In late August, a threat actor used hundreds of AI agents to develop and launch a global exploitation campaign targeting vulnerable PaperCut NG and MF servers. PaperCut is print management software, and researchers determined that the operation compromised at least 440 PaperCut instances linked to 395 distinct organizations across 48 countries. The AI agents were tasked with building, testing, and refining exploits for CVE-2026-81578 and CVE-2026-82078 both security flaws affecting PaperCut software and flagged as actively exploited earlier this month.  It is currently unclear if the threat actor is solely focused on access development to be handed off to other affiliated actors, or if they will directly leverage their access to achieve follow-on objectives such as data theft or ransomware deployment.

What’s Notable and Unique

• Researchers observed three attack paths following the exploitation of vulnerable PaperCut servers. Threat actors would harvest credentials from LSASS memory and registry secrets to perform pass-the-hash attacks, leverage older unpatched Windows vulnerabilities (CVE-2021-42278 and CVE-2021-42287) to escalate privileges in unpatched environments, or, in some cases, directly add newly created accounts to the Domain Admins group when PaperCut was running with domain-level privileges.
  
  
  

• Upon achieving remote code execution and credential harvesting within a self-hosted lab environment, the threat actor deployed hundreds of AI-powered agents that leveraged OpenAI Codex, DeepSeek models, and publicly available offensive security tools, including Mimikatz, SharpHound, Certipy, Rubeus, and Impacket, to automate reconnaissance, exploitation, and post-compromise activities. The attackers subsequently used a DCSync attack to obtain a database dump containing domain credentials. 

Analyst Comments

The observed activity demonstrates how threat actors are increasingly leveraging AI and large language models (LLMs) to accelerate cyber operations at unprecedented speed and scale. In this campaign, the adversary progressed from exploit development to remote code execution within hours and, in some cases, achieved Domain Administrator privileges in as little as five minutes. The AI-assisted workflow enabled rapid reconnaissance, exploitation, credential theft, privilege escalation, and lateral movement, allowing the compromise of multiple organizations within seconds. This activity highlights the growing threat posed by AI-enabled adversaries capable of conducting large-scale intrusions with greater efficiency and operational velocity. Organizations affected by the PaperCut vulnerabilities are strongly advised to apply the latest security updates and implement the vendor's recommended mitigation measures to reduce the risk of compromise and unauthorized access. 

Sources

• Agents Gone Wild: An AI-Orchestrated Global Campaign Against PaperCut NG/MF 

• AI-powered attack exploited PaperCut flaws to hack 395 organizations 

• PaperCut Attacker Uses Hundreds of AI Agents to Compromise 440+ Instances 

Cybercriminals and state-linked threat actors are increasingly incorporating artificial intelligence (AI) into multiple stages of offensive operations. Rather than relying on AI only for content generation or research, threat actors are now consistently using it to support reconnaissance, vulnerability discovery, credential theft, malware development, social engineering, and activities following initial compromise. The growing use of automated and agent-based workflows is allowing adversaries to coordinate offensive malicious activities with less manual involvement, potentially increasing the speed, scale, and efficiency of future campaigns.

What’s Notable and Unique

•  In one observed campaign, threat actors used AI to plan, build, and conduct an automated credential-harvesting operation within just several hours, demonstrating how compromised infrastructure can be rapidly repurposed to support larger-scale malicious activity.
  
  

• Arete has observed several threat groups using AI-assisted capabilities to facilitate the analysis of data obtained during exfiltration so far this year, including INC Ransom, FulcrumSec, and Settra.
  
  

• Attackers are also attempting to reproduce proprietary AI capabilities. Large-scale automated prompting campaigns have been used to extract information about the behavior and capabilities of proprietary AI models. The use of numerous accounts and intermediary infrastructure can make these activities more difficult to identify and attribute.

Analyst Comments

AI is increasingly becoming an operational component in the threat landscape rather than simply a tool that improves attacker productivity. By connecting reconnaissance, development, credential operations, and other activities through automated workflows, threat actors can conduct campaigns more quickly and reduce reliance on continuous human input. This trend also impacts security requirements for organizations deploying AI technologies. AI models, development environments, cloud resources, identities, repositories, and automated workflows should increasingly be considered interconnected elements of the enterprise attack surface, and organizations should maintain visibility across these areas and ensure that security controls account for both conventional threats and AI-enabled attack techniques.

Sources

• GTIG AI Threat Tracker: From Prompting to Autonomy – The Evolution of Adversarial AI

In today’s complex cyber threat landscape, small and medium-sized businesses (SMBs) should implement a layered, multi-pronged approach to security. Here are some proven, effective controls to consider:

1.        Implement MFA for All Users
Multi-factor authentication (MFA) is an effective and accessible way to protect sensitive data, comply with regulatory standards, and prevent unauthorized access to critical systems. By ensuring that users not only use a password but also a secure token, an organization can significantly reduce phishing attempts, credential stuffing attacks, and ransomware incidents. MFA should be enabled for email, VPN, and critical system access.

