Cleo Harmony Data Breach: Zero-Day Vulnerabilities Expose Critical Supply Chain Data

In a significant escalation of cyber threats targeting supply chain operations, Huntress security researchers have uncovered a sophisticated advanced persistent threat (APT) attack that exploited vulnerabilities in Cleo Harmony’s managed file transfer (MFT) software. Discovered on December 3, 2024, claims of data theft for 10 customers have already been published by the Termite ransomware group, exposing sensitive data and disrupting critical business operations across industries. Over 400 customers are believed to be vulnerable.

The incident underscores the high-stakes nature of file transfer security in modern supply chains. As businesses increasingly rely on interconnected systems to manage sensitive data, the consequences of failing to secure these systems are catastrophic. Attackers exploited two zero-day vulnerabilities to execute this campaign, bypassing fundamental security controls and exposing the weaknesses inherent in legacy MFT solutions.

The Cleo Harmony breach demonstrates how supply chain operations, a cornerstone of global commerce, have become prime targets for cybercriminals. Data theft and operational disruption have far-reaching implications, not just for individual businesses but for entire industry sectors.

Kiteworks, a leading provider of secure file transfer solutions, emphasizes the importance of a hardened security architecture to defend against evolving cyber threats. This blog explores lessons learned from the Cleo Harmony breach, offering actionable insights into how organizations can protect their sensitive data and future-proof their operations against similar attacks.

Anatomy of the Zero-Day Cleo Harmony Attack

The Cleo Harmony breach was made possible by two critical zero-day vulnerabilities that attackers exploited to infiltrate managed file transfer (MFT) systems. Together, these vulnerabilities exposed fundamental weaknesses in Cleo Harmony’s architecture, enabling a series of escalating actions that compromised sensitive data and disrupted operations.

The first vulnerability allowed unauthenticated file uploads. This critical vulnerability enabled attackers to upload files without providing credentials, bypassing the most basic level of security. Once inside, the attackers exploited the second vulnerability: access to an “autorun” directory. Typically reserved for executing legitimate installation scripts, this directory automatically executed any file placed within it, including malicious ones.

The attack’s progression involved a carefully orchestrated deployment of PowerShell scripts, which executed upon reaching the autorun directory. These scripts connected to command-and-control servers, downloading additional payloads, including a malicious Java-based program known as Malichus. Malichus enabled attackers to exfiltrate sensitive data, maintain persistent access to the compromised systems, and execute remote commands for further exploitation.

The breach unfolded in a structured timeline, beginning with initial access through unauthenticated uploads and culminating in persistent malware deployment and data theft. Attackers leveraged this progression to maintain control over affected servers while evading detection.

At the core of this breach was the glaring authentication mechanism flaw. Authentication plays a pivotal role in secure file sharing by verifying user identities and restricting access to sensitive systems. Without proper authentication protocols, organizations leave their systems vulnerable to unauthorized actions, as demonstrated by this attack. The Cleo Harmony breach highlights the critical importance of implementing multi-factor authentication, content validation, and restricted access directories. These measures are essential for ensuring that only authorized users interact with sensitive systems, mitigating the risk of exploitation.

The second core problem was lax hardening: the hardening principles of disabling unused services and removing unused code were not followed with regard to the autorun directory. This breach clearly illustrates the reason for this principle, since it was trivial for an attacker to execute code remotely once they had penetrated the first line of defense. Cleo has since advised customers to disable autorun.

Scope of the Cleo Harmony Breach

The Cleo Harmony breach cast a wide net, affecting multiple products and versions within the Cleo Harmony ecosystem. Vulnerabilities were identified in Cleo Harmony, VLTrader, and LexiCom, with attacks targeting versions up to 5.8.0.23. These legacy versions lacked critical security updates, leaving them susceptible to exploitation by the Termite ransomware group.

Geographically, the breach had a global footprint, but its impact was particularly severe in North America. Of the 421 vulnerable servers identified worldwide, 327 were located in the United States, representing nearly 78% of all affected systems. This concentration highlights the critical role of North American infrastructure in global supply chains and the heightened risks associated with its compromise.

Key industry sectors bore the brunt of the attack. These included consumer goods, food manufacturing, logistics, and trucking—industries heavily reliant on managed file transfer systems to handle sensitive data such as inventory schedules, supply chain records, and financial transactions.

