ConnectWise customers hit by supply-chain attack linked to compromised API secret

A portion of ConnectWise’s customers have been adrift for days, and hundreds are compromised, as the company’s efforts to restore its Cloud Backup service remain underway with no confirmed timeline for when customers can regain access.

The company temporarily shut down multiple services Saturday after a threat actor gained access to a highly sensitive credential that allowed its customers to connect the vendor’s application with Microsoft 365 environments. 

The threat actor, which hasn’t been identified, used the application programming interface (API) secret to compromise a series of ConnectWise Cloud Backup customers’ Microsoft 365 applications, including Exchange Online, Microsoft Teams, SharePoint Online, Cloud Backup, MS Graph and Partner Center, according to Huntress.

Researchers observed an initial wave of attacks Friday, and by late Saturday Huntress “had seen sign-in activity from the malicious infrastructure across almost 1,000 Entra tenants, with more than 300 of those sign-ins appearing to succeed,” Jonathan Semon, principal security operations analyst at Huntress, told CyberScoop.

The cybersecurity company, which primarily supports small- to mid-sized businesses, confirmed unauthorized sign-ins in 162 tenants and said additional compromises beyond its telemetry are likely. 

ConnectWise suspended its Cloud Backup, SaaS Security and Cloud Management services about two days after researchers observed an initial wave of unauthorized sign-ins. 

“ConnectWise is continuing its investigation and remediation following unauthorized access to application identities associated with ConnectWise Cloud Backup, formerly known as SkyKick,” a company spokesperson wrote in an email.

“We are monitoring our entire environment around the clock,” the company said in a security advisory. “Since mitigations began on October 17 at 05:00 UTC, we have not observed successful threat activity in the environments we monitor. This does not establish whether individual partner or customer Microsoft 365 tenants were affected; each potentially affected tenant still requires review.”

Microsoft Threat Intelligence said it observed broad successful sign-ins from a malicious IP address on Oct. 15. “Follow-on activity included Microsoft Graph API reconnaissance and attempts to add additional credentials on the related service principal in target tenants to maintain direct access as a backdoor,” the company said in a LinkedIn post. 

The root cause of the breach and ensuing fallout remains under investigation, and the company declined to answer questions about how attackers obtained the credential for ConnectWise Cloud Backup.

Researchers at Huntress and Todyl, which conducted its own investigation, characterized the secret and its chain of command as critical.

“Because it’s a multi-tenant application, anyone holding that credential can request access tokens in any tenant where the application is installed, without any action by the customer,” Semon said.

Sign-ins, which were performed by an automated tool, also gave the attacker the technical ability to read and write mail and files across various Microsoft 365 applications, Todyl wrote in a blog post. 

Highly privileged access granted by the credential for ConnectWise Cloud Backup allowed attackers to bypass security controls, including multi-factor authentication, and establish additional access.

“In the tenants where we saw post-compromise activity, the account associated with the application elevated its own privileges and added new credentials to other applications in the tenant. That would let someone keep access even after the original application was disabled,” Semon said.

ConnectWise and researchers haven’t attributed the attacks to any known threat actors and none have publicly claimed responsibility. The company said restoration efforts remain underway, but it hasn’t provided a timeline for when customers can regain access.

ConnectWise and researchers shared indicators of compromise to help potentially exposed customers hunt for malicious activity in their systems. Yet, the vendor and third-party companies responding to confirmed attacks, encouraged customers to disable any affected applications even if they don’t see anything unusual in their logs.