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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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Fake Gemini installer delivers Vidar infostealer via Google Colab lure
Attackers used a fake Google Gemini installer hosted on Google Colab to deliver a Go-compiled Vidar infostealer that stole browser credentials from an EMEA company.
Darktrace investigated an EMEA company infection where the top search result for a Gemini-related filename pointed to a Google Colab page that redirected to a fake 'Windows Software Hub' hosting a malicious executable. The ZIP contained a README instructing victims to run the file as administrator and add it to antivirus exceptions, delivering a newer Go-compiled Vidar variant that used dtm[.]kijangturbo88[.]top over Telegram-based infrastructure. The malware stole browser credentials and other sensitive data; Darktrace's Autonomous Response blocked the C2 and quarantined the device.
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Autonomous AI Agents Compromise Thousands of Credentials in Under Six Hours
Google's GTIG reports threat actors using autonomous AI agents, credential stealers, and LLMs to steal AI models, API credentials, and harvest thousands of credentials.
Google Threat Intelligence Group says attackers are targeting proprietary AI models across healthcare, government, and media, exfiltrating API credentials, and co-opting victim cloud environments to run unauthorized AI workloads. TeamPCP (Altered Spider/UNC6780) is conducting supply chain compromises of PyPI, npm, and Docker Hub, deploying the SANDCLOCK and DUSTMAKER credential stealers, with DUSTMAKER using AI workspace poisoning and prompt injection for defense evasion. One financially motivated actor used an autonomous multi-agent framework to compromise thousands of third-party credentials in under six hours without human intervention. China-nexus groups UNC6508 and Basin Castle (Mustang Panda) used local open-weight LLMs and commercial LLMs like Gemini, Claude, and Codex for espionage tasks and evading provider monitoring.
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Risky Bulletin: Ukraine's top prosecutor resigns amid scam call center scandal
Ukraine's top prosecutor Ruslan Kravchenko resigned after NABU arrested a deputy for taking bribes protecting scam call centers running fake investment platforms.
Ukraine's anti-corruption bureau NABU arrested Serhiy Kropyva, Deputy Head of International Cooperation at the Prosecutor General's Office, alleging officials took monthly protection fees from a network of 100-500 scam call centers luring victims into fake investment platforms, with bribes reportedly growing from $700,000 to $3.5 million per month. Prosecutor General Ruslan Kravchenko resigned on Monday, calling it a political decision, while Kropyva was fired with bail set at 120 million hryvnias ($2.7 million) and over 100 call centers shut down in the past month. The newsletter also briefly covers a cyberattack crippling more than 80 Luxembourg medical practices via payment vendor BMS Engineering, ShinyHunters' claimed theft of 200,000 Florida DMV driver records, a cyberattack on the American Meteor Society, and school closures in Springfield, Massachusetts.
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AI Is Giving Lesser-Resourced Attackers Nation-State-Level Reach, Google Warns
Google's Threat Intelligence Group warns AI now gives lesser-resourced criminal and nation-state attackers nation-state-level speed and scale, citing TeamPCP, Basin Castle, APT42, and APT24 usage.
GTIG documented throughout 2026 that adversaries increasingly use AI to automate and scale attacks. TeamPCP (UNC6780) used an AI coding chatbot with agent instructions to plan and execute a mass credential harvesting campaign in under six hours, and has compromised PyPI, npm, and Docker Hub since March 2026 with its Dustmaker credential stealer plus released tools Shai-Hulud and Miasma. PRC-nexus Basin Castle uses LLMs for target profiling, lure drafting, and malware development; APT42 (Calanque Ion) uses Gemini for OSINT and localized lures; APT24 (Ravine Castle) uses Gemini across the full attack lifecycle; and DPRK's Midnight Neptune (UNC1069) integrates AI into cryptocurrency theft. Google responds by disrupting attacker accounts and hardening models against distillation attacks.
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