The implications for managed file transfer security are significant. This breach revealed the inherent vulnerabilities of legacy MFT systems that prioritize functionality over security. With cybercriminals increasingly targeting critical infrastructure, organizations must shift their focus to platforms designed with a security-first approach.

The Cleo Harmony breach serves as a wake-up call, underscoring the necessity of modernizing file transfer solutions. Organizations must prioritize platforms that integrate robust authentication, encryption, and real-time monitoring to protect sensitive data and ensure operational continuity in an evolving threat landscape.

Impact on Secure File Transfer Operations

The Cleo Harmony breach disrupted business operations across multiple industries, exposing the vulnerabilities of legacy MFT systems. Organizations that relied on compromised servers faced interruptions to their supply chains, as attackers exfiltrated sensitive data and caused operational delays. For businesses dependent on real-time data exchange—such as logistics providers and manufacturers—these disruptions had cascading effects, delaying shipments, halting production lines, and impacting downstream partners.

In addition to business interruptions, the breach resulted in significant data security compromises. Sensitive files, including proprietary information, financial data, and customer records, were exfiltrated to attacker-controlled servers. The loss of this data not only exposed affected organizations to reputational damage but also created compliance risks, particularly for companies operating under strict regulatory frameworks like GDPR or HIPAA.

The breach also illuminated broader vulnerabilities within global supply chains. With many organizations relying on interconnected file transfer systems, a single compromised node had the potential to disrupt operations across an entire network. This incident demonstrated how outdated MFT platforms can become the Achilles’ heel of otherwise robust supply chain systems.

Addressing these vulnerabilities requires a commitment to modern security measures. Zero-trust architecture ensures that every user and device must be authenticated and authorized before accessing sensitive systems. Multi-factor authentication (MFA) adds another layer of security, while granular access controls restrict user permissions to only what is necessary for their roles. Finally, encrypted file transfer protects data during transit, safeguarding it from interception or unauthorized access.

Modern MFT Security Requirements

The Cleo Harmony breach underscores the urgent need for modern security measures in MFT systems. Legacy platforms, designed primarily for functionality, lack the robust security features required to defend against today’s sophisticated threats. Organizations must adopt MFT solutions that integrate advanced capabilities to ensure secure and resilient data transfer operations.

Hardening best practices and an assume-breach architecture are essential to slow or prevent this type of attack. Layers of defenses should prevent access to internals of the system, but if access is obtained by attackers, more layers of defenses should be in place internally. Unused services, such as the autorun in this Cleo case, must be disabled, and if possible, the code should be removed from the system.

Multiple forms of intrusion detection are essential. All these methods become difficult with installer-based products where the customer has control of the operating system, leaving them to provide the hardening, run penetration tests, and drive a bounty program. On the other hand, delivering the product as a hardened virtual appliance enables the vendor to provide and validate these layers of protection and prevents the customer from installing any vulnerable software, even when running the system on their own premises as is typical for MFT.

Content-aware protection adds another layer of defense by automatically identifying and classifying sensitive files based on their content. This capability ensures that confidential documents, such as those containing personal identifiable information (PII) or financial records, receive appropriate security safeguards during transfer and storage.

Advanced threat protection is critical for identifying and mitigating potential risks in real time. Threat detection tools integrated into MFT systems can analyze file transfer patterns for anomalies, such as unusual file sizes or access attempts, and take proactive measures to block malicious activities.

Secure file sharing protocols, such as protected transfer pathways, are essential to safeguarding data in transit. These protocols ensure that sensitive files cannot be intercepted or altered during transmission.

Modern MFT platforms must also integrate seamlessly with existing security tools, such as Security Information and Event Management (SIEM) systems, to provide comprehensive threat visibility. Additionally, compliance tools that align with regulations like GDPR, HIPAA, and SOC 2 are non-negotiable, ensuring that organizations meet legal and industry standards.

Blue Yonder Supply Chain Attack

The Cleo Harmony breach had a devastating impact on Blue Yonder, a leading supply chain software provider. Attackers exfiltrated an astounding 680 GB of sensitive data from Blue Yonder’s systems. This data included proprietary supply chain information, partner agreements, and potentially customer-sensitive records, exposing the vulnerabilities in outdated MFT systems.

