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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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MantaxOtax Android Malware Combines Ransomware With Spyware
Zimperium analyzed MantaxOtax Android malware combining AES file encryption with extensive spying, linked to Indonesian actors and distributed via sideloading.
Zimperium's zLabs published a technical analysis of MantaxOtax, an Android malware family that combines ransomware-style file encryption with comprehensive spyware, linked to Indonesian threat actors and distributed via sideloaded APKs on a third-party file-sharing service. The malware requests device administrator, SMS, contacts, storage and Accessibility permissions, resolves its C2 domain dynamically from a GitHub repository, and encrypts files with AES using per-device keys derived from the Android ID on Android 9 and earlier. It steals WhatsApp messages, Telegram credentials, OTPs and other data, and uses MediaProjection for screenshots and screen recording staged on Catbox; a second variant adds WebSocket C2 with persistent screen locking and app blocking.
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