Phobos ransomware may not be the most prolific ransomware group, but the group poses a significant threat, especially to municipal and county governments, emergency services, education, and healthcare organizations. The group issues ransom demands for millions of dollars and the group’s attacks have caused hundreds of millions of dollars in losses. Phobos is a ransomware-as-a-service operation where the infrastructure to conduct attacks and encrypt files is provided to affiliates – individuals who specialize in breaching company networks – in exchange for a percentage of any ransom payments they can generate. The affiliates benefit from being able to concentrate on what they do best, and the ransomware group makes up for the loss of a percentage of the ransom by conducting many more attacks than would be possible on their own.

The group engages in double extortion tactics involving data theft and file encryption. Threats are issued to publicly leak stolen data on the group’s data leak site and payment is required for the keys to decrypt data and prevent data exposure. Several ransomware variants are connected to Phobos based on the tactics, techniques, and procedures (TTPs) used in attacks, including Elking, Eight, Devos, Faust, and Backmydata ransomware. The latter variant was recently used in an attack in Romania that affected around 100 hospitals.

Affiliates use several methods to gain initial access to victims’ networks, with phishing one of the most common. The phishing attacks conducted by the group usually involve spoofed email attachments with hidden payloads, with one of the favored payloads being the Smokeloader backdoor trojan. Smokeloader gives the group initial access to victims’ networks, from where they use a variety of methods and legitimate networking tools for lateral movement, credential theft, privilege escalation, and data exfiltration. These include 1saas.exe or cmd.exe for privilege escalation, Windows shell functions for control of systems, and built-in Windows API functions to bypass access control and steal authentication tokens. Open source tools such as Bloodhound and Sharphound are used to enumerate the Active Directory, Mimikatz for obtaining credentials, and WinSCP and for file exfiltration. Other methods used for initial access include the use of legitimate scanning tools such as Angry IP Scanner to search for vulnerable RDP ports, and then open source brute-forcing tools are used to guess weak passwords.

To improve defenses against Phobos ransomware attacks, businesses should follow the guidance in the recently published security alert from the U.S. Cybersecurity and Infrastructure Security Agency (CISA), Federal Bureau of Investigation (FBI), and Multi-State Information Sharing and Analysis Center (MS-ISAC), which includes latest Indicators of Compromise (IoCs) and TTPs observed in recent attacks. The guidance can be found in the #StopRansomware section of the CISA website.

Mitigations are concerned with improving defenses against the initial access vectors – phishing and remote access software. An email security solution is required to block phishing emails, consider disabling hyperlinks in emails, and adding banners to emails from external sources. An email security solution should be used that has both signature and behavioral threat detection capabilities to identify malicious files. End user training should be provided to improve resilience to phishing attempts, web filtering to block malicious file downloads, phishing-resistant multi-factor authentication to prevent the use of compromised credentials from granting access, strong password policies to improve resilience to brute force attacks, and strict controls on RDP and other remote desktop services. Robust backup processes are required, including maintaining offline backups of data, and an incident response policy for ransomware attacks should be developed and tested to ensure the fastest possible recovery in the event of an attack.