The downstream impact of this breach was significant. Companies relying on Blue Yonder’s services, including Starbucks and several grocery chains, experienced operational delays, disruptions in inventory management, and cascading effects on their supply chain workflows. For organizations dependent on real-time data to coordinate manufacturing and logistics, these interruptions underscored the critical risks posed by insecure file transfer systems.

The implications of the breach extend beyond operational disruption. It highlighted the interconnected nature of supply chains and how a compromise at one node can ripple across an entire network. Businesses that trusted Blue Yonder to protect their sensitive information were left grappling with reputational damage and compliance risks.

Preventing such breaches requires a secure MFT implementation built on a zero-trust architecture. Features like end-to-end encryption, multi-factor authentication, and content-aware protection ensure that sensitive data remains secure throughout the transfer process. Additionally, robust compliance tools and real-time threat detection capabilities are essential to safeguarding supply chains from future attacks.

Technical Deep Dive: Attack Chain & Prevention

The Cleo Harmony breach unfolded through a structured and deliberate attack chain that exploited systemic weaknesses in legacy MFT platforms.

Attackers began by leveraging an unauthenticated file upload vulnerability to place malicious files into Cleo Harmony’s servers. This critical flaw allowed unauthorized actors to bypass basic access controls. The second stage involved placing these files into an “autorun” directory, which automatically executed the uploaded files without validation. These files initiated PowerShell scripts that downloaded additional payloads, including the Malichus malware.

Malichus enabled persistent access to compromised systems, allowing attackers to exfiltrate data, issue remote commands, and escalate their presence within affected networks.

Preventing such attacks requires addressing specific vulnerabilities with robust security controls:

1. Authentication Systems: Multi-factor authentication ensures that only authorized users can interact with MFT platforms. This layer of verification significantly reduces the risk of unauthorized access.
2. File Upload Validation: Comprehensive file validation protocols must be in place to examine the content and integrity of uploaded files. Suspicious files should be flagged or quarantined automatically.
3. Directory Access Management: Protected directory structures prevent malicious files from executing automatically. Autorun functionality must be restricted to trusted and verified files.
4. Audit Logging: Detailed logs of all file operations provide visibility into system activities, enabling rapid detection and response to anomalies.

A hardened security architecture that integrates these controls ensures that vulnerabilities like those in Cleo Harmony cannot be exploited. Modern MFT platforms built on zero-trust principles are critical to preventing similar breaches in the future.

Securing Enterprise File Transfer

Enterprise file transfer security has become an essential component of organizational risk management. Modern MFT systems must meet stringent requirements to counter today’s sophisticated cyber threats. A zero-trust implementation forms the foundation of a secure MFT system, ensuring that every user and device is authenticated and authorized before accessing sensitive data.

Continuous monitoring and real-time threat detection provide an additional layer of defense by identifying unusual activities and neutralizing potential risks before they escalate.

Kiteworks offers a comprehensive security framework that addresses these challenges, combining zero-trust principles, advanced threat protection, and compliance tools. By integrating robust authentication and content-aware protection, Kiteworks empowers organizations to secure sensitive file transfers while maintaining operational efficiency. Importantly, it delivers Kiteworks as a pre-hardened virtual appliance, with built-in network firewall, a WAF tuned for Kiteworks use cases and attack vectors, and an assume-breach architecture that prevents software installation, detects unexpected process runs, disables unused services, removes unused code, enforces zero trust principles between internal components, and detects and warns on many types of intrusions.

Strengthening File Transfer Security to Prevent the Next Cleo Harmony Breach

The Cleo Harmony breach underscores the vulnerabilities of legacy file transfer systems and the pressing need for secure alternatives. Exploiting zero-day flaws, the Termite ransomware group revealed systemic weaknesses that exposed organizations to data theft and operational disruption.

Secure file transfer has become a business imperative. Organizations must prioritize platforms that embed robust security features, enabling them to share sensitive data confidently and stay ahead of evolving cyber threats. Kiteworks offers the advanced tools and architecture needed to meet these demands, providing a reliable path to secure, future-proof file transfer operations.

Additional Resources

• Brief How to Harness the AI Evolution and Combat Data Leakage With Kiteworks
• Brief Ways to Navigate the EU-U.S. Data Privacy Framework
• Brief When You Positively, Absolutely Need the Most Secure MFT
• eBook Top 10 Trends in Data Encryption
• eBook 15 Use Cases Supporting HIPAA Compliance With Kiteworks