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Is Your VS Code Infected? A “Ransomware” Extension Was Just Found on the Official Marketplace.

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CISO Briefing: Is Your VS Code Infected? A “Ransomware” Extension Was Just Found on the Official Marketplace. (The Supply Chain Nightmare) — by CyberDudeBivash

By CyberDudeBivash · 01 Nov 2025 · cyberdudebivash.com · Intel on cyberbivash.blogspot.com

LinkedIn: ThreatWirecryptobivash.code.blog

VS CODE • SUPPLY CHAIN ATTACK • RANSOMWARE • EDR BYPASS

Situation: This is a CISO-level “Supply Chain” red alert. A malicious Visual Studio Code (VS Code) extension, disguised as a “popular utility,” was discovered on the *official* Microsoft Marketplace. This is a Developer-focused Supply Chain Attack that *instantly* bypasses your EDR (Endpoint Detection and Response) to deploy ransomware or infostealers.

This is a decision-grade CISO brief. This is a “Trusted Process” bypass. Your EDR is *whitelisted* to trust `vscode.exe`. The malicious extension runs *inside* this trusted process, gaining `SYSTEM` access to your system. This is the ultimate threat for IP Theft (source code) and Lateral Movement. We provide the *hunt guide* to check your developers’ systems *now*.

TL;DR — A malicious extension was found on the official VS Code store.

  • The TTP: “Trusted Process Hijack”. The malicious extension runs *inside* `vscode.exe` (a trusted, signed Microsoft executable).
  • The “EDR Bypass”:** Your EDR *allows* this. It sees “trusted” activity. The malware’s payload (e.g., a fileless PowerShell script) runs *in-memory* and is missed.
  • The Impact: This attack has *full file system access*. It can 1) Encrypt the developer’s source code, 2) Steal `~/.ssh/` keys, and 3) Use the dev’s PC as a *backdoor* to the internal network.
  • THE ACTION (CISO): 1) AUDIT all developer extensions *immediately* (guide below). 2) HARDEN: Implement an “allowlist” for extensions (WDAC/AppLocker). 3) HUNT: This is the mandate. Hunt for anomalous `vscode.exe` network connections *now*.

TTP Factbox: VS Code Supply Chain Attack

TTPComponentSeverityExploitabilityMitigation
Trusted Process Hijack (T1219)VS Code Extension (`vscode.exe`)CriticalEDR Bypass (LotL)MDR / AppLocker / WDAC
Data Exfiltration (T1567)Source Code / Cloud KeysCriticalTrusted ChannelMDR Hunting / IP Restriction

Critical Supply Chain RiskEDR Bypass TTPIP Theft / RansomwareContents

  1. Phase 1: The “Supply Chain” Nightmare (Why Your EDR is Blind)
  2. Phase 2: The Kill Chain (From “Install” to IP Theft)
  3. Exploit Chain (Engineering)
  4. Reproduction & Lab Setup (Safe)
  5. Detection & Hunting Playbook (The *New* SOC Mandate)
  6. Mitigation & Hardening (The CISO Mandate)
  7. Audit Validation (Blue-Team: *How to Check Now*)
  8. Tools We Recommend (Partner Links)
  9. CyberDudeBivash Services & Apps
  10. FAQ
  11. Timeline & Credits
  12. References

Phase 1: The “Supply Chain” Nightmare (Why Your EDR is Blind)

As a CISO, your Third-Party Risk Management (3PRM) program is failing. The new attack vector is not your vendor’s server; it’s your developer’s local machine, specifically their IDE (Integrated Development Environment).

The core problem: **VS Code extensions run with the *full trust* of the parent application (`vscode.exe`)**. This is the **”Trusted Process” Bypass** that kills your defenses.

1. The “Whitelisting” Problem

Your EDR (Endpoint Detection and Response) is configured to *trust* `vscode.exe`. It’s a signed executable from Microsoft. This is necessary for your DevSecOps team to function.
**The Attack:** A malicious extension is installed. It’s simply a folder of JavaScript (`.js`) files. When VS Code runs, it loads the malicious `.js` *into the trusted `vscode.exe` process’s memory*. The attacker now has the same access level as your developer’s desktop, and your EDR sees “trusted activity.”

2. The “Ransomware” Payload

The malicious extension isn’t just an infostealer. It’s a ransomware dropper. The extension’s code can:

  • Read, modify, and delete *any* file the developer can access (i.e., your entire source code base, all `.env` files).
  • Encrypt the user’s local drive.
  • Steal *active session tokens* (MFA bypass) for GitHub, AWS, and internal tools.

