Developers, it’s time for a critical check of your tools. A new report today has highlighted a dangerous new threat found inside the official Visual Studio Code Extension Marketplace: a malicious extension with built-in ransomware capabilities that appears to have been created with the help of AI.

The extension, published under the name "susvsex" by a user named "suspublisher18," was flagged by security researchers for its blatant and malicious functionality. The publisher even included the description "Just testing," making a poor attempt to hide its true nature. Microsoft has since stepped in and removed the extension from the marketplace.

While this specific threat has been removed, it represents a dangerous new reality. The extension was designed to automatically activate the moment a user launched VS Code. Once active, it would immediately begin a malicious function: it would zip up all files in a target directory, upload that .zip archive to a remote server, and then encrypt the original files on the victim's machine, effectively holding them for ransom.

What makes this incident particularly alarming is its "vibe-coded" nature—a term researchers used to describe code that was clearly generated or assisted by AI. The extension also used a clever command-and-control (C2) method, polling a private GitHub repository to receive new commands. This allowed the attacker to potentially change the target directory from a "testing" folder to a user's entire C: drive at any time.

This event is a stark reminder that the tools developers trust every day are a high-value target for attackers. Even the official VS Code Marketplace is not immune. This incident proves that AI is lowering the barrier for entry, allowing malicious actors to quickly generate and deploy functional malware.

All developers should take this as a warning. Be extremely cautious when installing new extensions, even from the official marketplace. Always check the publisher's reputation, the number of installs, and the reviews. If an extension seems new, has few users, or a suspicious name, it's best to avoid it.