Phantom Taurus: New China-Linked Hacker Group Hits Governments With Stealth Malware

Government and telecommunications organizations across Africa, the Middle East, and Asia have emerged as the target of a previously undocumented China-aligned nation-state actor dubbed Phantom Taurus over the past two-and-a-half years.

“Phantom Taurus’ main focus areas include ministries of foreign affairs, embassies, geopolitical events, and military operations,” Palo Alto Networks Unit 42 researcher Lior Rochberger said. “The group’s primary objective is espionage. Its attacks demonstrate stealth, persistence, and an ability to quickly adapt their tactics, techniques, and procedures (TTPs).”

It’s worth pointing out that the hacking group was first detailed by the cybersecurity company back in June 2023 under the moniker CL-STA-0043. Then last May, the threat cluster was graduated to a temporary group, TGR-STA-0043, following revelations about its sustained cyber espionage efforts aimed at governmental entities since at least late 2022 as part of a campaign codenamed Operation Diplomatic Specter.

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Unit 42 said its continued observation of the group yielded enough evidence to classify it as a new threat actor whose primary goal is to enable long-term intelligence collection and obtain confidential data from targets that are of strategic interest to China, both economically and geopolitically.

“The group takes an interest in diplomatic communications, defense-related intelligence and the operations of critical governmental ministries,” the company said. “The timing and scope of the group’s operations frequently coincide with major global events and regional security affairs.”

This aspect is particularly revealing, not least because other Chinese hacking groups have also embraced a similar approach. For instance, a new adversary tracked by Recorded Future as RedNovember is assessed to have targeted entities in Taiwan and Panama in close proximity to “geopolitical and military events of key strategic interest to China.”

Phantom Taurus’ modus operandi also stands out due to the use of custom-developed tools and techniques rarely observed in the threat landscape. This includes a never-before-seen bespoke malware suite dubbed NET-STAR. Developed in .NET, the program is designed to target Internet Information Services (IIS) web servers.

That said, the hacking crew has relied on shared operational infrastructure that has been previously employed by groups like AT27 (aka Iron Taurus), APT41 (aka Starchy Taurus or Winnti), and Mustang Panda (aka Stately Taurus). Conversely, the infrastructure components used by the threat actor have not been detected in operations carried out by others, indicating some sort of “operational compartmentalization” within the shared ecosystem.

The exact initial access vector is not clear, but prior intrusions have weaponized vulnerable on-premises Internet Information Services (IIS) and Microsoft Exchange servers, abusing flaws like ProxyLogon and ProxyShell, to infiltrate target networks.

Another significant facet of the attacks is the shift from gathering emails to the direct targeting of databases using a batch script that makes it possible to connect to an SQL Server database, export the results in the form of a CSV file, and terminate the connection. The script is executed using the Windows Management Instrumentation (WMI) infrastructure.

Unit 42 said the threat actor used this method to methodically search for documents of interest and information related to specific countries such as Afghanistan and Pakistan.

Recent attacks mounted by Phantom Taurus have also leveraged NET-STAR, which consists of three web-based backdoors, each of which performs a specific function while maintaining access to the compromised IIS environment –

• IIServerCore, a fileless modular backdoor loaded by means of an ASPX web shell that supports in-memory execution of command-line arguments, arbitrary commands, and payloads, and transmits the results in an encrypted command-and-control (C2) communication channel
• AssemblyExecuter V1, which loads and executes additional .NET payloads in memory
• AssemblyExecuter V2, an enhanced version of AssemblyExecuter V1 that also comes fitted with the ability to bypass Antimalware Scan Interface (AMSI) and Event Tracing for Windows (ETW)

“The NET-STAR malware suite demonstrates Phantom Taurus’ advanced evasion techniques and a deep understanding of .NET architecture, representing a significant threat to internet-facing servers,” Unit 42 said. “IIServerCore also supports a command called changeLastModified. This suggests that the malware has active timestomping capabilities, designed to confuse security analysts and digital forensics tools.”

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