(SentinelLabs) From late June to mid-July 2024, a suspected China-nexus threat actor targeted large business-to-business IT service providers in Southern Europe, an activity cluster that we dubbed ‘Operation Digital Eye’. The intrusions could have enabled the adversaries to establish strategic footholds and compromise downstream entities. SentinelLabs and Tinexta Cyber detected and interrupted the activities in their initial phases. The threat actors used a lateral movement capability indicative of the presence of a shared vendor or digital quartermaster maintaining and provisioning tooling within the Chinese APT ecosystem. The threat actors abused Visual Studio Code and Microsoft Azure infrastructure for C2 purposes, attempting to evade detection by making malicious activities appear legitimate. Our visibility suggests that the abuse of Visual Studio Code for C2 purposes had been relatively rare in the wild prior to this campaign. Operation Digital Eye marks the first instance of a suspected Chinese APT group using this technique that we have directly observed.