ready-made Android banking trojan kits impersonating five major Indian banks. "The operation supplies a two-stage dropper protected by a custom native packer, a public cloud database that receives stolen UPI PINs and device data with no authentication required, and a downstream channel that relays intercepted one-time passwords for immediate fraudulent use," iZOOlogic said. The toolkit costs $25 for a five-credit pack and $400 for a three-month unlimited plan. One of the droppers containing the malicious payload masquerades as a video-calling application, while requesting access to SMS and telephony features. "The payload’s real functionality, including SMS interception, WebView-based KYC phishing, and data exfiltration, is not present in a static scan of the installed application," the company added. "It is protected by a native library, internally named libdpt.so, that decrypts a hidden code section in memory using RC4, forks the process before executing that code as an anti-debugging measure, installs hooks on libc and on the ART runtime’s class loader, and splices a second, hidden DEX archive into the application’s running ClassLoader. The same mechanism is then used in reverse to remove the trace of that injection."
• Bauman University Leak Exposes Russia's Military Cyber Training Pipeline — Leaked Bauman University records have revealed a long-running program that trained about 250 career and reserve students for special intelligence, operational information-technical effects, and information-technology protection under Department No. 4. "The curriculum combined both offensive and defensive techniques for cyber defense, as well as offensive doctrine for active measures campaigns and GRU activities," DomainTools said. "Field placements then moved students from classroom instruction into military units and academies aligned with their specialties, giving them supervised exposure to intelligence operations and preparing them for military and government operations careers." Department No. 4 is assessed to be tied to the GRU, with identified graduates assigned to military units associated with APT28 and Sandworm.
• Pentagon's Anthropic Blacklisting Ruled Illegal — A U.S. judge blocked Anthropic's designation by the Pentagon as a supply chain risk earlier this year. "Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless," District Judge Rita Lin said. "The empty invocation of national security is not a blank check to punish and retaliate against government critics." Anthropic said it welcomed the ruling and it remained "focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology."
• State of AI-Enabled Malware in August 2026 — Palo Alto Networks Unit 42's analysis of 405 malware samples that integrate AI in some capacity has found that only 12 of them reached a production environment, with about 97% existing only in sandboxes and on VirusTotal in the form of proof-of-concept and research code, security validating and testing, and AI-themed brand abuse. Among those that were detected in customer endpoints were FunkSec ransomware, a trojanized AI application called Recipe Lister, Oyster, Rhadamanthys Stealer, and a COM hijacking DLL. "For defenders, the practical takeaway is straightforward. Existing behavioral detection, cloud-based sandboxing and endpoint analytics catch these threats using the same mechanisms that stop conventional malware," it said. "The AI component does not evade detection. It changes how the code is authored, not how it executes."
• Rogue Pornographic Android Apps Lead to Financial Fraud — The Indian Cyber Crime Coordination Centre (I4C) warned that malicious Android applications masquerading as pornography apps under the names Night Play, Reloop, Kyss, Vimo, Rivo, Nexo, and Vixa are being used to disseminate a banking trojan capable of carrying out financial fraud. These bogus apps are circulated through Facebook and Instagram ads and instruct victims to sideload the APK file. "After installation, the app requests permissions that allow it to install additional applications and, by abusing accessibility permission, take control of the users' device, which may result in financial fraud," I4C said. "Some apps also install a VPN, which may be used to route internet traffic pertaining to malicious/criminal activity. The app may prevent users from uninstalling it through the device settings." Details about the KYSS malware were published by security researcher Rudra Ponkshe in July 2026, describing it as a trojan designed to perform overlay attacks against 19 targets across Japan and Latin America, as well as abuse Android's accessibility services to grant itself extensive permissions, exfiltrate photos and contacts, and issue commands for subsequent execution.

Conclusion

The useful lesson is not that every attack became smarter. It is that more of them arrived through things already trusted: shipped devices, familiar prompts, support tools, valid access, and systems meant to protect the network.

That changes the question. “Is it working?” is no longer enough. Ask what else it can do, who else can reach it, and whether the evidence it produces can be trusted. Quiet systems deserve a second look.

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