cryptocurrency wallet

BitGo has patched a vulnerability that threatened to expose the private keys of retail and institutional users.

Cryptocurrency wallet BitGo has patched a critical vulnerability that could have exposed the private keys of retail and institutional users.

Cryptography research team Fireblocks identified the flaw and notified the BitGo team in December 2022. The vulnerability was related to BitGo Threshold Signature Scheme (TSS) wallets and had the potential to expose the private keys of exchanges, banks, businesses and users of the platform.

The Fireblocks team named the vulnerability the BitGo Zero Proof Vulnerability, which would allow potential attackers to extract a private key in under a minute using a small amount of JavaScript code. BitGo suspended the vulnerable service on Dec. 10 and released a patch in February 2023 that required client-side updates to the latest version by March 17.

The Fireblocks team outlined how it identified the exploit using a free BitGo account on mainnet. A missing part of mandatory zero-knowledge proofs in BitGo’s ECDSA TSS wallet protocol allowed the team to expose the private key through a simple attack.

Related: Euler Finance hacked for over $195M in a flash loan attack

Industry standard enterprise-grade cryptocurrency asset platforms make use of either multi-party-computation (MPC/TSS) or multi-signature technology to remove the possibility of a single point of attack. This is done by distributing a private key between multiple parties, to ensure security controls if one party is compromised.

Fireblocks was able to prove that internal or external attackers could gain access to a full private key through two possible means.

A compromised client-side user could initiate a transaction to acquire a portion of the private key held in BitGo’s system. BitGo would then perform the signing computation before sharing information that leaks the BitGo key shard.

“The attacker can now reconstruct the full private key, load it in an external wallet and withdraw the funds immediately or at a later stage.”

The second scenario considered an attack if BitGo was compromised. An attacker would wait for a customer to initiate a transaction, before replying with a malicious value. This is then used to sign the transaction with the customer’s key shard. The attacker can use the response to reveal the user’s key shard, before combining that with BitGo’s key shard to take control of the wallet.

Fireblocks notes that no attacks have been carried out by the identified vector, but warned users to consider creating new wallets and moving funds from ECDSA TSS BitGo wallets prior to the patch

Hacks of wallets have been commonplace across the cryptocurrency industry in recent years. In August 2022, over $8 million was drained from over 7000 Solana-based Slope wallets. Algorand network wallet service MyAlgo was also targeted by a wallet hack that saw over $9 million drained from various high-profile wallets.