Kaspersky Lab has discovered and studied a non-trivial cyber incident. The attackers managed to steal 1.33 bitcoins from a hardware wallet (at the time of the study, in the amount of $29,585). Moreover, the theft took place when the device, disconnected from the Internet, was in the owner’s safe.
According to experts, hardware wallets are considered a safer way to store digital assets than software “hot” wallets, since separate USB devices must be connected to a computer to send cryptocurrency or interact with decentralized financial protocols.
To steal, the attackers had to physically open the device in advance, as well as make changes to the original firmware of the bootloader and the wallet itself. Externally, the hacked crypto wallet worked as usual, but the cybercriminals had already gained full control over it. The Lab said: Instead of ultrasonic welding, the halves of the wallet were filled with glue and fastened with double-sided tape. In addition, another microcontroller with modified firmware and bootloader was installed instead of the original one. Thus, it turned out that the victim bought a hardware wallet that was already infected, and at the time of purchase, the factory packaging and holographic stickers looked intact and did not arouse suspicion.
The attackers removed the control of protective mechanisms from the firmware. Also, at the initialization stage or when resetting the wallet, a randomly generated seed phrase was replaced with one of 20 pre-created and saved in the fraudulent firmware. Thirdly, if the owner set an additional password to protect the master key, only its first character was used. Thus, in order to pick up the key to a particular fake wallet, the attackers had to go through a total of 1280 options.
Stanislav Golovanov, cybersecurity expert at Kaspersky Lab, explained:
Although hardware wallets are considered one of the safest ways to store cryptocurrencies, attackers have found a way to hack them by selling infected or fake devices. Such attacks can be avoided. We strongly recommend purchasing such devices only from official and trusted sources in order to minimize the risks.