Visual Studio Code: Security Woes and How to Protect Your Development Environment

Visual Studio Code is often likened to a golden retriever—friendly, fast, and extremely popular among developers. However, this trust in the widely-used text editor was recently shaken by a serious issue regarding its security posture.

Recent Security Breach in VSCode Extensions

Cybersecurity researchers uncovered ransomware hidden within two extensions available on the VSCode Marketplace. These extensions were live for weeks or months before Microsoft eventually removed them. The extensions in question were named “ahban.shiba” and “ahban.cychelloworld.” Their names might sound suspicious, and that’s because they were.

Let’s dive deeper into what happened.

What Happened?

Researchers from ReversingLabs, a firm specializing in software supply chain risks, discovered that both extensions contained PowerShell scripts. These scripts were designed to connect to a remote AWS server without any user interaction. Once connected, they initiated a second-stage payload, which functioned as ransomware, possibly still in testing.

These extensions were available for download on the official VSCode Marketplace, which surprisingly failed to detect this malicious behavior during the submission process.

Timeline of Events

• October 27, 2024 – “ahban.cychelloworld” uploaded to the Marketplace.

• February 17, 2025 – “ahban.shiba” goes live.

• March 2025 – ReversingLabs reports the threat; Microsoft pulls both extensions.

  
  

While these malicious extensions were essentially in a test stage, they were still available for download in real developer environments.

Why This Matters to Developers and Organizations

Visual Studio Code is one of the most popular code editors in the world. With that popularity comes significant potential risks, as its extensions often have access to:

• Local files and folders.

• Terminal commands and environment variables.

• Credentials, API tokens, and cloud configurations.

  
  

When a malicious extension infiltrates such a trusted platform, it can:

• Encrypt files and demand a ransom.

• Steal sensitive information.

• Propagate through synced development environments or repositories.

  
  

This scenario is a classic supply chain attack—targeting one layer closer to the human developers responsible for software creation.

How to Protect Your Development Environment

The best practices for security are now critical survival tools. Here’s how you can protect your development environment effectively:

1. Audit Your Installed VSCode Extensions

   
   

   Regularly review your installed extensions. Remove anything that seems unfamiliar, unnecessary, or suspicious. Be particularly cautious with extensions that:

   
   

• Have a very low number of downloads.

• Use vague or untrustworthy publisher names.

• Have appeared recently without any credible history.




2. Monitor Outbound Connections

   
   

   Utilize endpoint security tools to monitor outbound connections from VSCode or its extensions. These tools can help you detect any attempts to reach unexpected external IP addresses or download remote content.

   
   

3. Lock Down Permissions

   
   

   Avoid running VSCode with administrator rights unless absolutely necessary. Additionally, restrict PowerShell usage for non-admin users whenever possible.

   
   

4. Stay Informed

   
   

   Keep up with trusted sources for security advisories. Subscribe to updates from:

   
   

• CISA Advisories

• GitHub Security Advisories

• ReversingLabs Threat Reports

Final Thoughts: Trust in the Marketplace Is at Stake

This incident involves more than just a rogue dependency hidden in a backend library. It involved actual ransomware on a first-party extension marketplace, published under Microsoft’s watch.

If Microsoft intends to maintain developer trust, it must take action. This includes:

• Tightening the review process for extensions.

• Improving automated malware detection.

• Increasing transparency regarding incidents like this.

  
  

Until substantial improvements are made, developers must remain skeptical, cautious, and perhaps a little paranoid.

Even your trusted text editor can pose risks. It’s crucial to audit your extensions regularly and stay vigilant. As users of technology, we owe it to ourselves to assure our security in an increasingly interconnected world.