Attackers stole ConnectWise application credentials to access Microsoft 365 tenants, prompting the company to suspend cloud services.
ConnectWise suspended its Cloud Backup service and took both SaaS Security and Cloud Management offline over the weekend after discovering that unknown attackers had obtained unauthorized access to seven of its application identities.
The company discovered the incident on October 14 through internal monitoring, disabled the compromised identities on October 17, and is still investigating how attackers obtained the credentials.
“We have taken protective action following unauthorized access to application identities associated with ConnectWise Cloud Backup, formerly known as SkyKick. Our investigation remains ongoing. Since implementing the mitigations described below, we have not observed successful threat activity in the environments we monitor.” reads the alert published by the company on October 17. “Out of an abundance of caution, we suspended Cloud Backup service by revoking certificates used for affected application connections across all users. This removed ConnectWise’s access through those connections. The shared credentials previously used for Cloud Backup are no longer valid and cannot be used. In addition to mobilizing our internal security teams and Security Operations Center (SOC), we have engaged a reputable third-party incident response firm to support our investigation and containment efforts. Together, these teams are actively monitoring our backup infrastructure and broader environment, with the investigation extending across all partner-facing services. At this time, we have no indication that any other ConnectWise product, service, or offering is impacted.”
This was not a case of attackers stealing individual customers’ passwords. ConnectWise’s applications already had permission to access customer Microsoft 365 environments to manage services and run backups. After stealing the application credentials, the attackers could pretend to be ConnectWise’s own applications and request access tokens from Microsoft Entra ID. They did not need to steal any customer passwords.
Depending on the permissions granted to these applications, the attackers could access mailboxes, SharePoint documents, Teams messages, and directory data. ConnectWise explained that disabling the affected connections prevents new authentication through those connections; however, it does not reverse changes previously made inside a tenant. In other words, disabling the compromised connections stops new access through them, but it does not undo what the attackers may have already done inside customer environments. Any changes made before the connections were disabled may remain.
Here’s what makes this particularly hard to clean up. An attacker who used a stolen application credential to get into a tenant could add their own client secret to a different trusted application already registered in that tenant, or create an entirely new application and grant it permissions. Either path gives them a second key that still works even after ConnectWise’s original compromised credential is revoked.
“The larger risk is what happens when that access is used to gain more. If an application can assign directory roles, as we saw in one tenant, it can make itself a Global Administrator, and an administrator can add credentials to other applications, create new applications and grant them permissions, reset passwords and authentication methods for users, and change Conditional Access policies.” reads the analysis published by cybersecurity firm Huntress. “Each of those steps gives the attacker another way back in that does not depend on the original vendor credential, which is why rotating the vendor credential is necessary, but not enough.”
Huntress identified malicious sign-ins from IP address 144.172.64.128 through October 15 at around 14:20 UTC, and a second targeted wave later that same day aimed specifically at 16 tenants in the policy, national security, trade, and critical minerals sectors. That second wave appeared to be manual rather than automated and hit Exchange Online, SharePoint Online, Teams, Azure Resource Manager, Entra, and Office 365 Management APIs in rapid succession. All 16 attempts in the second wave failed, but the fact that they were manually targeted at sensitive sectors is the detail worth sitting with.
Of about 1,000 Microsoft Entra tenants that recorded sign-in activity from the suspicious IP address, around 300 sign-ins were successful. However, a successful sign-in did not always give the attackers access to a tenant. In some cases, they could not proceed because the required service principal was missing. This was a result of the tenant’s configuration, not a security measure that had been deliberately put in place.
ConnectWise said its Cloud Backup archives remain encrypted, isolated, and preserved, with no evidence that attackers accessed or compromised them.
“Cloud Backup remains suspended. Scheduled backups are not running, and access to affected backup archives and restoration capabilities remains unavailable.” continues the ConnectWise’s alert.”Existing archives remain encrypted, isolated, and preserved. We have no evidence that these archives have been accessed.”
However, while the service remains offline, backups cannot run and customers cannot restore their data. This creates an operational risk for organizations that depend on the service to recover their systems and information.
Huntress’s recommendation for anyone using ConnectWise Cloud Backup or Cloud Management is to review both their own Microsoft 365 tenant and every managed customer tenant, including any with dormant SkyKick connections. Look specifically for sign-in activity from 144.172.64[.]128 starting October 13. Before doing anything else, preserve available sign-in and audit logs, because containment steps can overwrite the evidence you need to understand what actually happened.
The list of what to check is long: application credentials and federation trusts, directory role assignments, consent grants, recent policy changes, mailbox forwarding rules, and delegated mailbox access. Any of these could be the thing an attacker quietly added before the connection was killed. Full ConnectWise advisory and ongoing updates are available here.
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Pierluigi Paganini
(SecurityAffairs – hacking, ConnectWise)
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