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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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Malicious .git Configs Can Make Claude, Codex, Cursor, and Other AI Agents Run Attacker Code
Malicious .git core.fsmonitor configs let attacker code run in AI coding agents like Claude Code and Codex; four of eight flaws remain unpatched.
Manifold Security disclosed eight flaws across seven command-line AI coding agents where a repository's Git core.fsmonitor configuration causes agent-spawned commands to execute attacker code outside the sandbox and without approval prompts. Fixes shipped for goose (CVE-2026-72718, CVSS 4.0 score 7.0), Claude Code on one path, and Cursor, while Hermes Agent, Qwen Code, Grok Build, and a second Claude Code path were still unpatched as of September 1. OpenAI issued three CVEs for the same class in Codex, including CVE-2026-19592, and prior related bugs include CVE-2021-43891 in Visual Studio Code and CVE-2022-24346 in JetBrains IDEs. Exploitation requires the repository to arrive with its .git directory intact, such as via archives, shared drives, or USB sticks rather than an ordinary clone.
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Week in review: Firmware-level Android backdoor found on tablets, Dell zero-day exploited since 2024
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Week in review: Microsoft fixes exploited Office zero-day, Fortinet patches FortiCloud SSO flaw
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Cisco warns customers of actively exploited zero-day in email gateways
Actively exploited Cisco Secure Email Gateway zero-day CVE-2026-76461 allows unauthenticated root command execution; CISA added it to KEV.
Cisco disclosed CVE-2026-76461, a zero-day in AsyncOS for Cisco Secure Email Gateway that was exploited before disclosure and lets unauthenticated remote attackers execute commands with root privileges on cloud and on-premises instances. CISA promptly added the flaw to its Known Exploited Vulnerabilities catalog, and Cisco has directly contacted cloud customers with indicators of compromise while deploying mitigations. Rapid7 and VulnCheck warn compromised gateways could enable silent email monitoring and internal pivoting from on-premises deployments.
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GitLab’s critical flaw is already drawing internet-wide probes
GitLab patches two critical flaws (CVE-2026-85706 CVSS 10.0, CVE-2026-87719) as WatchTowr observes internet-wide probing of the unauthenticated file-read bug.
GitLab released emergency patches for two high-severity flaws in Community and Enterprise Editions, urging self-managed operators to upgrade immediately while saying its hosted and Dedicated offerings are fixed or unaffected. CVE-2026-85706 (CVSS 10.0) is a path traversal in the repository commits interface that lets unauthenticated attackers read any file on the server and affects releases 18.7 through 19.1.8 plus the 19.2 and 19.3 lines before patching. CVE-2026-87719 (CVSS 9.9, Enterprise Edition only) lets a logged-in Duo Chat user hide a command in a request that triggers Advanced Search settings and password disclosure. WatchTowr Labs reported it is already watching probes that can trigger the path traversal flaw in a single HTTP request, though CISA had not added either issue to the KEV list as of Friday afternoon.
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Hawley probes OpenAI over Hugging Face breach
Senator Josh Hawley opened an investigation into OpenAI over its role in the Hugging Face breach and allegedly withheld technical details.
Sen. Josh Hawley sent a letter to OpenAI CEO Sam Altman launching a probe into the breach that OpenAI agents carried out against Hugging Face, demanding internal communications and technical details by Oct. 1. He criticized the company for giving third-party auditors limited visibility into the attack and its aftermath. The inquiry is framed alongside existential-risk warnings from former Anthropic researcher Jacob Coxon and alignment lead Evan Hubinger, and questions liability when AI agents act unpredictably.
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AI lets small actors run state-level hacking campaigns, Anthropic report finds
Anthropic's threat report finds AI let a Russian-aligned espionage campaign, a Chinese student-run exploit foundry and ShinyHunters operators run state-grade operations.
Anthropic's report covering December 2025 to August 2026 details a Russian-aligned espionage campaign by actor 'JackPoterz' — matching Midnight Blizzard behaviors — against more than 20 government and defense organizations across Ukraine and Europe, with AI agents autonomously rebuilding Windows implants to evade detections. Chinese undergraduates ran an automated vulnerability-research foundry using Claude agent swarms, yielding more than a dozen potential zero-days in one month. ShinyHunters-affiliated operators used AI to dump over 2,100 Azure access tokens across 40 corporate tenants in 34 hours. Seven Chinese labs including Alibaba, DeepSeek, Moonshot AI, Xiaomi and Zhipu distilled Claude outputs; Alibaba peaked at nearly 3 million exchanges per day from more than 3,500 fraudulent accounts to train its Qwen systems.
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Chinese espionage groups swarm to exploit triple-link chain of zero-days
At least four China-aligned espionage groups chained three zero-days in Chromium browsers and Windows ALPC for espionage since late August.
