Malware turns home routers into proxies for Chinese state-sponsored hackers

Researchers on Tuesday unveiled a major discovery--malicious firmware that can wrangle a wide range of residential and small office routers into a network that stealthily relays traffic to command and control servers maintained by Chinese state-sponsored hackers.

A firmware implant, revealed in a write-up from Check Point Research, contains a full-featured backdoor that allows attackers to establish communications and file transfers with infected devices, remotely issue commands, and upload, download, and delete files. The implant came in the form of firmware images for TP-Link routers. The well-written C++ code, however, took pains to implement its functionality in a "firmware-agnostic" manner, meaning it would be trivial to modify it to run on other router models.

Not the ends, just the means

The main purpose of the malware appears to relay traffic between an infected target and the attackers' command and control servers in a way that obscures the origins and destinations of the communication. With further analysis, Check Point Research eventually discovered that the control infrastructure was operated by hackers tied to Mustang Panda, an advanced persistent threat actor that both the Avast and ESET security firms say works on behalf of the Chinese government.

"Learning from history, router implants are often installed on arbitrary devices with no particular interest, with the aim to create a chain of nodes between the main infections and real command and control," Check Point researchers wrote in a shorter write-up. "In other words, infecting a home router does not mean that the homeowner was specifically targeted, but rather that they are only a means to a goal."

The researchers discovered the implant while investigating a series of targeted attacks against European foreign affairs entities. The chief component is a backdoor with the internal name Horse Shell. The three main functions of Horse Shell are:

The SOCKS5 functionality seems to be the ultimate purpose of the implant. By creating a chain of infected devices that establish encrypted connections with only the closest two nodes (one in each direction), it's difficult for anyone who stumbles upon one of them to learn the origin or ultimate destination or the true purpose of the infection. As Check Point researchers wrote:

The implant can relay communication between two nodes. By doing so, the attackers can create a chain of nodes that will relay traffic to the command and control server. By doing so, the attackers can hide the final command and control, as every node in the chain has information only on the previous and next nodes, each node being an infected device. Only a handful of nodes will know the identity of the final command and control.

By using multiple layers of nodes to tunnel communication, threat actors can obscure the origin and destination of the traffic, making it difficult for defenders to trace the traffic back to the C2. This makes it harder for defenders to detect and respond to the attack.

In addition, a chain of infected nodes makes it harder for defenders to disrupt the communication between the attacker and the C2. If one node in the chain is compromised or taken down, the attacker can still maintain communication with the C2 by routing traffic through a different node in the chain.