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Chinese State-Sponsored Hackers Breach US Treasury Sanctions Office in Major Cyberattack

3 minutes read

Chinese State-Sponsored Hackers Breach US Treasury Sanctions Office in Major Cyberattack

3 minutes read

In a significant cybersecurity breach, Chinese state-sponsored hackers infiltrated critical offices within the US Treasury Department, including the Office of Foreign Assets Control (OFAC), the Office of Financial Research, and even targeted the office of Treasury Secretary Janet Yellen. This cyberattack, first disclosed by the Treasury earlier this week, highlights the intensifying digital espionage war between the United States and China, with economic sanctions emerging as a primary focus of Beijing’s intelligence-gathering efforts.

According to unnamed US officials cited by The Washington Post, the hackers exploited vulnerabilities in a third-party cybersecurity service provider, BeyondTrust. By compromising this vendor, they gained unauthorized access to employee workstations and sensitive, albeit unclassified, documents. The breach enabled the hackers to bypass security protocols, granting them remote access to critical departmental systems. The primary objective, officials believe, was to uncover intelligence regarding Chinese entities that the US may be considering for financial sanctions.

The Treasury Department, in its letter to lawmakers, described the breach as a “major incident” but refrained from specifying which individuals or departments were affected. The letter revealed that BeyondTrust had alerted the Treasury to the breach on December 8, after which investigations were launched in collaboration with the Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Bureau of Investigation (FBI). The hackers reportedly gained access to a key used by the vendor to secure a cloud-based service, allowing them to override protections and access specific departmental resources.

Responding to the allegations, Liu Pengyu, spokesperson for the Chinese Embassy in Washington, dismissed the accusations as “irrational” and “without factual basis,” labeling them as smear attacks against Beijing. Liu reiterated China’s official stance, emphasizing that the country opposes all forms of cyberattacks. Similarly, Chinese Foreign Ministry spokesperson Mao Ning, when questioned about the breach, stated that China has consistently combated cybercrime and denied involvement in the reported activities.

This breach is not an isolated incident. Earlier this month, Chinese state-sponsored actors reportedly infiltrated three major US telecommunications companies in a separate cyberattack known as Salt Typhoon. In that breach, hackers managed to intercept communications, including phone calls and text messages of US lawmakers, prompting bipartisan condemnation from Congress. These successive attacks underscore the evolving capabilities and persistent focus of Chinese cyber actors on penetrating key US institutions.

The US Treasury’s Office of Foreign Assets Control plays a crucial role in enforcing economic sanctions, which are among the most effective tools in Washington’s foreign policy arsenal. Sanctions have been used extensively against Chinese companies, individuals, and entities, often targeting sectors linked to military advancements, human rights abuses, and geopolitical tensions.

Experts suggest that this latest breach is part of a broader strategy by Beijing to gain insights into potential future sanctions and preemptively mitigate their impact. With the US considering additional financial restrictions on Chinese banks to curb Russia’s access to oil revenues, as mentioned by Secretary Yellen last month, such intelligence could provide Beijing with a significant strategic advantage.

The ongoing cyber tensions are reflective of the larger geopolitical rivalry between the US and China, where digital espionage has become a key battleground. Despite repeated warnings and increased investment in cybersecurity infrastructure, vulnerabilities persist, leaving critical institutions exposed to state-sponsored threats.

As investigations continue, the breach serves as a stark reminder of the growing sophistication of cyberattacks and the critical need for enhanced cybersecurity protocols. For Washington, the challenge remains twofold: securing its digital infrastructure against future intrusions while diplomatically managing an already strained relationship with Beijing. This incident not only exposes systemic weaknesses in third-party cybersecurity partnerships but also raises pressing questions about how prepared the US government is to counter increasingly complex cyber threats in an era of relentless digital warfare.

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