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China-Based Artificial Intelligence Companies Conducting Industrial-Scale Distillation Campaigns Against U.S. AI Companies
NSA, CISA, and FBI warn DeepSeek, Alibaba, and other Chinese AI firms ran industrial-scale distillation of U.S. frontier models, threatening U.S. AI leadership.
A joint NSA, CISA, and FBI Cybersecurity Advisory (AA26-251A) says China-based firms DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI extracted billions of tokens from U.S. frontier models including Claude, GPT, Gemini, and Grok, likely with Chinese government knowledge. Campaigns running since at least late 2024 used native APIs, cloud providers, third-party aggregators, gray-market proxy "transfer stations", and shared premium subscriptions to bypass geographic restrictions, evade safeguards, and violate providers' terms of use. The agencies recommend detecting anomalous prompts, accounts, and usage patterns; subtly altering responses to suspected distillers; and cross-organization intelligence sharing. They also call DeepSeek's publicly cited $5.6M training cost misleading because it excludes data acquired through distillation.
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Chinese AI firms are siphoning capabilities from American models, CISA warns
CISA, NSA and FBI warn Chinese AI firms including DeepSeek and Moonshot AI extracted billions of tokens from US frontier models via distillation campaigns.
A joint CISA, NSA and FBI advisory says China-based firms including DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Z.AI have run industrial-scale knowledge distillation campaigns against US frontier models such as Claude, GPT, Gemini and Grok since at least late 2024, likely with Chinese government knowledge. The campaigns used gray-market API proxies called transfer stations, premium account pools and traffic routing to bypass restrictions, evade safeguards and exfiltrate billions of tokens used to train models like DeepSeek R1/V3 and Kimi. The agencies challenge DeepSeek's reported $5.6 million training cost and recommend identity verification, usage monitoring, response variation, differential privacy and indicator sharing as defenses.
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CareCam CM2507
CISA advisory: seven flaws in CareCam CM2507 IP cameras enable unauthenticated live video access, privileged ONVIF control, credential recovery, and code execution.
CISA advisory ICSA-26-258-08 discloses seven vulnerabilities in CareCam HMT.CM2507 IP cameras running firmware v251211.1507. Issues include missing authentication for network video streaming (CVE-2026-88259, CVSS 3.1 7.5), an empty password on a privileged ONVIF account (CVE-2026-84398), weak legacy hashing of the root password (CVE-2026-85497, CVSS 4.0 9.3 critical), and cleartext storage of Wi-Fi credentials (CVE-2026-81321). Physical-access flaws allow arbitrary code execution from scripts on removable media (CVE-2026-81305) and unauthenticated bootloader access (CVE-2026-85478). The cameras are deployed worldwide in commercial facilities.
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CareCam Pro IP Cameras
CISA advisory details hard-coded bootloader credential CVE-2026-85083 in ANJIA AJL33PC0801 CareCam Pro cameras, allowing physical-access firmware compromise.
CISA ICS advisory ICSA-26-251-01 describes CVE-2026-85083, a hard-coded credential (CWE-798) used for bootloader authentication in the ANJIA AJL33PC0801 CareCam Pro IP camera. An attacker with physical access could gain privileged bootloader access and modify firmware and configuration, potentially fully compromising the device. The flaw scores 6.8 on CVSS 3.1 (7.0 on CVSS 4.0), is not remotely exploitable, and no public exploitation has been reported. Affected firmware is linux_linux_202008261138_svn13796 with U-Boot 2010.06; the vendor is headquartered in China with worldwide deployments.
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Xiiaozet LK100W
CISA warns of three flaws, including OS command injection, in Xiiaozet LK100W devices before firmware 2.1.240 that allow attackers to take full control of the device.
CISA published ICS advisory ICSA-26-239-01 covering three vulnerabilities (CVE-2026-78037, CVE-2026-78239, CVE-2026-76943) in Xiiaozet LK100W devices running firmware below 2.1.240. The issues include OS command injection, missing authentication for critical functions, and authentication bypass via an alternate path, rated CVSS v3 9.8. Successful exploitation allows an attacker to take control of the device. The China-based vendor's equipment is deployed worldwide, including information technology critical infrastructure sectors.
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Water sector passes, government sector fails attempts to spot and halt simulated CISA attack
CISA red teamers compromised both a government and a water organization; water defenders detected and contained the simulated attack, government defenders did not.
CISA's red team gained initial access, elevated domain privileges, and lateral movement into sensitive business systems and cloud resources at an unnamed government organization, whose SOC ignored low- and medium-severity EDR alerts buried under thousands of false positives. A water organization's SOC quarantined phishing-compromised workstations within 2, 10, and 20 minutes, and later detected and isolated intrusions reaching the OT DMZ bastion host. Both organizations underestimated cloud risk, lacked Microsoft Conditional Access for workload identities, and had no process to revoke compromised access and refresh tokens. This is one of CISA's rare public red-team reports since 2023.
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AI-fueled attacks pose ‘active threat’ to water, other sectors, U.S. agencies warn
NSA, CISA, FBI, DOE and EPA warn hackers are using AI-generated scripts to actively attack Siemens S7 PLCs across critical-infrastructure sectors.
A joint cybersecurity advisory from the NSA, CISA, FBI, Department of Energy and EPA warns of an active threat campaign targeting water, food, energy, chemical, manufacturing and commercial facilities via Siemens S7 Series programmable logic controllers. The actors use internet scanning to find exposed or poorly protected PLCs, then deploy AI-generated exploitation scripts disguised as legitimate monitoring tools, an OT first that dramatically lowers the expertise required for ICS attacks. Siemens says no new S7 vulnerabilities are involved, only exploitation of misconfigurations, and it is coordinating with CISA's ProductCERT. The warning follows a joint FBI-EPA advisory confirming attacks at water and wastewater utilities in at least 12 states since July 27.
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