Verizon, Southern California Water Supplier Among Those hit in Suspected Chinese Hack

Verizon and the Metropolitan Water District of Southern California were two high-value targets hit by a suspected Chinese-backed hack that was first brought to the public's attention in April, the Associated Press reported.

Pulse Connect Secure networking devices are used by many companies and governments to allow secure remote access to their networks and those were the targets of the hacks. The Chinese government was suspected of backing the hacks, but China has denied any role.

Verizon, which has over 120 million subscribers through Verizon Wireless, said a Pulse-related compromise was found in one of its labs. The hack was quickly dealt with, and Verizon said no data or customer information had been accessed or stolen.

"We know that bad actors try to compromise our systems," said Verizon spokesman Rich Young. "That is why internet operators, private companies and all individuals need to be vigilant in this space."

The Metropolitan Water District of Southern California, the country's largest water agency, provides water to 19 million people and operates some of the largest treatment plants worldwide, reported it also found a compromised device after an alert issued in April.

The device was immediately removed from service and spokeswoman Rebecca Kimitch said there was "no known data exfiltration" and no systems or processes were known to be affected.

The Associated Press reported earlier this month that the country's largest subway system in New York City was also breached during the hack.

For more reporting from the Associated Press, see below.

Security researchers say dozens of other high-value entities that have not yet been named were also targeted as part of the breach of Pulse Secure.

It's unclear what sensitive information, if any, was accessed. Some of the targets said they did not see any evidence of data being stolen. That uncertainty is common in cyberespionage and it can take months to determine data loss, if it is ever discovered. Ivanti, the Utah-based owner of Pulse Connect Secure, declined to comment on which customers were affected.

But even if sensitive information wasn't compromised, experts say it is worrisome that hackers managed to gain footholds in networks of critical organizations whose secrets could be of interest to China for commercial and national security reasons.

"The threat actors were able to get access to some really high-profile organizations, some really well-protected ones," said Charles Carmakal, the chief technology officer of Mandiant, whose company first publicized the hacking campaign in April.

The Pulse Secure hack has largely gone unnoticed while a series of headline-grabbing ransomware attacks have highlighted the cyber vulnerabilities to U.S. critical infrastructure, including one on a major fuels pipeline that prompted widespread shortages at gas stations. The U.S. government is also still investigating the fallout of the SolarWinds hacking campaign launched by Russian cyberspies, which infiltrated dozens of private sector companies and think tanks as well as at least nine U.S. government agencies and went on for most of 2020.

China has a long history of using the internet to spy on the U.S. and presents a "prolific and effective cyber-espionage threat," the Office of the Director of the National Intelligence said in its most recent annual threat assessment.

Six years ago Chinese hackers stole millions of background check files of federal government employees from the Office of Personnel Management. And last year the Justice Department charged two hackers it said worked with the Chinese government to target firms developing vaccines for the coronavirus and stole hundreds of millions of dollars worth of intellectual property and trade secrets from companies across the world.

In the Pulse campaign, security experts said sophisticated hackers exploited never-before-seen vulnerabilities to break in and were hyper diligent in trying to cover their tracks once inside.

"The capability is very strong and difficult to defend against, and the profile of victims is very significant," said Adrian Nish, the head of cyber at BAE Systems Applied Intelligence. "This is a very targeted attack against a few dozen networks that all have national significance in one way or another."

The Department of Homeland Security's Cybersecurity & Infrastructure Security Agency, or CISA, issued an April alert about the Pulse hack saying it was aware of "compromises affecting a number of U.S. government agencies, critical infrastructure entities, and other private sector organizations." The agency has since said that at least five federal agencies have identified indications of potential unauthorized access, but not said which ones.

The Metropolitan Transportation Authority in New York also said they've not found evidence of valuable data or customer information was stolen. The breach was first reported by The New York Times.

Nish, the BAE security expert, said the hackers could have broken into networks but not stolen data right away for any number of operational reasons. He compared it to a criminal breaking into a house but stopping in the hallway.

"It's still pretty bad," Nish said.

Mandiant said it found signs of data extraction from some of the targets. The company and BAE have identified targets of the hacking campaign in several fields, including financial, technology and defense firms, as well as municipal governments. Some targets were in Europe, but most in the U.S.

At least one major local government has disputed it was a target of the Pulse Secure hack. Montgomery County, Maryland, said it was advised by CISA that its Pulse Secure devices were attacked. But county spokesman Scott Peterson said the county found no evidence of a compromise and told CISA they had a "false report."

CISA did not directly respond to the county's statement.

The new details of the Pulse Secure hack come at a time of tension between the U.S. and China. Biden has made checking China's growth a top priority, and said the country's ambition of becoming the wealthiest and most powerful country in the world is "not going to happen under my watch."