Demodex: The New Rootkit Used by Chinese Hackers to Spy on Targeted Windows 10 Users

An operation aimed at South East Asian targets back in July 2020 to deploy a kernel-mode rootkit on compromised Windows systems has been linked to a Chinese-speaking threat actor. The hacking group nicknamed GhostEmperor by Kaspersky has been known to use “sophisticated multi-stage malware framework” allowing a persistent and remote control over the targeted hosts.

The rootkit has been nicknamed Demodex by the Russian cybersecurity firm and the infection is purported to have spread across high-profile entities in Thailand, Indonesia and Vietnam as well as few also located in Egypt, Ethiopia and Afghanistan.

“[Demodex] is used to hide the user mode malware’s artefacts from investigators and security solutions, while demonstrating an interesting undocumented loading scheme involving the kernel mode component of an open-source project named Cheat Engine to bypass the Windows Driver Signature Enforcement mechanism,” Kaspersky researchers said.

Infections by GhostEmperors leverage on multiple intrusion routes that culminate in the execution of malware in memory, chief among them being exploiting known vulnerabilities in public-facing servers such as Apache, Window IIS, Oracle, and Microsoft Exchange – including the ProxyLogon exploits that came to light in March 2021 – to gain an initial foothold and laterally pivot to other parts of the victim’s network, even on machines running recent versions of the Windows 10 operating system.

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Following a successful breach, select infection chains that resulted in the deployment of the rootkit were carried out remotely via another system in the same network using legitimate software such as WMI or PsExec, leading to the execution of an in-memory implant capable of installing additional payloads during run time.

Irrespective of its reliance on obfuscation and other detection-evasion methods to elude discovery and analysis, Demodex gets around Microsoft’s Driver Signature Enforcement mechanism to permit the execution of unsigned, arbitrary code in kernel space by leveraging a legitimate and open-source signed driver named (“dbk64.sys”) that’s shipped alongside Cheat Engine, an application used to introduce cheats into video games.

“With a long-standing operation, high profile victims, [and] advanced toolset […] the underlying actor is highly skilled and accomplished in their craft, both of which are evident through the use of a broad set of unusual and sophisticated anti-forensic and anti-analysis techniques,” the researchers said.

This disclosure is arising as a China-lined threat actor codenamed TAG-28 has been discovered as being behind intrusions against Indian media and government agencies such as The Times Group, the Unique Identification Authority of India (UIDAI), and the police department of the state of Madhya Pradesh.

A mail server of Roshan one of Aghanistan’s largest telecommunications provider has also been targets of malicious activities. These attacks have been attributed to four distinct Chinese state-sponsored actors — RedFoxtrot, Calypso APT, as well as two separate clusters using backdoors associated with the Winnti and PlugX groups.

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