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‘BitForge’ security flaw to threaten Binance, Coinbase, and other crypto exchanges 

BitForge

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TL;DR

  • Fireblocks identified “BitForge” vulnerabilities in over 15 major cryptocurrency wallets, highlighting potential risks to user funds on platforms like Coinbase and Binance.
  • The BitForge flaws target security methods called MPCs, allowing faster unauthorized access to secured assets if exploited.
  • Despite the challenges posed by BitForge, industry giants like Coinbase promptly addressed the concerns, showcasing the crypto-sector’s commitment to user security.

Recent revelations indicate that a host of leading cryptocurrency wallet providers were susceptible to potential security breaches. These vulnerabilities, now known as ‘BitForge’, have highlighted the inherent cyber risks in the cryptocurrency realm, even as the world grapples with increasing adoption and tighter regulatory oversight.

Cybersecurity company Fireblocks presented its findings at the Black Hat USA conference, disclosing that over 15 predominant cryptocurrency wallets, making up over 80% of the market, were affected. These vulnerabilities could have easily been harnessed to compromise user funds on celebrated exchanges, including Binance and Coinbase.

These security flaws primarily targeted multiparty computation protocols (MPCs). MPCs typically fracture private keys into multiple fragments, dispersed over different devices. This method should ideally bolster security. However, it was discovered that certain implementations of MPCs made it feasible for malicious actors to access the full key after merely 16 transactions. Such rapid-fire transactions could occur within seconds on high-frequency wallets.

Fireblocks’ CEO, Michael Shaulov, explained the simplicity of exploiting these vulnerabilities. He remarked, “The BitForge vulnerabilities operate in line with common cyber-attack mechanisms. A single compromised user through malware is all that’s needed.” This underscores the ever-present threat of malware, often delivered via phishing scams designed to deceive users into downloading malevolent software or revealing sensitive data.

This vulnerability’s disclosure comes amidst a mixed landscape of crypto crimes. While the overall figure was down 65% to $3.3 billion in H1 2023 from 2022, ransomware attacks – malicious software that encrypts a victim’s files and demands payment for their release, typically in cryptocurrency – are rising sharply. These are predicted to nearly touch $900 million this year, only slightly behind 2021’s $940 million.

The international community and regulatory bodies have long been apprehensive about cybersecurity linked to digital assets. Given the burgeoning incidents of cryptocurrency thefts, many governments are ramping up efforts to integrate digital assets and their providers within a regulatory framework. As an illustration, Hong Kong’s Securities and Futures Commission (SFC) now necessitates cryptocurrency exchanges operating within its jurisdiction to acquire a license. This move seeks to impose benchmarks in cybersecurity, private key management, and other areas.

However, uncertainties remain. While Fireblocks has pinpointed vulnerabilities in a significant number of wallet providers, determining the exact number affected by these flawed MPC implementations remains elusive.

A deep dive into BitForge

Fireblocks’ research pinpointed vulnerabilities in implementations of certain multi-party computation (MPC) protocols, specifically GG-18, GG-20, and Lindell17. These vulnerabilities were traced back to deviations from standard implementations or previous efforts to patch known flaws.

Notably, GG-18 and GG-20 protocols faced issues where earlier attempts to rectify vulnerabilities inadvertently introduced newer ones. Lindell17’s flaw, on the other hand, revolved around deviations from the original academic specifications and mishandling of failed signatures.

As a testament to industry collaboration, Fireblocks undertook a 90-day disclosure process. Their endeavors were met with a proactive response. Leading wallet providers, particularly Coinbase WaaS and Zengo, were commended for their swift action in addressing and rectifying the security flaws.

As digital currencies continue to weave themselves into the world’s financial fabric, it’s evident that maintaining cybersecurity will remain a top priority for providers and regulators alike.

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Mohammad Shahid

An IT and Cybersecurity graduate with specialized knowledge of cryptocurrency and blockchain, Mohammad joins the Repo elite team. He has worked on several blockchain development projects and is an enthusiastic crypto trader.

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