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CloudZ Malware Hijacks Microsoft Phone Link to Steal SMS Codes and Credentials

The finding shows cross-device syncing can leak login codes through the PC, prompting a shift to hardware security keys.

Overview

  • Cisco Talos on Tuesday detailed a new CloudZ plugin called Pheno and released indicators of compromise that defenders can use.
  • Pheno watches for active Microsoft Phone Link sessions on Windows and tries to read the app’s local SQLite database to capture texts, one-time passwords, and credentials without infecting the phone.
  • Researchers observed an infection chain that starts with a fake ScreenConnect update, drops a Rust-based loader, then runs a .NET loader that installs CloudZ and persists via a scheduled task after anti-analysis checks.
  • The technique abuses normal Phone Link behavior rather than a software flaw, so guidance stresses detection, moving away from SMS codes, and using authenticator apps or hardware security keys for sensitive accounts.
  • The activity has been active since at least January 2026 with no group named, and a compromised PC can expose mobile codes mirrored to the desktop and help attackers defeat two-factor checks.