Railway says breach led to $740,000 in fraudulent AI charges

Cloud hosting company Railway says attackers exploited a previously unknown vulnerability in its build infrastructure, accessing some files on host virtual machines. The company said the files included credentials used to authenticate to some internal systems.

According to Railway’s incident report, the attackers used those credentials to reach Temporal, its internal task management system. A copy of Railway’s codebase there revealed a misconfigured authentication mechanism that provided temporary cloud credentials. The attackers then accessed other internal systems, including credentials for a production database containing encrypted customer environment variables and information on how to decrypt them.

Railway said the attackers appeared mainly interested in API keys used by businesses to access paid AI services. The keys were used for coding agents and AI training pipelines, resulting in about $740,000 in fraudulent charges. Railway said it believes the keys may have been sold on the black market, possibly to support model distillation.

The company estimates environment variables from as many as 100,000 customer workspaces could have been decrypted, but stressed this is an upper limit, not a confirmed count of affected accounts. Railway said the attack began on October 20 at about 07:28 UTC and ended on October 21 at 09:24 UTC, after roughly 26 hours.

Railway says it has closed the exploited vulnerabilities, rebuilt affected infrastructure and rotated compromised credentials. It is seeking refunds from AI providers and says it will cover losses they do not reimburse.