Phase 2: The Kill Chain (From “Install” to IP Theft)

This is a CISO PostMortem because the kill chain is *devastatingly* fast and *invisible* to traditional tools.

Stage 1: Initial Access (The “Shadow IT” Install)

Your developer installs a new “Productivity Timer” or “Cool Theme” extension from the Marketplace.

Stage 2: Execution & Collection (The Infosteal)

The malicious extension runs *inside* `vscode.exe`. It *immediately* runs the Infostealer payload:

  1. `fs.readFile()`: It finds all local secrets (AWS keys, GitHub tokens, database connection strings).
  2. `child_process.exec(‘openssl enc …’)`: It encrypts the developer’s entire local source code directory.

Stage 3: C2 & Data Exfiltration

The malicious code makes a “trusted” network connection to an attacker’s C2 server. Your Firewall/DLP is blind. It sees a “trusted” `vscode.exe` process making a “normal” HTTPS request (which is allowed).
**This connection exfiltrates the stolen AWS/GitHub keys.**

Stage 4: Lateral Movement & Ransomware

The attacker now has the stolen keys. They *log in* to your corporate GitHub or AWS/Azure cloud. They pivot. They *deploy ransomware* to your internal production server fleet. Your company is held hostage.

Exploit Chain (Engineering)

This is a “Trusted Process” Hijack (T1219/T1176). The “exploit” is a *logic* flaw in your EDR Whitelisting policy.

  • Trigger: User installs a malicious extension.
  • Precondition: EDR/AV is configured to *automatically trust* all `vscode.exe` processes.
  • Sink (The Breach): Extension’s `background.js` uses `require(‘child_process’)` to run shell commands (`powershell.exe`, `tar -czf`).
  • Module/Build: `vscode.exe` (Trusted) → `powershell.exe -e …` (Lateral Movement)
  • Patch Delta: There is no “patch.” The “fix” is Application Control (WDAC) and MDR (Threat Hunting).

Reproduction & Lab Setup (Safe)

You *must* test your EDR’s visibility for this TTP.

  • Harness/Target: A sandboxed Windows 11 VM with your standard EDR agent installed.
  • Test: 1) Install a *legitimate* VS Code extension (e.g., “Code Runner”). 2) Manually modify its source file (`extension.js`) to include: `require(‘child_process’).exec(‘calc.exe’)`.
  • Execution: Reload VS Code.
  • Result: Did `calc.exe` launch? Did your EDR fire a P1 (Critical) alert for `vscode.exe -> calc.exe`? If it was *silent*, your EDR is *blind* to this TTP.
  • Safety Note: If `calc.exe` can run, so can the Vidar Infostealer.

Detection & Hunting Playbook (The *New* SOC Mandate)

Your SOC *must* hunt for this. Your SIEM/EDR is blind to the exploit itself; it can *only* see the *result*. This is your playbook.

  • Hunt TTP 1 (The #1 IOC): “Anomalous Child Process.” This is your P1 alert. Your `vscode.exe` process should *NEVER* spawn a shell (`powershell.exe`, `cmd.exe`, `/bin/bash`).# EDR / SIEM Hunt Query (Pseudocode) SELECT * FROM process_events WHERE (parent_process_name = ‘vscode.exe’) AND (process_name = ‘powershell.exe’ OR process_name = ‘cmd.exe’ OR process_name = ‘bash’)
  • Hunt TTP 2 (The C2): “Show me all *network connections* from `vscode.exe` to an *anomalous, newly-registered domain* (the C2).”
  • Hunt TTP 3 (The Exfil): “Show me *any* process running `openssl` or `tar` followed by an *outbound* network connection.” (Data Hoarding).

Mitigation & Hardening (The CISO Mandate)

This is a DevSecOps failure. This is the fix.

  • 1. HARDEN (The *Real* Fix): This is your CISO mandate. Application Control (WDAC/AppLocker). You *must* move from a “blocklist” (what’s bad) to an “allowlist” (what’s *known good*). Create a GPO that *only* allows *your* known-good publishers (e.g., “Microsoft,” “Google,” “Cisco”). This *kills* the “Shadow IT” TTP, as un-vetted extensions *cannot run* the malicious payload.
  • 2. HUNT (The “MDR” Fix): You *cannot* run a 9-to-5 SOC. You *must* have a 24/7 human-led MDR team (like ours) to hunt for the *behavioral* TTPs (like Hunt TTP 1) that your EDR will log but *not* alert on.
  • 3. VERIFY (The “Red Team” Fix): You *must* run an Adversary Simulation (Red Team) to *prove* your EDR and your SOC team *can* detect this TTP.

Audit Validation (Blue-Team)

Run this *today*. This is not a “patch”; it’s an *audit*.

