Hacker News

It speaks a lot to the power of financial incentives. As soon as there's money in it, every conceivable attack to get that money has been tried. Which also mimics what happens in market economies: once there is money in it, every conceivable industry springs up, even things that are absurd or harmful. And money appears to be more powerful than things like laws or governments, in that things that are illegal but profitable happen, while things that are legal and unprofitable do not.

In some ways this is kinda encouraging, because it means that even in cases where society collapses and the government disappears, there are really only two fundamental technologies needed to reboot everything: money and contracts.

After the Hezbullah pagers incident, the basic assumption has to be that every possible supply chain attack you can think of is realistic.

This is a big part of my problem with crypto and why I'm bearish on it breaking through to normies. Traditional financial institutions just seem so much safer all in all, not to mention having far better UX.

I don't get hardware wallets that have you enter the key on another device. Or don't show the transaction on the hardware device's screen, with every destination and amount, with a button to confirm on the device. Or trusting a wallet to generate a random seed. Or not using the most entropy possible (e.g. 24-word seed). Anything less is dropping the ball.

Would love to hear people's thoughts on this excerpt from the Epstein files in light of these disclosures:

--------------

From: Vincenzo lozzo

Sent: Monday, July 2, 2018 8:04 AM

To: jeevacation@gmail.com

Subject: Ledger wallet warning

Attachments: image1jpeg; Untitled attachment 00284.txt

In case you hold any coins in it, please don't spread this as they h=ven't released any of the information yet.

As for what is worth, the other wallets seem just as bad

--------------

Links:

https://www.justice.gov/epstein/files/DataSet%2011/EFTA02501...

https://www.justice.gov/epstein/files/DataSet%2011/EFTA02507...

https://www.justice.gov/epstein/files/DataSet%209/EFTA008603...

https://www.justice.gov/epstein/files/DataSet%2011/EFTA02505...

I don't own any crypto, but if I did, I'd probably choose to use a multisig setup with 2+ signers, including at least one (regularly pentested) software wallet.

> this is incredible stuff...

Is it? The theory and even the implementation is literally a gas station credit card skimmer for crypto. I do agree that anyone dismissing attacks on Ledger was foolish, but mostly because Ledger is an obviously low-quality product on even a cursory inspection, not because we need to become even more paranoid conspiracy theorists.

The idea reminds me somehow of bank card ATM skimmers from old times like this one (2009): https://www.consumerreports.org/consumerist/heres-what-a-car...

> No matter whether you like or hate or don't care about cryptocurrencies, this is incredible stuff...

> Now basically: every single attack that's been described as "theoretical" or "far-fetched" or "only existing in the mind of a paranoid person" did actually happen.

Huh? Nothing here is theoretical or far-fetched. Hardware attacks of this sort have been documented for decades and basically part-and-parcel for most intelligence agencies, from the US govt installing backdoors in Cisco hardware to the exploding pagers for Hamas. This is not even the first hardware wallet attack documented on the internet (although it might be the largest-scale one).

It's just that hardware attacks are complicated, expensive, and risky, so they're usually done in a targeted manner. The only news here is that the crypto community painted a gigantic target on their backs by inventing a currency that can be taken from them with zero recourse, broadcasting it to the world that they own a lot of it, and then buying cheap hardware from overseas retailers to "protect" their assets. So all of sudden, it was profitable and relatively low-risk to cast a wider net.

It's fascinating in the sense that we're discovering from first principles why the financial system works the way it does. The damage caused by cryptocurrencies has been really pretty staggering, for little real benefit.

> So the secure element ain't tampered with.

Back in the day, RSA SecurID hardware tokens were completely physically sealed, with no room for a backdoor. Tampering with them in any ways destroys them or makes it physically obvious. That's a physically secure design. This Ledger thing looks more like a consumer toy.

Here I am using an iPhone app like I have been for a decade, feeling safer than ever. I'm really glad I didn't jump on the hardware wallet trend.

Multiple crypto-experts said that the safest crypto wallet is a recent iPhone in airplane mode which is only used for this purpose. Because it's much harder to implant that your average hardware crypto wallet.

I remember chatting with about AI a few months ago about the issue of foreign RAM sticks being able to cooperate with websites to serve different files/instructions, undetectably. Scary stuff.

> Now basically: every single attack that's been described as "theoretical" or "far-fetched" or "only existing in the mind of a paranoid person" did actually happen.

It's predictable: The ROI of attacking cryptocurrencies in this manner is high enough to make expensive attacks worthwhile. It doesn't make other expensive attacks on typical end-users worthwhile, and they remain far-fetched.

This is why I sold my bitcoin early - all those years of reading Phrack. Sure, it was $300 at the time and I could have made more, but I had no idea how to securely _store_ it. Still don't.

> or "only existing in the mind of a paranoid person" did actually happen.

This reminds me of the 2020 case where a union organizer thought there was a spy camera inside a utility pole outside his house. It was in a conspiracy subreddit, so it seemed like the deranged ramblings of a ravingly-paranoid stranger. But they found the addresses of the IP cams and had plenty of evidence to corroborate it.

Now, Flock cameras are just normal.

