The issue comes from a default setting in Cursor. A safety feature called Workspace Trust is disabled by default when the program is first installed. As a result, certain task files can begin executing commands immediately when a developer opens a folder.

If a user adds a harmful task to a project and shares it online, those commands will run as soon as another person opens the folder in Cursor.

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Cursor is built on top of Visual Studio Code, which also includes the Workspace Trust feature. This tool is designed to protect developers from malicious code by blocking automatic tasks from unknown sources.

The vulnerability exploits the .vscode/tasks.json file, which can contain instructions to run tasks as soon as a folder is opened. Attackers can place these instructions in a shared project.

According to Erez Schwartz from Oasis Security, this behavior can lead to stolen credentials, changed files, or system access. It also increases the chances of supply chain attacks, where malicious code spreads through tools or projects used by many people.

To stay safe, users should take a few steps. First, they should enable Workspace Trust in Cursor to stop unknown tasks from running automatically. Second, it is advised to open untrusted projects using a different code editor, especially the .vscode folder, before using Cursor.

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Cole explained in an August 12 post on X that the issue began when he added an extension called “contractshark.solidity-lang” to his setup through Cursor AI.

This extension appeared safe, since it had a detailed description, a familiar icon, and had already been downloaded over 54,000 times.

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However, after installation, the software quietly accessed Cole’s local environment file. Within minutes, his private key was copied and sent to someone else.

The extension then allowed the attacker to access Cole’s wallet for three days. On August 10, all the funds in that wallet were removed. Cole explained that he had been working to finalize a smart contract when he added the tool, which led to the oversight.

Despite the breach, Cole did not lose much money. He only stores small amounts in easily accessible wallets used for testing, while his main assets are protected with hardware devices.

His investigation led him to reports from cybersecurity sources like Kaspersky and BleepingComputer, which linked the same extension to a larger theft campaign that has taken more than $500,000 from different victims.

As of now, the extension is still available on Cursor AI’s marketplace, and the publisher remains listed as a trusted source.

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