Q1: Can you share some real cases of theft?
A1: SlowMist Security Team: Firstly, most cases occur because users store their private keys or mnemonic phrases online. For example, users often use cloud storage services such as Google Docs, Tencent Docs, Baidu Cloud, WeChat Favorites, or memo apps to store their private keys or mnemonic phrases. Once the accounts of these platforms are hacked and breached, the private keys can easily be stolen. Secondly, users downloading fake apps can also lead to private key leakage. For example, one common scam is the multi-signature scam, where scammers trick users into downloading a fake wallet and stealing the wallet’s mnemonic phrase. They then modify the account permissions of the user’s wallet, changing it from being solely owned by the user to being jointly held by the user and the scammer. They patiently wait for the user to accumulate a certain amount of cryptocurrency assets before making a one-time transfer. OKX Web3 Security Team: SlowMist has outlined the two main situations in which private keys are stolen. In the second case, scammers use fake apps to steal users’ private keys. These fake apps are essentially Trojan horses that gain access to users’ input methods, photos, and other permissions, ultimately leading to the theft of private keys. Android users are more susceptible to Trojan horse attacks compared to iOS users. Here are two case examples: 1. A user reported that their wallet assets were stolen. After communicating with our team, we discovered that the user had previously downloaded a data platform software from a Google search. However, the link to this software appeared in the top 5 search results on Google, leading the user to believe it was an official software. Many users do not verify the links provided by Google, making it easy for them to fall victim to Trojan horse attacks. We recommend that users take multiple security measures, such as using firewalls, antivirus software, and configuring their Hosts file, for daily security protection. 2. A user reported that their wallet assets were stolen while investing in a DeFi project. However, our analysis revealed that the DeFi project itself was not the issue. User B’s wallet assets were stolen because they were targeted by a fake customer service representative impersonating the official customer service of the DeFi project. The user clicked on a fake link provided by the impersonator and entered their mnemonic phrase, resulting in the theft of their wallet assets. It is evident that scammers’ methods are not sophisticated, but users need to be more discerning and never disclose their private keys in any situation. Additionally, our wallet is not connected to the internet at the underlying level to protect users’ wallet private keys. Users’ mnemonic phrases and relevant information are encrypted and stored locally on their devices. The related SDKs are also open-source and have undergone extensive verification by the technical community, ensuring transparency. Furthermore, our wallet has undergone rigorous security audits through collaborations with reputable security institutions such as SlowMist.
Q2: Is there an optimal way to store private keys? What alternative solutions are available to reduce reliance on private keys?
A2: SlowMist Security Team: Private keys or mnemonic phrases are actually single points of failure. Once stolen or lost, they are difficult to recover. Currently, new technologies such as Secure Multi-Party Computation (MPC), social authentication technology, Seedless/Keyless, pre-execution, and zero-knowledge proof technology are helping users reduce their reliance on private keys. Taking MPC as an example, firstly, MPC technology refers to complex joint computations performed by all participants to complete a task while keeping their data private and secure without sharing it with other participants. Secondly, in terms of MPC wallets, MPC technology is used to securely fragment a private key into multiple pieces that are managed by multiple parties, or multiple parties collectively generate a virtual key. The latter scenario is more common because in this case, no one has seen the complete private key. In summary, the core idea of MPC is to decentralize control to mitigate risks or enhance disaster recovery, effectively avoiding single points of failure and other security issues. It is worth noting that MPC involves a term called “Keyless,” which can be understood as “without mnemonic phrases” or “without private keys.” However, this “without” does not mean the actual absence of a key, but rather that users do not need to back up mnemonic phrases or private keys and are unaware of their existence. Therefore, in terms of Keyless wallets, it is important to understand the following three points: 1. During the creation of a Keyless wallet, private keys are not created or stored at any time or location. 