Introduction

NTLM (New Technology LAN Manager) has been a cornerstone of Windows network authentication for decades, but its legacy status comes with significant security risks that have grown more critical in 2023. Recent vulnerabilities, such as CVE-2025-24054, have exposed critical weaknesses that attackers can exploit to harvest NTLM hashes and launch sophisticated credential theft attacks. This article explores the risks associated with NTLM, the implications for Windows networks, and concrete steps organizations should take to protect themselves.

Background on NTLM and Its Security Challenges

NTLM is an authentication protocol that enables Windows users to authenticate themselves in network environments. While once sufficient, NTLM has several inherent vulnerabilities:

  • Weak Encryption: Older versions like NTLMv1 use outdated cryptography (DES-based hashing), which is trivial to crack today.
  • Replay and Relay Attacks: Attackers can intercept and reuse NTLM hashes to impersonate users and access resources without knowing the actual password.
  • Lack of Forward Secrecy: Compromise of NTLM credentials can expose past communications and sessions.

Microsoft has long recommended migrating away from NTLM towards more secure protocols like Kerberos, yet many enterprise environments still rely on NTLM for legacy support. In 2023, Microsoft further deprecated NTLMv1 and encouraged adoption of Negotiate Authentication combining Kerberos and NTLMv2 mechanisms.

The Critical Vulnerability CVE-2025-24054

A recently disclosed vulnerability, CVE-2025-24054, enables attackers to exploit Windows' handling of SCF files (Shell Command Files). Here's how it works:

  1. Attackers craft malicious SCF or .library-ms files that specify attacker-controlled file names or paths.
  2. When a user views a folder containing such files in Windows Explorer or unzips malicious archives,
  3. Windows NTLM authentication attempts out via SMB leak the user's NTLM hash to an attacker-controlled server.

This minimal user interaction attack can swiftly compromise authentication hashes, which attackers use to perform pass-the-hash and relay attacks.

The exploit has been observed in wide-reaching campaigns targeting government and private sector entities, with exfiltration servers linked to sophisticated threat actors like APT28 (Fancy Bear).

Implications for Windows Networks

The risks are severe and include:

  • Credential Theft and Lateral Movement: Attackers can spread within networks using stolen hashes, bypassing standard password verifications.
  • Network-Wide Trust Erosion: Compromising one account can jeopardize multiple systems due to trust relationships.
  • Compliance and Regulatory Exposure: Data breaches stemming from attacks can lead to substantial legal consequences.

Given NTLM's continued presence in many environments, vulnerabilities like CVE-2025-24054 function as a gateway for attackers to gain footholds and move laterally, posing a high risk of widespread compromise.

Protecting Your Windows Network in 2023: Best Practices

1. Immediate Patch Management
  • Deploy Microsoft's security updates addressing CVE-2025-24054 promptly.
  • Monitor the Microsoft Security Response Center for ongoing advisories.
2. Minimize NTLM Usage
  • Audit your network for legacy NTLM dependencies.
  • Transition to Kerberos authentication wherever feasible.
  • Implement Negotiate authentication as an interim step favoring Kerberos.
3. Enhance Network Segmentation & Access Control
  • Isolate sensitive systems into distinct network segments.
  • Limit lateral movement possibilities post-compromise.
4. Enforce Multi-Factor Authentication (MFA)
  • Add an additional authentication layer to reduce impact from stolen credentials.
5. Robust Monitoring & Anomaly Detection
  • Monitor SMB authentication attempts and NTLM hash usage for suspicious patterns.
  • Trigger timely alerts on abnormal activities.
6. User Education & Security Awareness
  • Train users on phishing risks and safe file handling.
  • Emphasize caution with unexpected file types or compressed archives.
7. Harden LDAP and Channel Bindings
  • Configure LDAP channel binding and signing to prevent rogue authentication relays.

Technical Insight: How the Patch Works

The patch for CVE-2025-24054 prevents the Windows system from leaking NTLM hashes when processing malicious SCF files by blocking unauthorized external control over file names or paths during SMB authentication.

This stops the exploitation chain that would otherwise send authentication hashes to attacker-controlled servers just by a user viewing a folder.

The Road Ahead: Moving Beyond NTLM

Microsoft’s roadmap includes further deprecating NTLM, especially NTLMv1, in favor of more secure methods:

  • Increased adoption of Kerberos as the standard authentication protocol.
  • Enhancements like Extended Protection for Authentication (EPA) to prevent relay attacks.
  • Momentum towards passwordless authentication technologies, including FIDO2 and biometrics.

While legacy systems complicate immediate transitions, organizations must plan strategic migrations to reduce reliance on NTLM for sustainable security.

Conclusion

NTLM, while historically crucial, has become an Achilles’ heel in modern Windows network security. The CVE-2025-24054 vulnerability and related attacks underscore the urgency of retiring legacy protocols and adopting layered protections. By staying vigilant with patch management, minimizing NTLM use, strengthening authentication methods, and educating users, enterprises can significantly reduce their exposure to credential theft and lateral movement attacks.

Resources and strategic investments today will safeguard business continuity and data integrity in an evolving threat landscape.