# 1. Check your VS Code Extensions
code --list-extensions > extensions.txt

# 2. Audit the Output
# Search the extensions.txt list for *unrecognized publishers*.
# Search for names that look like typos (e.g., "Formatr" instead of "Formatter").

# 3. Audit your EDR (The "Lab" Test)
# Run the `vscode.exe -> calc.exe` test. 
# Did your EDR *see* it? If not, it is BLIND.

Is Your EDR Blind to “Trusted” Malware?
Your EDR is whitelisted. Your SOC is asleep. CyberDudeBivash is the leader in Ransomware Defense. We are offering a Free 30-Minute Ransomware Readiness Assessment to show you the *exact* gaps in your “Trusted Process” and “Data Exfil” defenses.

Book Your FREE 30-Min Assessment Now →

Recommended by CyberDudeBivash (Partner Links)

You need a layered defense. Here’s our vetted stack for this specific threat.

Kaspersky EDR
This is your *sensor*. It’s the #1 tool for providing the behavioral telemetry (process chains, network data) that your *human* MDR team needs to hunt.Edureka — DevSecOps Training
Train your developers *now* on Software Supply Chain Risk and WDAC Application Control.Alibaba Cloud (VDI)
A key mitigation. Use Virtual Desktops (VDI). If the VDI is popped, you *burn it* and re-image in seconds. The host is safe.

AliExpress (Hardware Keys)
*Mandate* this for all developers. Get FIDO2/YubiKey-compatible keys. This *token-binds* the session, making the stolen cookie *useless*.TurboVPN
Secure your admin access. Your RDP/SSH access for *your admins* should be locked down.Rewardful
Run a bug bounty program. Pay white-hats to find flaws *before* APTs do.

CyberDudeBivash Services & Apps

We don’t just report on these threats. We hunt them. We are the “human-in-the-loop” that your automated EDR is missing.

  • SessionShield — Our flagship app. This is the *only* solution designed to *behaviorally* detect and *instantly* kill a hijacked M365/GitHub session. It stops the *result* of the breach.
  • Managed Detection & Response (MDR): Our 24/7 SOC team becomes your Threat Hunters, watching your EDR logs for these *exact* “VSCode -> C2” TTPs.
  • Adversary Simulation (Red Team): This is the *proof*. We will *simulate* this EDR bypass kill chain to show you where you are blind.
  • Emergency Incident Response (IR): You found this TTP? Call us. Our 24/7 team will hunt the attacker and eradicate them.
  • PhishRadar AI — Stops the phishing attacks that *initiate* the breach.

Book Your FREE 30-Min AssessmentBook an Adversary Simulation (Red Team)Subscribe to ThreatWire

FAQ

Q: What is a Malicious Browser Extension?
A: It’s a “Trojan Horse” that you *willingly* install. It looks like a “Theme” or “Productivity” tool, but it contains malicious code (e.g., `background.js`) that runs *inside* your trusted browser, giving it full access to all your passwords, cookies, and data.

Q: Why doesn’t my EDR/Antivirus block this?
A: Because your EDR is *configured to trust* `chrome.exe` and `vscode.exe`. This is a “Trusted Process” bypass. The malicious code runs *in the memory* of this trusted process. Your EDR has no “bad file” to scan and sees “normal” behavior (a browser connecting to the internet).

Q: How do I check my extensions *right now*?
A: In Chrome/Edge, type `chrome://extensions` in your address bar. *Audit the permissions*. Does your “Theme” extension *really* need “Read all data on all websites”? If yes, **REMOVE IT.** In VS Code, run `code –list-extensions` and audit the *publisher* of every tool.

Q: What is the #1 fix for this *entire class* of attack?
A: Application Control (WDAC/AppLocker). This moves your defense to an “allowlist” model that *only* permits *pre-vetted* software (and extensions) to run. This *kills* the “Shadow IT” TTP at its source.

Timeline & Credits

This “Malicious Extension” TTP is an active, ongoing campaign by multiple APTs. The “Ransomware” payload is the final step in a successful Session Hijacking breach.
Credit: This analysis is based on active Incident Response engagements by the CyberDudeBivash threat hunting team.

References

Affiliate Disclosure: We may earn commissions from partner links at no extra cost to you. These are tools we use and trust. Opinions are independent.

CyberDudeBivash — Global Cybersecurity Apps, Services & Threat Intelligence.

cyberdudebivash.com · cyberbivash.blogspot.com · cryptobivash.code.blog

#VSCode #Extension #Ransomware #SupplyChainAttack #DevSecOps #EDRBypass #SessionHijacking #CyberDudeBivash #CISO #MDR #ThreatHunting

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