2. Private keys are not involved in signing transactions, and private keys are never reconstructed at any time. 3. Keyless wallets never generate or store complete private keys or seed phrases. OKX Web3 Security Team: Currently, there is no perfect way to store private keys. However, our security team recommends using hardware wallets, physically writing down private keys, setting up multi-signature authentication, and storing mnemonic phrases in a decentralized manner to manage private keys. For example, storing mnemonic phrases in a decentralized manner means that users can split their mnemonic phrases into two or more groups for storage, reducing the risk of mnemonic phrase theft. Setting up multi-signature authentication allows users to select trusted individuals to jointly sign transactions to ensure security. To ensure the security of users’ wallet private keys, our OKX Web3 wallet is not connected to the internet at the underlying level. Users’ mnemonic phrases and private key-related information are encrypted and stored locally on their devices. The related SDKs are also open-source and have undergone extensive verification by the technical community, ensuring transparency. In addition, OKX Web3 wallet collaborates with reputable security institutions such as SlowMist to conduct strict security audits. Furthermore, to better protect our users, our OKX Web3 Security Team is continuously providing and planning more robust security capabilities, which are being iteratively upgraded. Here are some features we are developing: 1. Two-factor encryption: Currently, most wallets use password encryption for mnemonic phrases, storing the encrypted content locally. However, if a user’s device is infected with a Trojan horse virus, the Trojan horse can scan the encrypted content and listen to the user’s input password. If the password is intercepted by the scammer, they can decrypt the encrypted content and obtain the user’s mnemonic phrase. In the future, our OKX Web3 wallet will use two-factor encryption for mnemonic phrases, making it impossible for scammers to decrypt the content even if they obtain the user’s password through a Trojan horse. 2. Secure private key copying: Most Trojans steal information from users’ clipboards when they copy their private keys. We plan to enhance the security of the private key copying process, such as copying partial private keys and clearing clipboard information in a timely manner, to help users reduce the risk of private key information theft, etc.
In summary, for fishing websites, users can authenticate the official website of the project before interacting and pay attention to whether there are malicious signature requests during the interaction. Users should also be cautious about submitting mnemonic phrases or private keys and remember not to disclose them anywhere.
OKX Web3 Security Team: We have conducted research on common fishing methods and provided multidimensional security protection on the product side. Here are a few of the main fishing methods that users currently encounter:
The first type is false airdrops. Hackers usually generate addresses similar to the victim’s address and perform small amount transfers, 0U transfers, or airdrops of fake tokens to deceive users. These transactions will be displayed in the user’s transaction history. If the user accidentally copies and pastes the wrong address, it will result in asset loss. OKX Web3 Wallet can identify these historical transactions and mark them as risks, while providing security risk reminders when users transfer to these addresses.
The second type is induced signature. Hackers usually comment on well-known projects on Twitter, Discord, TG, etc., and release false DeFi project URLs or URLs for claiming airdrops to induce users to click and steal their assets. In addition to the signature fishing methods mentioned by SlowMist, there are also:
Method 1: Direct token transfer theft. Hackers often name malicious contract functions as Claim, SeurityUpdate, etc., with misleading names, but the actual function logic is empty, transferring only the user’s main chain tokens. The current OKX Web3 Wallet has launched a pre-execution function that can display asset changes and authorization changes after a transaction is on the chain, providing security risk reminders to users.
Method 2: On-chain authorization. Hackers usually induce users to sign approve/increaseAllowance/decreaseAllowance/setApprovalForAll transactions, allowing them to transfer the user’s token assets to a specified address. They monitor the user’s account in real-time and immediately transfer the corresponding assets once they are received. The security defense process against fishermen is a battle and an ongoing upgrading process.
Although most wallets perform security risk detection on hacker’s authorization addresses, attackers’ methods are also evolving. For example, by using the features of create2, attackers can pre-calculate new addresses and bypass security checks because the new addresses are not in the safe blacklist. Attackers wait for the bait and then deploy contracts to transfer users’ funds. For example, recently, we have also discovered that many attackers use user authorization to the uniswap.multicall contract, which can bypass security product detection because it is a legitimate project contract.
