Muddying the Tracks: The State-Sponsored Shadow Behind Chaos Ransomware | #ransomware | #cybercrime


Executive summary

In early 2026, a sophisticated intrusion initially appearing to be a standard Chaos ransomware attack was assessed to be consistent with a targeted state-sponsored operation. While the threat actor operated under the banner of the Chaos ransomware-as-a-service (RaaS) group, forensic analysis revealed the incident was a “false flag” masquerade. Technical artifacts, including a specific code-signing certificate and Command-and-Control (C2) infrastructure, suggest with moderate confidence that this activity is linked to MuddyWater (Seedworm), an Iranian Advanced Persistent Threat (APT) affiliated with the Ministry of Intelligence and Security (MOIS).

The campaign was characterized by a high-touch social engineering phase conducted via Microsoft Teams, where the attackers utilized interactive screen-sharing to harvest credentials and manipulate Multi-Factor Authentication (MFA). Once inside, the group bypassed traditional ransomware workflows, forgoing file encryption in favor of data exfiltration and long-term persistence via remote management tools like DWAgent. This report deconstructs the infection chain and analyzes the custom “Game.exe” Remote Access Trojan (RAT).

Additionally, this explores the process by which MuddyWater is increasingly leveraging the cybercriminal ecosystem to provide plausible deniability for geopolitical espionage and prepositioning, particularly in the US. The strategy highlights the convergence between state-sponsored intrusion activity and criminal tradecraft, where a big “tell” lies in the techniques that were deployed – and those that weren’t.

This overall strategy suggests the primary goal was not financial gain. It is also further proof of the lines blurring against the background of geopolitical tensions, and that attribution is becoming more difficult if teams do not take it upon themselves to conduct proper and thorough research.

Rapid7 coverage

Rapid7 has coverage for this campaign across both intelligence and detection workflows. The campaign is available in Rapid7’s Intelligence Hub, providing customers with curated context, indicators, and threat actor tradecraft to support awareness, investigation, and prioritization. Relevant detections are also available in InsightIDR, helping security teams identify activity associated with this intrusion pattern across their environments.

Chaos ransomware: Profile and targeting

Active since February 2025, Chaos is a ransomware-as-a-service (RaaS) operation specializing in big-game hunting (BGH) attacks against high-profile organizations, with reported ransom demands reaching up to $300,000. Despite the name, it is distinct from the Chaos malware builder identified in 2021. The group emerged shortly after the July 2025 law enforcement disruption of BlackSuit infrastructure during Operation Checkmate and is likely composed of former BlackSuit and/or Royal members. To expand its operations, Chaos advertises its affiliate program on cybercrime forums, such as RAMP (prior to its takedown) and RehubCom.

Chaos relies heavily on social engineering and remote access abuse to gain initial access. Rapid7 observed techniques that include spam email flooding combined with voice-based phishing (vishing), often involving impersonation of IT support personnel. Chaos then persuades victims to grant remote access via legitimate tools such as Microsoft Quick Assist, allowing operators to establish an initial foothold.

In line with common ransomware practices, Chaos typically employs double extortion, exfiltrating sensitive data prior to encryption and threatening public disclosure via its data leak site (DLS). The group has also demonstrated triple extortion by threatening distributed denial-of-service (DDoS) attacks against the victim’s infrastructure. These capabilities are reportedly offered to affiliates as part of bundled services, representing a notable feature of its RaaS model. Additionally, Chaos has been observed leveraging elements of quadruple extortion, including threats to contact customers or competitors to increase pressure on victims.

A distinguishing characteristic of the group’s DLS is the use of a “blind” countdown timer, which withholds the victim’s identity until expiration, likely intended to accelerate negotiations (Figure 1). As of late March 2026, Chaos has claimed 36 victims and maintained a consistent operational tempo (Figure 2). The group predominantly targets organizations in the United States, with a particular focus on the construction, manufacturing, and business services sectors (Figure 3).


Figure 1: Screenshot from Chaos’ DLS

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Figure 2: Number of claimed victims over time

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Figure 3: Geographic victim distribution

Incident overview

The intrusion that Rapid7 investigated began with a targeted social engineering campaign leveraging Microsoft Teams, where the threat actor (TA) engaged employees through external chat requests. By operating interactively through compromised users, the attacker conducted initial discovery, harvested credentials, including MFA manipulation, and quickly transitioned to using legitimate accounts for internal access.

From there, the TA established persistence using remote access tools such as DWAgent and AnyDesk, before deploying additional payloads and further control of the environment. Following this, the TA exfiltrated data from the compromised environment and subsequently contacted the victim via email, claiming data theft and initiating ransom negotiations (Figure 4).

 

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Figure 4: Incident breakdown

Initial Access via social engineering and remote interaction

The TA achieved initial access through social engineering conducted via Microsoft Teams, where they initiated one-on-one chats with users from a controlled account. During these interactions, the TA established screen-sharing sessions, gaining direct visibility and interactive access to user assets.

While connected, the TA executed basic discovery commands, accessed files related to the victim’s VPN configuration, and instructed users to enter their credentials into locally created text files. In at least one instance, the TA deployed a remote management tool (AnyDesk) to further facilitate access.