Texas-based cybersecurity firm, Halcyon, has accused Cloudzy, a cloud service provider, of enabling state-sponsored hacking operations. Their report claims Cloudzy rents server space to malicious actors in countries like China, Russia, Iran, and North Korea, potentially facilitating espionage and extortion.

Cloudzy CEO Hannan Nozari vehemently denies these accusations. He compares his company to a “knife factory,” arguing they cannot be held responsible for how clients use their services. He claims only 2% of Cloudzy’s customers are malicious.

However, Halcyon estimates nearly half of Cloudzy’s business is illicit, including services provided to ransomware groups. Their investigation involved directly renting servers from Cloudzy and tracing connections to known hacking activities.

Another cybersecurity firm, CrowdStrike, hasn’t observed state-sponsored hackers using Cloudzy, but acknowledges other cybercrime activities linked to the company.

Cloudzy’s location remains unclear. While registered in the US and Cyprus, Halcyon believes it’s a front for another Iranian-based company, abrNOC, run by Nozari. Nozari refutes this, claiming Cloudzy and abrNOC are separate entities.

The lack of transparency and minimal customer verification procedures raise concerns. Adam Meyers of CrowdStrike highlights a pattern among small virtual private server providers who offer anonymous web hosting for cryptocurrency payments.

This incident underscores the complexities of the online security landscape, where small businesses can unwittingly become tools for cybercriminals. Further investigation is needed to determine the extent of Cloudzy’s involvement and the potential risks it poses.