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Alex Kimani

Alex Kimani

Writer, Divergente Research LLC

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Divergente Research LLC and Safehaven.com. 

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45 U.S. Tech Companies Hit By Massive Chinese Hack

Security

About two months ago, cybersecurity firm Crowdstrike warned that China had stepped up efforts to steal intellectual property from American firms and trade secrets under president Trump’s administration.

As it turns out, the crime had been going on right under our noses long before Trump ascended into the Oval Office. The Department of Justice (DOJ) has sealed a damning indictment and charged two Chinese intelligence officers for playing a part in a decade-long state-sponsored global hacking campaign that involved intellectual property from no less than 45 U.S. companies including NASA’s Jet Propulsion Laboratory and Goddard Space Flight Center and tech giants IBM and Hewlett Packard.

Other affected companies operate in diverse tech sectors including: seven companies in the aviation sector, space and/or satellite technology; three companies involved in manufacturing complex electronic systems; three in communications technology; a company in oil and gas and another in maritime technology.

‘Godkiller’ Attacks

The indictment accuses China’s ministry of State Security—the country’s main intelligence agency—of hacking into dozens of government and tech company databases in an effort to steal intellectual property.

The indictment also says that the hackers stole personally identifiable information, including names, dates of birth, email addresses, Social Security numbers and salary information on more than 100,000 U.S. Navy personnel.

The two charged hackers are part of the notorious Chinese hacking outfit known as Advanced Persistent Threat 10, or simply, APT10. Their famous aliases are Godkiller, CVNX and Afwar.

The group used pretty sophisticated tactics to steal hundreds of gigabytes of product data by infiltrating the MSPs that are used by these companies. MSPs, or Managed Service Providers, are companies that remotely manage their clients’ information technology infrastructure including servers, storage, networks, consultancy and IT support.

Unfortunately, the hackers are Chinese nationals still living in China and chances of ever being prosecuted in the U.S. are slim-to-none.

Related: Bad News Builds For Global Markets

The charges have come in a period of high tension between the U.S. and China after the former cooperated with Canada to arrest a Huawei CFO. The move came in the middle of a détente in a protracted trade war between the U.S. and China and caused tensions to flare up once again. In retaliation, Beijing has arrested three Canadian citizens while demanding the release of the Huawei executive.

Intellectual Property Theft

When Trump imposed a 10-percent tariff on Chinese goods worth $250 billion, one justification he used was that China was guilty of stealing American intellectual property. These violations involve stealing trade secrets, counterfeiting famous brands and pressuring American companies to share technology with Chinese companies in order to be granted access to the huge Chinese market.

Allegations of Chinese state-sponsored hackers are nothing new really. After years of sustained economically-motivated cyberattacks on US businesses, President Obama and China’s President Xi Jinping agreed to put a stop to the menace in 2015:

"We've agreed that neither the US or the Chinese government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage," Obama said.

China did stick to its end of the deal, but only for a short time.

A 2016 report by cybercrime company FireEye showed that the number of attacks on networks it tracked that originated from Chinese hackers fell to just 10 from 60 three years before. It’s therefore quite clear that a lot of Chinese hacking activity is directly or indirectly state sanctioned. Tellingly, the targeted industries in the latest hacking campaign were closely aligned with China’s ambitious ‘‘Made in China 2025.’’

Developments such as these sadly lend credence to pessimistic outlooks that the ongoing trade war between the two nations won’t be ending anytime soon. And this is not just about China or the U.S.— 75 percent of respondents in a November CNBC Global CFO Council survey believe that the trade spat will negatively impact their businesses over the next six months, with European and Asian CFOs being the most concerned. The trade war is bad for everybody on many levels, not least financial markets that hate uncertainty.

By Alex Kimani for Safehaven.com

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