2.        Update Patch Management Programs
A modern patching program should include policies and mechanisms to manage software updates in a timely manner. Patching efforts should address not just operating system updates, but also commonly utilized software within the environment. An active patching plan aims to reduce the mean time to patch and provide metrics on existing patch efforts. In the event of a high-severity vulnerability, a mature patching program should also be able to identify the risks and exposure for a given set of systems based on the average time to patch. This helps stakeholders make informed decisions when a new exploit is released.

3.        Leverage a Properly Managed Endpoint Detection and Response (EDR) Tool
With real-time threat detection and advanced visibility, endpoint detection and response (EDR) solutions can enhance an organization’s ability to detect and investigate potential malicious activity, including ransomware, lateral movement, fileless attacks, and more. Effective management of EDR should include proper configuration, regular agent updates, and established procedures for responding to alerts.

4.        Enhance EDR with Frontline Incident Intelligence
While EDR solutions are an important component of a security program, threat actors are continually adapting their techniques to evade detection, and as a result, standard detection methods may not always identify emerging threats or novel attack behaviors. To strengthen protection, organizations can supplement EDR tools with custom detection rules informed by incident response data. These rules can help identify indicators of compromise observed during cyber incidents, providing an additional layer of visibility beyond traditional detections.

Arete Bloktd℠ illustrates this approach by transforming threat intelligence and malware analysis into curated detection rules for EDR tools. Applying frontline intelligence to security tools can result in earlier detection, less investigative burden, and a more confident response. 

5.        Create and Continuously Test an Incident Response (IR) Plan
An incident response plan can help an organization effectively identify, respond to, and recover from a cybersecurity incident while minimizing disruption and downtime. An IR plan defines clear roles, escalation paths, communication strategies, and decision frameworks for both internal and external teams. To be effective, these plans should be regularly tested with post-incident reviews or tabletop exercises involving key stakeholders.

6.        Maintain Encrypted and Tested Data Backups
In the case of a cyberattack, backups can help organizations maintain business continuity, support ransom negotiations with threat actors, and contribute to a timely and successful recovery. Encrypting backups makes it more difficult for threat actors to access or alter them, and regular testing ensures they remain accessible during a security incident.

7.        Conduct Employee Security Awareness Training
Human error is a leading cause of cybersecurity incidents, and an organization’s employees are its first line of defense against cyber threats. Security awareness training reinforces the importance of data confidentiality, supports regulatory compliance, and helps employees recognize and understand red flags such as suspicious emails, malicious links, and social engineering attempts.

8.        Assess and Address Existing Risk and Vulnerabilities
To maintain a proactive approach to risk management and improve resilience, organizations should regularly assess existing vulnerabilities through expert-led Vulnerability Assessments, Penetration Testing, and Threat Hunting Assessments. These exercises can help identify security gaps, support regulatory compliance, and prevent potential incidents. During remediation, prioritize high-impact vulnerabilities and make a plan for periodic assessments.

9.        Apply Least-Privilege Access Controls
Employees should have access only to the systems, applications, and data necessary to perform their jobs. By removing unnecessary administrative privileges and regularly reviewing user permissions, organizations can reduce the risk of unauthorized access and limit the damage caused by compromised accounts or insider threats.

Organizations should regularly review their cybersecurity programs, stay informed about emerging threats, and evaluate whether their security controls are adapting to the evolving threat landscape.

Although INC Ransom was the most active ransomware threat group observed in August 2026, overall activity remained relatively distributed across the threat landscape, with approximately 30 unique ransomware and extortion groups, including both established and newly emerged actors, observed during the month. Alongside INC Ransom, Storm, DragonForce, Qilin, and The Gentlemen were among the top five most active threat groups, underscoring the continued diversity and competitiveness of the ransomware ecosystem.

Figure 1. Activity from the top 5 threat groups in August 2026 

Throughout the month, analysts at Arete identified several trends behind the threat actors perpetrating cybercrime activities: 

• August 2026 was a significant month for the emergence of new threat actors, with Arete identifying several previously untracked ransomware groups, including Storm, Dark Project, DireWolf, Morpheus, Orova, Spirals, Wallstreet Team, and Zawoo Team. This trend underscores the ongoing evolution of the threat landscape and the low barriers to entry for new cybercriminal operations. 

• Arete observed a continued use of AI-enabled capabilities across the ransomware ecosystem during August. Similar to Fulcrumsec and Setra, the newly emerged Zawoo Team appears to leverage AI-assisted analysis of stolen data, publishing highly structured and detailed victim assessments on its data leak site (DLS). Additionally, both the Aurora and Storm ransomware groups have been observed utilizing AI-driven or AI-assisted chat representatives during victim communications. These developments suggest that threat actors are increasingly incorporating AI to enhance data analysis, automate victim engagement, and improve the effectiveness and scalability of extortion operations. 

• In August, Arete also observed that despite sustained law enforcement disruption efforts, LockBit continues to demonstrate operational resilience, likely through the expansion of its affiliate ecosystem and the evolution of its tactics. Recent activity indicates an increased reliance on data theft and exfiltration-only operations, with observed victimology suggesting a notable focus on organizations within the financial sector. 

Sources

• Arete Internal