Operation DRAGONCLONE: Chinese Telecom Targeted by Malware

Operation DRAGONCLONE is an advanced cyber espionage campaign targeting China Mobile Tietong and potentially European telecom organizations connected to Chinese infrastructure. It uses sophisticated malware loaders like VELETRIX and the VShell adversary simulation tool, delivered via malicious ZIP files exploiting DLL sideloading and anti-analysis techniques such as IPFuscation. The campaign is linked to China-nexus threat groups UNC5174 (Uteus) and Earth Lamia and employs tools including SuperShell, Cobalt Strike, and Asset Lighthouse System. Active since March 2025, it focuses on credential theft, network reconnaissance, and callback execution. Detection requires monitoring for specific malware behaviors, DLL sideloading, and network callbacks. Germany, France, and the UK are at heightened risk due to their telecom sectors and economic ties to China. The threat is assessed as high severity given its advanced evasion, espionage intent, and potential impact on critical telecom infrastructure.

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