A widely active phishing-as-a-service (PhaaS) operation known as FlowerStorm has begun using a browser-based virtual machine to conceal credential theft code, marking what researchers say is an escalation in phishing-kit sophistication that could make attacks harder for traditional email and static-analysis tools to detect.Researchers at Sublime Security said in April that they identified the campaign, which used KrakVM, an open-source JavaScript virtual machine recently published on GitHub, to obfuscate malicious code delivered via HTML attachments in phishing emails.The campaign targets credentials and multi-factor authentication (MFA) codes for services including Microsoft 365, Hotmail, and GoDaddy, while also supporting adversary-in-the-middle (AiTM) interception techniques designed to hijack authenticated sessions.“What makes this campaign notable is the adoption of KrakVM as a delivery wrapper within a month of the project’s public release,” the researchers wrote in a report.The findings highlight how phishing operations are increasingly adopting techniques traditionally associated with sophisticated malware campaigns, including virtualized execution environments and layered obfuscation frameworks.Browser-based VM used to hide phishing payloadsAccording to the report, victims receive phishing emails containing HTML attachments disguised as voicemail notices, invoices, or vendor communications. When opened in a browser, embedded JavaScript immediately launches a credential-harvesting workflow tailored to the victim’s environment.The attack chain uses KrakVM to compile malicious JavaScript into encrypted bytecode, which is executed through a virtual machine running inside the browser.“KrakVM compiles JavaScript into unreadable bytes,” the researchers wrote, adding that the virtual machine then interprets and executes the payload at runtime.The approach adds multiple layers of obfuscation designed to complicate static analysis and evade traditional email-security tooling.While virtual-machine-based obfuscation has long been used in malware packers and software protection systems, its adoption inside large-scale phishing kits appears far less common.The campaign dynamically adapts to victimsAfter deobfuscation, the phishing payload loads infrastructure designed to impersonate Microsoft 365 and other login portals while dynamically adapting to targeted users.According to the report, the malware can determine which authentication provider should be impersonated, preload victim email addresses into phishing pages, and customize branding elements such as company logos and backgrounds.The phishing kit also enumerates MFA methods registered on victim accounts, including Microsoft Authenticator push notifications, TOTP codes, SMS authentication, and voice verification flows.When the victim enters credentials, the kit forwards them to a command-and-control server, which attempts a real login against the target service. If the service prompts for MFA, the kit presents the victim with a matching prompt, captures the response, and forwards it to complete the attacker’s session.Researchers said the framework supports real-time AiTM interception, allowing operators to relay authentication sessions while harvesting credentials and MFA tokens.“A widely known unique feature of FlowerStorm is its capability for advanced AiTM and MFA interception,” the report said.Detection challenges grow for defendersThe combination of VM-based obfuscation and AiTM-capable payload creates a detection gap for email security tools.Sublime Security said its own Autonomous Security Analyst system identified the attack as malicious, partly because of the HTML attachment’s use of “heavily obfuscated JavaScript with custom virtual machine bytecode.”The researchers also noted that both KrakVM and FlowerStorm appeared to operate close to their default configurations, suggesting the campaign did not require advanced technical sophistication from operators.That raises concern that VM-based obfuscation techniques could spread quickly across phishing ecosystems if tooling becomes easier to operationalize, the report added.The broader phishing ecosystem is evolvingThe campaign has targeted sectors including local government, logistics, retail, communications, and real estate, according to the report. Researchers also identified infrastructure using domains designed to resemble court systems, enterprise portals, and Microsoft-related services.Sublime published 153 indicators of compromise, including dozens of subdomains on cloud object storage services across regions, including Singapore, Bangkok, Frankfurt, Tokyo, Seoul, Jakarta, and Ashburn.The researchers also identified domain naming patterns that overlap with prior FlowerStorm reporting, including German-language domains assembled from English words to mimic legitimate business names.Sophos had documented FlowerStorm in December 2024, after the kit emerged following a disruption to the Rockstar2FA phishing service. The researchers said they had found no evidence linking the KrakVM developer to FlowerStorm operations.The findings come as security teams face increasingly sophisticated phishing campaigns that blend credential theft, MFA interception, session hijacking, and anti-analysis techniques into unified attack chains.“This campaign likely represents only the earliest use of KrakVM’s obfuscation capabilities,” the researchers wrote. “We anticipate more complex implementations as its adoption grows.”