Iranian Cyber-Threat Group Drops New Backdoor, BugSleep

The group — which has targeted Israel, Saudi Arabia, and other nations — often uses spear-phishing and legitimate remote management tools but is developing a brand-new homegrown tool set.

Iranian cyber-espionage group MuddyWater is pivoting from controlling infected systems with legitimate remote-management software to instead dropping a custom-made backdoor implant.
As recently as April, the group infected systems by targeting Internet-exposed servers or through spear phishing, ending with the installation of the SimpleHelp or Atera remote management platforms, security-operations provider Sekoia said in an advisory. Yet, in June, the group switched to a different attack chain: sending out a malicious PDF file with an embedded link leading to a file on stored on the Egnyte service, which installs the new backdoor, dubbed MuddyRot by Sekoia.
Check Point Software noted the shift to the new tool as well. MuddyWater has been using the backdoor implant, which the firm calls BugSleep, since May, and has quickly been improving it with new features and bug fixes, says Sergey Shykevich, threat intelligence group manager at Check Point Software.
Often, they also introduce new bugs into the malware, however. They likely realized that their tactic of utilizing remote management tools as a backdoor was not effective enough and decided to swiftly transition to homemade malware, Shykevich says. Probably due to pressure for a rapid change, they released an incomplete version.
Iran has become a significant cyber-threat actor in the Middle East. Since at least 2018, the MuddyWater threat group has targeted a variety of government agencies and critical industries with malicious attacks, stated a 2022 advisory published jointly by US and UK government agencies. The MuddyWater group is part of the Iranian Ministry of Intelligence and Security (MOIS), with other cybersecurity firms referring to the group as Earth Vetala, MERCURY, Static Kitten, Seedworm, and TEMP.Zagros,
according to the joint advisory
.
The BugSleep backdoor uses typical anti-analysis tactics, such as delaying execution — that is, going to sleep — to avoid being detected or running in a sandbox. The backdoor also employs encryption, but in many instances the encryption was not properly executed.
The encryption issues are not the only bugs in the code. In other samples, the program creates a file — a.txt — and then later deletes it, apparently for no reason. These issues, plus the frequent updates, suggests the code is still under development,
stated Check Point Softwares advisory
.
MuddyWater previously had created its own backdoor programs, such as one called Powerstats, written in PowerShell, but later shifted to using remote management (RMM) software, Sekoias advisory noted.
We don’t yet know why MuddyWater operators have reverted to using a homemade implant for their first infection stage in at least one campaign,
the advisory stated
. It is likely that the increased monitoring of RMM tools by security vendors, following their rise in abuse by malicious threat actors, has influenced this change.
The use of a file sharing service such as Egnyte to host malicious documents has become more popular among attackers. The trial period is often sufficient enough time to give the attackers a platform to use during an attack, Check Point Softwares Shykevich says.
Numerous file-sharing platforms are utilized by attackers within their infection chains, he says. In theory, emulating and scanning the uploaded files can reduce the malicious use, but it is quite complicated from operational and cost perspectives for the file-sharing services operators.
The lures used in the groups phishing campaigns have become simpler — focusing on generic themes such as webinars and online course, which allows them to send out a higher volume of attacks, Check Point Softwares advisory stated.
Their sophistication level is medium, but they are a highly persistent and aggressive group from the standpoint of phishing campaigns and targeting of specific sectors or organizations, Shykevich says. They send hundreds of malicious emails to multiple recipients in the same organization or the same sector, also doing it across different days.
MuddyWater may not be a single group, however. In 2022, Ciscos threat intelligence group, Talos, described them as
an umbrella of APT groups.
The US Cybersecurity and Infrastructure Security Agency (CISA) describes the group as a group of Iranian government-sponsored advanced persistent threat (APT) actors,
in its advisory
.
The group employs spearphishing, exploiting publicly known vulnerabilities, and leveraging multiple open-source tools to gain access to sensitive government and commercial networks, CISA stated, adding, MuddyWater actors are positioned both to provide stolen data and accesses to the Iranian government and to share these with other malicious cyber actors.
While the group focuses on attacking organizations in Israel and Saudi Arabia, they have also hit other nations, including India, Jordan, Portugal, Turkey, and even Azerjaiban, the advisories said.

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Iranian Cyber-Threat Group Drops New Backdoor, BugSleep