$500K was stolen through a fake IDE extension

#ai #devops #cursorai #vscode

In July, $500K was stolen through a fake IDE extension. No 0days — just blind trust in a marketplace. Here’s why every fintech should care and what you can fix in 48 hours

In July 2025, a fake “Solidity Language” plugin appeared on the Open VSX marketplace for the Cursor IDE. The extension executed malicious code, downloaded a backdoor, and enabled attackers to steal crypto assets. The attackers used search manipulation and boosted download counts to make the fake plugin look trustworthy.

What exactly happened

A blockchain developer installed the fake “Solidity Language” plugin from Open VSX into Cursor IDE. The name fully matched the legitimate one.
Inside the plugin, an extension.js file launched a PowerShell script that downloaded additional components: a RAT (Quasar) and a targeted stealer designed to locate and exfiltrate private keys and other secrets.
Result: attackers gained access to crypto assets, and about $500K was drained from the wallet.

Attack chain: how it worked

Search spoofing & social engineering
The attackers uploaded a plugin with the same name and nearly identical metadata. They spoofed the author name (juanbIanco vs juanblanco — uppercase “I” vs lowercase “l”), and in Cursor’s font those characters were visually indistinguishable. Users had no easy way to tell the fake apart. (securelist.com)

Ranking manipulation
Fake download activity boosted the malicious extension above the real one in search results.

Malicious execution
Once installed, the plugin executed extension.js, launched a PowerShell script, downloaded Quasar RAT and a stealer, and deployed additional modules.

Environment exploitation
Because the developer stored private wallets and project secrets locally, the attackers extracted keys and moved funds.

Why this matters to CTOs, CEOs and dev teams in fintech/crypto

Open VSX does not enforce thorough security checks before publishing extensions — this is why such incidents slip through.

What to do:

1.Don't rely on names or download counts
Attackers mimic legitimacy with metadata and ranking manipulation.

2.Restrict extension privileges
Block or sandbox extensions that can run arbitrary code/scripts without explicit approval.

3.Never store keys/seeds in IDE environments
Use hardware wallets, secure VMs or enclaves. Keep production secrets off dev machines.

4.Create a company-wide extension policy
Centralized whitelists/blacklists. Only allow installs from an internal catalog.

5.Enable monitoring and EDR
Track PowerShell execution, unusual network behavior and extension scripts.

6.Secure CI/CD and dependencies
Use SCA scanners, version pinning, checksum validation and supply chain controls.

## And there’s another trend making this worse: AI-driven development
Apiiro analyzed tens of thousands of repos written by developers from Fortune 50-related companies. Key findings:

AI assistants reduce syntax errors by 76% and logic mistakes by 60%.
But AI-generated code contains: 322% more vulnerabilities that enable privilege escalation; 153% more architectural security flaws.

AI fixes typos — but also unknowingly inserts ticking time bombs. With faster code output and wider use of helper tools like Cursor, the number of hidden vulnerabilities and risky extensions will only grow.
This incident is a clear example of how supply chain trust and developer tooling choices translate directly into financial losses and reputation damage. For crypto, fintech and SaaS companies, this is a signal to act systemically: DevSecOps + supply-chain control + extension/security governance.