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Hidden Dangers: How Malicious Firmware Can Steal Your Bitcoin Seed Phrase

Writer's picture: Blockonome GnomeBlockonome Gnome

A new attack vector, Dark Skippy, highlights vulnerabilities in Bitcoin hardware wallets by exfiltrating seed phrases through transaction signatures.



A recently discovered attack vector named Dark Skippy poses a significant risk to Bitcoin hardware wallets by extracting the master seed phrase using malicious firmware. This method, which relies on deterministic nonces in transaction signatures, requires only two transactions to leak the entire seed phrase.


Dark Skippy leverages compromised firmware to manipulate the signing process. Typically, Bitcoin transactions use a randomly generated nonce during the Schnorr signature process. However, in devices compromised by Dark Skippy, the firmware uses low-entropy nonces derived from the master seed. By embedding parts of the seed phrase into transaction signatures, the attacker can reconstruct the entire seed after observing two transactions.


The compromised firmware can be installed through various means, such as malicious firmware updates or pre-compromised devices distributed via supply chains. Once in place, the firmware embeds secret data within public transaction signatures, effectively using the blockchain as a covert channel to leak sensitive information.


Attackers monitor the blockchain for transactions with specific watermarks indicating the presence of embedded data. Using algorithms like Pollard’s Kangaroo, they can retrieve the low-entropy nonces from the public signature data, reconstruct the seed, and gain control over the victim’s wallet.


Robin Linus, credited with discovering Dark Skippy, highlighted the attack's potential during a Twitter discussion last year. Subsequent investigations confirmed the feasibility of extracting a 12-word seed with minimal computational resources, showcasing the attack's effectiveness and subtlety.


To mitigate such attacks, implementing 'anti-exfil' protocols in signing devices is crucial. These protocols can help prevent unauthorized leaking of secret data. However, continuous development and rigorous implementation are necessary to stay ahead of evolving threats.


The cryptographic community and device manufacturers must address these vulnerabilities promptly to protect users from exploits like Dark Skippy. Users should ensure their devices run genuine firmware and are sourced from reputable vendors to minimize compromise risks. Additionally, multi-signature setups can provide extra defense against this attack vector.


photo source / Blockonome

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Blockonome's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.

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