A Chinese nation-state actor was responsible for the compromise of Microsoft365 tenants used by ConnectWise, which led to IT management software provider taking a number of its cloud services offline.
Microsoft assessed that a threat actor, tracked as Storm-0940, utilized agentic AI penetration testing framework ARTEX to target hundreds of organizations globally across a broad range of industries, beginning in September 2026.
The China-aligned group was able to obtain privileged access to a number of organizations’ cloud infrastructure, including ConnectWise, often in less than three hours from initial targeting.
The campaign targeted industries such as aerospace and defense, automotive, chemicals, energy, financial services, government, legal, manufacturing, media, military, semiconductor, software, technology, and think tanks and non-profits.
Storm-0940 has been active since 2021 and its primary objective is data theft. It uses password spraying and exploitation of internet-facing applications for initial access, and establishes persistence in cloud environments by adding credentials to existing OAuth applications.
Attackers Target ConnectWise Customers
After gaining unauthorized access to the ConnectWise multi-tenant application, the China-aligned actor targeted the IT services firm’s downstream customers using the ARTEX platform to accelerate scanning and reconnaissance, password spraying and OAuth application abuse.
The group attempted to sign-in to more than 2250 tenants at 2900 sign-in attempts per minute. Microsoft said the pace of this supply chain attack gives defenders little time to detect and respond.
Microsoft revealed that it had identified multiple customer environments with evidence of follow-on activity, including reconnaissance, application credential modifications to establish persistence, and changes involving identities, groups and privileged roles.
“After acquiring control of the identities of multiple ConnectWise cloud applications, the AI agents operating on behalf of the threat actor continued to use the same IP range to authenticate to customer environments using the illicit access acquired through these stolen app credentials, effectively taking advantage of the already established trust by these apps within a tenant,” the tech giant explained in a blog dated October 21.
In an update published on October 21, ConnectWise acknowledged Microsoft’s findings and the extensive use of AI to compromise its Microsoft365 tenants.
“Nation-state actors are increasingly targeting the software supply chain, because one trusted connection can open the door to many organizations. AI now lets them test those connections at what Microsoft calls 'machine speed'. MSPs are in the middle of that chain. They are targets in their own right, and they are also a path into every client they serve,” the company wrote.
ConnectWise Cloud Services Remains Offline
ConnectWise first identified suspicious activity in its network on October 15, before discovering unauthorized access to application identities within its Cloud Backup environment on October 17.
The discovery resulted in several ConnectWise cloud services including Cloud Backup (previously known as SkyKick), SaaS Security and Cloud Management being taken offline while the company investigates the incident.
These services remain offline, according to the company’s status page.
However, ConnectWise said in an advisory on October 22 that it had started a phased restoration of its Cloud Backup service.
“We expect restoration to take several days and will share service-specific availability and reconnection instructions as confirmed. Keep affected connections disabled until formal instructions apply to your service,” it told customers.
The firm added that existing backup archives remain encrypted, isolated, and preserved, with no indication of compromise, while there is no evidence that other ConnectWise products and services are impacted by the incident.
Customers have also been advised to review individual Microsoft 365 tenants for unauthorized changes or persistent access.
The ARTEX Agentic AI Platform Threat
ARTEX is a multi-agent large-language model (LLM) that can use any AI model to automate a variety of offensive security workflows, including penetration test from reconnaissance through data exfiltration.
The agents then accumulate the discovered assets and vulnerabilities into a graph during the penetration test, Microsoft explained.
While the platform’s user interface and generated output default to English, the framework can be switched to Korean, Mandarin, Spanish, or Japanese.
In October 2026, CrowdStrike reported that a China-based threat actor used ARTEX to discover vulnerabilities and compromise specific services in South Korean financial organizations, a campaign that resulted in the exfiltration of data.