Chinese "Twisted Panda" Hackers Caught Spying on Russian Defense Institutes

At least two research institutes located in Russia and a third likely target in Belarus have been at the receiving end of an espionage attack by a Chinese nation-state advanced persistent threat (APT).

The attacks, codenamed "Twisted Panda," come in the backdrop of Russia’s military invasion of Ukraine, prompting a wide range of threat actors to swiftly adapt their campaigns on the ongoing conflict to distribute malware and stage opportunistic attacks.

They have materialized in the form of social engineering schemes with topical war and sanctions-themed baits orchestrated to trick potential victims into clicking malicious links or opening weaponized documents.

Israeli cybersecurity firm Check Point, which disclosed details of the latest intelligence-gathering operation, attributed it a Chinese threat actor, with connections to that of Stone Panda (aka APT 10, Cicada, or Potassium) and Mustang Panda (aka Bronze President, HoneyMyte, or RedDelta).

Calling it a continuation of “a long-running espionage operation against Russian-related entities that has been in operation since at least June 2021,” most recent traces of the activity is said to have been observed as recently as April 2022.

Targets included two defense research institutions belonging to the Russian state-owned defense conglomerate Rostec Corporation and an unknown entity situated in the Belarusian city of Minsk.

The phishing attacks commenced with emails that contain a link masquerading as the Health Ministry of Russia, but in reality is an attacker-controlled domain, as well as a decoy Microsoft Word document designed to trigger the infection and drop a loader.

The 32-bit DLL (“cmpbk32.dll”), besides establishing persistence by means of a scheduled task, is also responsible for executing a second-stage multi-layered loader, which is subsequently unpacked to run the final payload in memory.

The injected payload, a previously undocumented backdoor named Spinner, makes use of sophisticated techniques such as control flow flattening to conceal the program flow, previously identified as put to use by both Stone Panda and Mustang Panda in their attacks.

“These tools are in development since at least March 2021 and use advanced evasion and anti-analysis techniques such as multi-layer in-memory loaders and compiler-level obfuscations,” Check Point said.

Despite its complex code structure, Spinner is a barebones implant that’s only equipped to enumerate compromised hosts and run additional payloads retrieved from a remote server.

Check Point noted that its investigation also revealed an earlier variant of the backdoor that’s distributed in a similar fashion, indicating that the campaign has been active since June 2021 based on the compilation timestamps of the executables.

But in an interesting twist, while the older version doesn’t incorporate the anti-reverse engineering methods, it makes up for it by sporting extra features missing from Spinner, including the ability to list and manipulate files, exfiltrate valuable data, and run operating system commands and arbitrary downloaded payloads.

“In less than a year, the actors significantly improved the infection chain and made it more complex,” the researchers said. “All the functionality from the old campaign was preserved, but it was split between multiple components making it harder to analyze or detect each stage.”

“The evolution of the tools and techniques throughout this time period indicates that the actors behind the campaign are persistent in achieving their goals in a stealthy manner.”

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