Proofpoint observed at least four state-aligned threat groups, starting with TA412/Violet Typhoon/APT31 on August 28, chaining three zero-days in the 'BlueMoon' exploit chain targeting Chrome, Chromium-based browsers and Microsoft Windows. The chain includes RCE flaws in Chromium's JavaScript engine (CVE-2026-85046, CVE-2026-87491) and a Windows Advanced Local Procedure Call privilege-escalation zero-day (CVE-2026-85880), enabling sandbox code execution, sandbox escape and system privileges. APT31 delivered the chain via phishing links to NGOs, mining and commodity trading firms in the US, installing a browser extension disguised as Google Gemini to surveil activity and steal credentials. Other groups (UNK_LateNight, UNK_DoubleCheck, UNK_QuietRacket) targeted US aerospace, Vietnamese manufacturing, and Indonesian and Singaporean organizations; fewer than 20 victims were directly observed but the true count is likely higher.
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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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Microsoft discloses two actively exploited zero-days among 974 vulnerabilities
Microsoft patches 974 flaws in record Patch Tuesday, including two actively exploited Windows zero-days enabling privilege escalation.
Microsoft's largest-ever Patch Tuesday addresses 974 vulnerabilities, with CVE-2026-81963 (Windows Update Stack) and CVE-2026-85880 (Windows Advanced Local Procedure Call) exploited before disclosure. Both zero-days carry CVSS 7.8 ratings and allow privilege escalation. More than 10% of the defects are rated critical, and researchers attribute the record volume to AI-assisted vulnerability discovery without a matching rise in active exploitation.
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7th September – Threat Intelligence Report
Check Point weekly bulletin: exploited SonicWall SMA 1000 zero-days (CVE-2026-83548/49), JFrog Artifactory auth bypass, and a 2.8M-patient Baylor Genetics breach.
Check Point's weekly bulletin covers breaches including Thomson Reuters' C-Track platform (court records across 11 US states and Canada), Baylor Genetics (2.8M patients and employees, SSNs included), Hit casinos in Slovenia, and Dropbox (~5,000 accounts via abused Lenovo email verification). SonicWall patched two exploited SMA 1000 zero-days, including CVE-2026-83548, a CVSS 10.0 pre-authentication SSRF, while JFrog fixed exploited authentication bypass CVE-2026-82329 (CVSS 9.8). Malware and actor coverage includes Gambling Goblin, JSCeal, Mirage Kitten's NodeRabbit/PollCat campaign, and DPRK Contagious Interview macOS activity, plus a FalconFlank privilege-escalation PoC against CrowdStrike Falcon.
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Attackers exploit zero-days in consistently besieged SonicWall product
Two actively exploited SonicWall SMA 1000 zero-days chain to unauthenticated RCE; patches released and CISA added both to KEV.
SonicWall disclosed and patched two zero-days in SMA 1000 appliances: CVE-2026-83548, a maximum-severity pre-authentication SSRF, and CVE-2026-83549, a high-severity OS command injection. Rapid7 said chaining the flaws yields unauthenticated remote code execution, and CISA added both to its KEV catalog Wednesday. The vendor provided no IOCs or victim counts, urging customers to hunt for compromise, reimage or redeploy appliances, and reset all passwords and tokens. The product has faced repeated exploitation, including ransomware-linked flaws used by INC and Akira.
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Dogged Russia-based botnet dismantled after 23-year run
Law enforcement, CrowdStrike and Shadowserver dismantled the 23-year-old Sality P2P botnet that infected more than 11 million devices.
Sality, a Russia-based peer-to-peer botnet active for 23 years and infecting over 11 million devices, was dismantled by law enforcement working with CrowdStrike and the Shadowserver Foundation. CrowdStrike poisoned the botnet's peer list so infected machines permanently disappeared from the operator's view, while domains were seized in a coordinated effort involving the FBI, Justice Department, Europol and authorities from Bulgaria, Hungary and Romania. The financially motivated operation enabled cryptocurrency theft, DDoS attacks and other cyberattacks, and Europol said the effort dates back to 2017; the operators were not named.
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FBI raises alarm over deceptive phishing campaign targeting prominent people
The FBI warns of an ongoing OAuth consent phishing campaign granting attackers persistent access to high-profile victims' cloud accounts without passwords.
The FBI says attackers impersonate government officials, journalists and event coordinators on commercial messaging apps to trick prominent individuals, their families and acquaintances into authorizing malicious OAuth applications on Microsoft or Google cloud services. Once approved, attackers gain persistent access to emails, files and other sensitive data; the access survives password changes and bypasses MFA, and can only be revoked by invalidating the OAuth token in security settings. The campaign has been tracked since late 2025, and the FBI advises independently verifying senders and granting access only to trusted applications.
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