A new vulnerability in Bitcoin hardware wallets called “Dark Skippy” has been found by security researchers. The Trojanized module actually uses a brute force method to steal private keys by directly planting the parts of the user’s seed words in public Bitcoin transactions while leveraging malicious firmware. From there, attackers can leverage smart algorithms that reconstruct the seed words and end up gaining full control of the wallet. Dark Skippy can perform its attack with only two, whereas other methods may require hundreds. Authentication vulnerabilities and hardware fixes are two of the primary ways to address this, according to researchers.
What is Dark Skippy?
Dark Skippy is a nifty assault that lets cyber criminals acquire your bitcoins money with even greater facility and requires only two transactions without touching the wallet itself. In this manner, all hardware wallets are vulnerable if the attacker is able to convince the user to load their trojan firmware.
The attack involves embedding fragments of the user’s seed words into public nonces for transaction signing. Now that you know the attacker has posted an indexed one, they can just retrieve used nonces and run Pollard’s Kangaroo Algorithm to get your full set of seed words.
How It Works?
The attack, called Dark Skippy by CoinKite, takes advantage of the wallet’s firmware and can be exploited to introduce malicious code. With this code in place, it subtly changes the nonces (random numbers applied when a user signs off on trading) to incorporate small pieces of the person’s seed phrase. At the point when a transaction hits the blockchain, these tampered-with numbers also hit the public area.
By scanning the blockchain and decomposing these nonces, attackers can deduce your seed phrase through an extremely advanced cryptographic means known as Pollard’s Kangaroo Algorithm. Worse, Dark Skippy can succeed with only two signed transactions and significantly reduce the window to detection.
Old weaknesses and contrasts
However, Dark Skippy is not exactly new; it’s a more advanced stage of current attacks on Bitcoin wallets. Prior proposed methods relied on nonce grinding—another, more cumbersome, and slower process that required multiple transactions.
It also happens to be among the most effective and subtle of what Dark Skippy can do.
Impact on Wallet Users
Dark Skippy also reveals the need for more security infrastructure on both hardware wallets with allable signSHA256 and cashier side. Manufacturers are encouraged to employ secure boot processes, have locked JTAG/SWD interfaces, and produce special vendor-signed firmware builds that can be reproduced as required.
Users should therefore be wary of downloading firmware from unknown third parties, and look into whether further countermeasures could prevent this type of attack in their hardware wallet. Additional safeguards include anti-exfiltration signing protocols that make it impossible for the hardware wallet to generate its own data.
Impacts on the Cryptocurrency Ecosystem
This is a huge vulnerability. While Dark Skippy is a currency-agnostic framework, in practice, if such techniques are widely used, the potential financial losses for those holding cryptocurrency could be substantial. The disclosure has already prompted discussions on the future sustainability of existing hardware wallet designs and improved security controls.
Another related attack saw thieves steal over 900,000 USD worth of BTC after exploiting a security vulnerability in the Libbitcoin explorer library, again being another example to highlight how unregulated and unstable it is for companies that deal with server hosting or wallet services.
Furthermore, Dark Skippy sheds light on the changing threat landscape of crypto. Because the method can sidestep many conventional security controls, both in built and during OP (e.g., seeding or beaconing), manufacturers as well as users will have to become proactive when it comes to prevention strategies. While the vulnerability itself is not new, its method of exploitation is, which makes it a major issue for the Bitcoin community, as highlighted in this report.