Method 3: Permission changes. This includes permission changes in Tron and Solana. In Tron permission changes, multisignature is a feature of the Tron chain. In many fishing websites, attackers disguise permission change transactions as transfer transactions. If users accidentally sign these transactions, their accounts will become multisignature accounts, and they will lose control over their accounts. In Solana permission changes, attackers modify the owner of the user’s token ATA account through SetAuthority. Once the user signs this transaction, the ATA account’s owner will become the attacker, allowing them to access the user’s assets.
Other methods: In addition, due to the design mechanisms of protocols, fishing attackers can easily take advantage of them. For example, the queueWithdrawal invocation in the Ethereum middleware protocol EigenLayer allows specifying another address as the withdrawer, and users are tricked into signing this transaction. After seven days, the specified address can use completeQueuedWithdrawal to obtain the user’s staked assets.
The third type is uploading mnemonic phrases. Attackers usually provide disguised airdrop projects or fake tools to lure users into uploading their private keys or mnemonic phrases. There are also cases where they disguise themselves as pop-ups from wallet extensions to deceive users into uploading their mnemonic phrases.
Q4: Differentiating between hot wallet and cold wallet attack methods.
OKX Web3 Security Team: The difference between hot wallets and cold wallets lies in the storage method of private keys. Cold wallets generally store private keys offline, while hot wallets are usually stored in an environment with internet access. Therefore, the security risks for cold wallets and hot wallets differ. The security risks of hot wallets have already been comprehensively covered and will not be further discussed.
The security risks of cold wallets mainly include:
First, social engineering and physical attack risks, as well as transaction process risks. Social engineering and physical attack risks refer to the possibility of attackers using social engineering methods to impersonate relatives or friends to gain access to the cold wallet. As a physical device, cold wallets can be damaged or lost. Transaction process risks refer to the various fishing scenarios mentioned earlier, such as airdrops and induced signature attacks, which can also affect cold wallets.
Q5: Besides “giving away high-value wallet private keys,” what are some other alternative fishing traps?
SlowMist Security Team: Yes, “intentionally giving away high-value wallet private keys” is a very classic case that has been around for many years, but there are still people who fall for it. In this scam, scammers deliberately disclose private key mnemonic phrases. Once you import the private key mnemonic phrases into your wallet, the attacker will monitor your wallet and immediately transfer your ETH as soon as you deposit it. This method takes advantage of users’ greed, and the more people they trick, the higher the transaction fees and the greater the losses.
In addition, some users may think, “I don’t have anything worth attacking,” and this defensive mindset makes users more vulnerable to attacks. Any person’s information, such as email, password, banking information, etc., is valuable to attackers. Some users even think that as long as they don’t click on the links in spam emails, they won’t be threatened. However, some phishing emails may implant malicious software through images or attachments.
Finally, regarding “security,” we need to have an objective understanding that there is no absolute security. Moreover, there are many evolving methods and rapid developments in phishing attacks. Everyone should continuously learn and increase their awareness of security to protect themselves.
OKX Web3 Security Team: Preventing third-party fishing traps is indeed a complex issue because attackers often exploit people’s psychological weaknesses and common security negligence. Many people are usually cautious, but they often relax their vigilance and amplify their greed when faced with unexpected “big gains,” which leads to being deceived. In this process, human weaknesses outweigh technology. Even with more security measures, users may overlook them in the short term. Only when they look back, they realize that they have been deceived. We must be clear that “there is no such thing as a free lunch.” Always be vigilant, pay attention to security risks, especially in the dark forest of blockchain.
Q6: Suggestions for improving private key security for users.
SlowMist Security Team: Before answering this question, let’s first understand how attackers steal users’ assets. Attackers generally steal users’ assets through the following two methods:
Method 1: Deceiving users into signing malicious transaction data to steal assets, such as deceiving users to authorize or transfer assets to the attacker.
