The MIT Review is reporting the hacking group, known as APT1 or Comment Crew, thought they were hacking a water control system for a US municipality, but it was merely a decoy set up by Kyle Wilhoit, a researcher at security firm Trend Micro.
Wilhoit told attendees at the Black Hat conference in Las Vegas that his company has been busy setting up 'honeypots' in order to catch hackers.
"You would think that Comment Crew wouldn’t come after a local water authority", Wilhoit told the MIT Review.
"I actually watched the attacker interface with the machine. It was 100 percent clear they knew what they were doing."
According to Wilhoit the trap mainly attracted cyber-criminals from Russia and from the US.
The incident has led Wilhoit to believe that other utilities around the world may have already been infiltrated by hackers, and that engineers working at these facilities may not realise that their systems have been compromised.
He also told attendees that around 12 other decoys attracted some 74 deliberate attacks from APT1 and other groups, 10 of which were able to completely control the fake water plants.
The attacks reportedly occurred before the US opened talks with China over cyber security.