Description

ToddyCat APT has expanded its cyber-espionage tactics to target Microsoft 365 and on-premises Outlook environments. The group has been observed stealing cloud emails by extracting OAuth 2.0 tokens from memory and copying locked OST files directly from victim machines. By combining these methods, the attackers gained persistent and covert access to both local mailbox archives and Microsoft 365 cloud accounts without triggering standard authentication alerts. The attack is effective because ToddyCat uses a multi-stage acquisition strategy. First, it deploys credential-harvesting tools capable of collecting browser data, cookies, saved credentials, and DPAPI keys. It then uses a custom utility to perform block-level disk reads, enabling the copying of Outlook OST files even when they are locked by Outlook. For cloud targeting, ToddyCat scans processes such as Outlook and Teams to locate in-memory OAuth tokens, which allow the attacker to authenticate to Microsoft 365 services from an external machine. These tokens bypass normal MFA protections, granting full mailbox access. Organizations can reduce risk by enforcing strict endpoint hardening, including blocking raw-disk-read tools and monitoring for unauthorized credential-harvesting utilities. Memory-protection policies, conditional access rules, and automatic revocation of OAuth refresh tokens should be enabled to prevent token misuse. Cloud access logs should be continuously monitored for suspicious Graph API or IMAP activity, especially from unusual IP addresses. Regular rotation of credentials, least-privilege access policies, and strong segmentation further reduce the attack surface.