Method 2: Deceiving users into entering wallet mnemonic phrases on malicious websites or apps, such as deceiving and enticing users to enter wallet mnemonic phrases on fake wallet pages.
Knowing how attackers steal wallet assets, we need to guard against potential risks:
Prevention 1: Do what you see. It is said that a wallet is the key to entering the Web3 world, and the most important thing for user interaction is to refuse blind signatures. Before signing, users should identify the data being signed and know what the transaction is for. Otherwise, give up the signature.
Prevention 2: Don’t put all your eggs in one basket. By managing wallets in different levels based on the assets and frequency of use, the risk of assets can be controlled. Wallets used for activities such as airdrops, which have a higher frequency of use, are recommended for storing small amounts of assets. Large amounts of assets are not frequently used and should be stored in cold wallets, ensuring a secure network and physical environment when using them. If possible, use hardware wallets, as they generally cannot directly export mnemonic phrases or private keys, thus increasing the threshold for mnemonic phrase and private key theft.
Prevention 3: Learn to identify various fishing methods and events, increase security awareness, educate yourself, and avoid being deceived, gaining self-rescue capabilities.
Prevention 4: Don’t be hasty or greedy, and use multiple verifications. In addition, if users want to learn more comprehensive asset management solutions, they can refer to SlowMist’s “Cryptocurrency Asset Security Solution” to gain more security awareness and self-education. They can also refer to the “Blockchain Dark Forest Self-Rescue Handbook.”
OKX Web3 Security Team: Private keys are the only credentials for accessing and controlling encrypted assets in wallets, so protecting the security of wallet private keys is crucial.
Prevention 1: Understand your DApp. When investing in on-chain DeFi, it is important to have a comprehensive understanding of the DApp you are using to prevent accessing false DApps and causing asset loss. Although OKX Web3 Wallet has implemented various risk detection and reminders for DApps, attackers continuously update their attack methods and bypass security risk detection. Users must be vigilant and cautious when investing and keep their eyes open.
Prevention 2: Understand your signatures. When signing transactions on-chain, users must verify and understand the details of the transaction to avoid blindly signing. OKX Web3 Wallet parses and simulates on-chain transactions and offline signatures, displaying the results of asset and authorization changes. Users should focus on these results before making transactions and check if they match expectations.
Prevention 3: Understand the software you download. When downloading auxiliary trading and investment software, make sure to download from official platforms and scan with antivirus software after downloading. If you download malicious software, trojans can capture information through screenshot monitoring, memory scanning, and uploading cache files to obtain users’ mnemonic phrases or private keys.
Prevention 4: Enhance security awareness and properly safeguard private keys. Avoid copying mnemonic phrases, private keys, and other important information, and refrain from taking screenshots or storing such information on third-party cloud platforms.
Prevention 5: Use strong passwords and multisignature. When using passwords, users should increase the complexity of their passwords to prevent attackers from cracking them after obtaining encrypted private key files. If there is a multisignature mechanism during transactions, it should be used. This way, even if one party’s mnemonic phrase or private key is leaked, it will not affect the overall transaction.
Editor’s Disclaimer: The content of this article is a promotional draft provided by the contributor. The contributor has no relationship with Dynamicland, and this article does not represent Dynamicland’s position. This article does not intend to provide any investment, asset, or legal advice and should not be considered as an offer to buy, sell, or hold assets. Any services, solutions, or tools mentioned in this promotional draft are for reference only, and the actual content or rules should be based on the contributor’s publication or explanation. Dynamicland is not responsible for any potential risks or losses. Readers are reminded to conduct their own careful verification before making any decisions or actions.
Related Reports
Beware of Open Source Bots on GitHub! SlowMist: A Free Open Source Bot with Backdoor, Stealing Solana Private Keys
Is Mac More Secure Than Windows? NFTGo and SlowMist Team Discuss Crypto Security
SlowMist | Chasing Fake Web3 Wallets! MetaMask, imToken, TokenPocket… Beware of Downloads