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>Resetting an infected device will remove the Wifatch malware Best. Malware. Ever.

As long as it's not on the chips I guess you're right.

Question I got afterwards was: Apart from disabling telnet, what kind of long-term modifications are made to the system?

I don't mind a nice vigilante "malware" that disables out-of-date daemons, but I mind if suddenly it added an opening for something else.