Microsoft Will Finally Kill an Encryption Cipher That Enabled a Decade of Windows Hacks

Chinese crypto scammers and other well‑resourced threat actors who have spent years abusing a weak Windows authentication cipher are about to lose one of their favorite tools, as Microsoft prepares to retire the decades‑old RC4‑based mechanism that has quietly enabled widespread credential theft and network intrusions. The decision marks a rare instance where a long‑criticized cryptographic relic, tolerated for compatibility reasons, is finally being pushed off life support to close a structural weakness in the Windows ecosystem that attackers have reliably exploited for more than a decade.​

Microsoft is now moving to phase out support for the legacy RC4‑based encryption used in specific Windows authentication and network pathways, a cipher that cryptographers have considered broken for years due to biases in its keystream and well‑documented practical attacks. Introduced in the 1990s, RC4 persisted in Windows as a fallback option and as part of older NTLM and domain authentication flows, even as more secure AES‑based suites became standard elsewhere. In practice, this meant that once attackers captured authentication traffic relying on RC4, they could perform rapid offline cracking against weak MD4‑derived hashes, dramatically lowering the cost of turning intercepted packets into reusable credentials.​

For Chinese cybercrime crews focused on crypto fraud, this environment proved fertile ground. Investigations into Chinese‑linked crypto scams have repeatedly shown that the first step in many operations is the compromise of a corporate or government Windows account that can be leveraged for internal access. Using a mix of phishing, misconfigured services, and protocol downgrade tricks, these actors captured NTLM traffic, extracted hashes, and then used compromised credentials to move laterally, plant malware, and seize control of machines that would later support crypto‑related schemes. From there, they could host fake trading dashboards, run phishing campaigns from trusted email domains, and manage infrastructure used to launder stolen digital assets through layers of wallets and mixers.​

Security reports over the last several years have tied Chinese‑aligned groups to high‑profile intrusions in the United States and Europe where Windows authentication weaknesses, including reliance on RC4‑backed ciphers and legacy NTLM, played a central enabling role. Once inside, operators deployed tooling to harvest additional credentials, pivot to cloud resources, and silently maintain persistence while setting up channels for data theft and financial fraud. In many cases, stolen access was monetized not only through classic ransomware or extortion but also through business email compromise workflows that steered victims toward bogus investment platforms, resulting in multimillion‑dollar crypto losses.​

Microsoft’s own security documentation and the Microsoft Digital Defense Report 2025 underline how these financially motivated groups increasingly blend traditional network intrusions with highly polished scam ecosystems that live on messaging apps, social platforms, and underground marketplaces. The Windows layer is simply the reliable foothold: compromised domain controllers, SharePoint instances, or on‑prem servers give attackers a trusted launchpad to reach real users with fraudulent offers that appear to come from legitimate organizations. Weak encryption and aging authentication flows have effectively subsidized this business model by making it cheaper to steal and reuse credentials at scale.​

By announcing a clear deprecation timeline for RC4‑based support in Windows authentication, Microsoft is signaling that organizations can no longer postpone the move to stronger cipher suites and modern configurations. Administrators are being urged to audit their estates for any lingering RC4 or legacy NTLM dependencies, enable strict AES‑based Kerberos where possible, and apply current hardening guidance that disables weak protocol options by default. Systems that remain tied to RC4 after the cutoff risk both compatibility issues and increased exposure if administrators attempt ad‑hoc workarounds instead of fully modernizing their authentication stack.​

Security commentators have not minced words about the importance of this shift. One widely read security newsletter summarized the change by noting that “Microsoft just announced they're finally killing off RC4 encryption support by mid‑2026,” calling the aging cipher “a hacker's dream” that sat at the heart of countless Windows intrusions and downstream fraud campaigns. As Microsoft follows through on its plan, defenders gain a rare opportunity to slam shut a door that should have been closed years ago—provided they act quickly to align their environments with the new reality.