Executive Summary

Security researchers at AhnLab have identified a new and highly capable ransomware family named Cephalus. First observed in mid-June 2025, the Cephalus group specializes in gaining initial access by exploiting stolen Remote Desktop Protocol (RDP) credentials. Once inside a network, the ransomware deploys a suite of sophisticated defense evasion and anti-recovery techniques, including disabling Windows Defender, deleting volume shadow copies, and terminating critical backup and database services like Veeam and Microsoft SQL Server. The group employs a double-extortion model, exfiltrating victim data before encryption and threatening to leak it on a dedicated site. The reliance on RDP makes organizations with poorly secured remote access infrastructure prime targets.

Threat Overview

The Cephalus attack chain is methodical and designed for maximum impact. After gaining initial access via compromised RDP credentials, the operators perform reconnaissance and escalate privileges. Before encryption, the ransomware executes a series of commands to cripple the victim's defenses and recovery options. This includes disabling security products and deleting backups to ensure that restoring from local copies is impossible, thereby increasing the pressure to pay the ransom. The group also steals sensitive data to use as leverage in their double-extortion scheme. The final payload encrypts files using a combination of AES-CTR and RSA cryptography.

Technical Analysis

• Initial Access: The primary vector is Remote Desktop Protocol (T1021.001) using stolen or brute-forced credentials.
• Defense Evasion (T1562.001 - Disable or Modify Tools): Cephalus actively disables Windows Defender's real-time protection to avoid detection during its execution.
• Impact & Inhibit System Recovery (T1490 - Inhibit System Recovery): The ransomware systematically undermines recovery efforts by:
  • Deleting volume shadow copies using vssadmin.exe.
  • Terminating services associated with backup software (e.g., Veeam) and databases (e.g., SQL Server) to ensure their data files can be encrypted.
• Deceptive Encryption: The malware's encryption process is noteworthy for its attempt to deceive analysis tools. It generates a fake AES key, likely to mislead automated sandboxes, while using a real, separate key for the actual encryption. This demonstrates a level of sophistication aimed at thwarting security researchers.
• Double Extortion: Like most modern ransomware groups, Cephalus exfiltrates data before encryption (T1041 - Exfiltration Over C2 Channel) and uses a leak site to pressure victims.

Impact Assessment

Cephalus poses a significant threat to organizations, particularly those reliant on RDP for remote work. The ransomware's built-in capabilities to disable security and backup services can make recovery extremely difficult and costly, often leaving victims with little choice but to consider paying the ransom. The theft and potential leakage of sensitive corporate data can lead to severe reputational damage, regulatory fines, and loss of competitive advantage. The group's focus on a common, often insecurely configured protocol like RDP means a large pool of potential targets exists globally.

Detection & Response

• RDP Log Monitoring: Monitor Windows Event Logs (ID 4624, 4625) for a high volume of failed RDP login attempts (brute-forcing) followed by a success. Scrutinize successful logins from unusual or non-business-related IP addresses. This is a core part of D3FEND's D3-LAM: Local Account Monitoring.
• Behavioral Alerts: Configure EDR solutions to generate high-priority alerts for the execution of vssadmin.exe delete shadows or commands that attempt to disable Windows Defender's real-time protection.
• Service Monitoring: Monitor for the unexpected termination of critical services like Veeam.Backup.Service.exe or sqlserver.exe.

Mitigation

• Secure RDP Access (M1032 - Multi-factor Authentication): This is the most critical mitigation. Enforce MFA on all RDP access. If MFA is not possible, do not expose RDP directly to the internet. Instead, require users to connect through a VPN with MFA first. This aligns with D3FEND's D3-MFA: Multi-factor Authentication.
• Strong Password Policies (M1027 - Password Policies): Enforce strong, unique passwords for all accounts to make brute-forcing and credential stuffing more difficult.
• Immutable Backups: Maintain offline and immutable backups that cannot be deleted or modified by the ransomware. This ensures a viable recovery path. This is the goal of D3FEND's D3-FR: File Restoration.
• Network Level Authentication (NLA): Enable NLA for RDP connections to provide an extra layer of authentication before a full session is established.