I think the 2020s will be defined by this trend. "Things which only existed in the minds of a paranoid person" becoming normal parts of daily life.

Selling Ledger wallets or compromised Ledger wallets? My understanding was a reputable reseller (Cryptobilis) was bought and then the wallets were modified via the reseller chain. This isn’t on Ledger it’s a (literal) supply chain attack. Unless MediaMarkt was buying via the reseller?

I wonder what the liabilities are for that

Why doesn't it surprise me that the shittiest company Media Markt is somehow involved in this. These guys are about to close shop anyway, rest in piss Mediamarkt.

Great example of a digital 'analog hole'; https://en.wikipedia.org/wiki/Analog_hole

I had a similar idea to bypass DRM for a while. Some kind of board that goes between the display panel driver and whatever sends it the signal, and outputs something you can capture, e.g. DVI or unencrypted HDMI. Not sure how practical it is.

Do passkeys next.

> Hardware wallets are not a solution to self-custody.

Look back as recently as last year and hardware wallets were held up as the recommended way to do self-custody all over.

Whenever I brought up the issue of losing coins due to hacks or bugs, I was told that hardware wallets had solved this problem.

> Hardware wallets are not a solution to self-custody.

Nothing in this world tends to be "the solution", everything has tradeoffs.

Say you want to do self-custody, what is then the best option? "Don't do self-custody" obviously isn't the solution, as the core use case here is self-custody, so what in your opinion is a better way, than hardware wallets?

If there is nothing better today than hardware wallets, then for now, they are "one of the better solutions" for how to do self-custody, even with the current tradeoffs. But again, I'm eager to hear what the alternatives are.

Then can you give an example of what you would consider a solution, whether hypothetical or real?

Yes, but this threat analysis also holds for laptops and phones.

What do you use to access your bank account online? I use my laptop, or my phone.

But freedom.

Seriously, that's why we have banks, still.

No, this is May version. If you look at the twitter thread, the October version is different and looks much more "stock"

(sadly I have not found nice website with newer version photos yet)

I heard they reduced the battery size to make space for their chip.

This one too (pardon the AI slop): https://www.tibane.net/research/ledger-nano-x-implant

Is that safe for devices containing a lithium battery?

They could x-ray it, carve out epoxy with nothing inside, put the logger, apply epoxy.

Take off the case, put your own entire module in, put the case back in. Epoxy doesn't solve much.

...frankly, selling one as DIY kit have highest chance for tamper resistance. Tho pretty untenable with small SMD components sadly

There are pictures online. And for an unexplainable reason it is the person behind the biggest Bitcoin exchange SNAFU of all times (where hackers stole something like 800 000 Bitcoins), Mark Karpeles of "Mt. Gox" (who did jail time btw), who was the first to post them:

Apparently the hacker did remove the battery and replace it with a smaller one, leaving enough room for the tiny eSIM/LTE modem / OCR chip that did recognition of the secret on screen.

https://www.tibane.net/research/ledger-nano-x-implant

They're here. It's wild.

The crypto-theft angle seems more typical of China/NK/Russia to me. (China has some history of hardware supply-chain attacks). But without evidence we're simply speculating.

The attack is profitable because it's targeted. Every one of those devices contains crypto. Which is not the case for mobile phones.

It seems unlikely that smartphones would be targeted for such an attack because almost nobody stores large amounts of crypto on their smartphone. Those that do will likely get hacked more traditionally.

Why do you think it's too costly? It's well known that there are divisions in DPRK that are focused on generating $ through crypto hacks and compromises.

We're dealing with reasonably sophisticated state actors here in this dark forest; not script kiddies.

Cheap $5 PCB + programmable small FPGA is a very viable route too for hardware implants; but even a microcontroller / ESP32/etc will probably do.

Dangerous things sells implantable chips.

Eg. https://dangerousthings.com/products/apex-flex?Antenna=Narro...

PCBWay will make anything you send them for reasonable pricing. Custom boards etc are not at all hard to manufacture, and for the amount of money you can get, of course you can team up with someone. I think the most people overestimate the cost of bespoke PCB creation.

If you slide through and ignore the writing, the linked implant teardown is wild - https://www.tibane.net/research/ledger-nano-x-implant

They did, in fact, appear to mass-manufacture a custom-built flat flex implant with cellular (LTE-M!), eSIM, and everything that hid right inside the Ledger, sniffing the SPI reads to the display to read the recovery phrases it pukes out and send 'em over cellular to the ringleader.

It's an EXTREMELY well built implant. I'm impressed. Multiple revisions, even.

The money's too hot to not build shit like this and slip it into the stream. Even a few thousand in R&D netting a six figure ROI is worth it, getting millions is just the icing.

I wouldn't trust any of the hardware wallet vendors. Pretty much all of them have had customer data leaks, resulting in wrench attacks.

You're better off just having a dedicated laptop for crypto transactions.

Hardware wallets have a huge target on their back. They are great for convenience, but once you are using multiple for muli-sig you can have more security with less hassle with an airgapped old laptop or a hand-stamped piece of metal you keep in a safe

What always surprised me is there aren't many implementations of multisig for EVM based chains.

Actually the only one I know is the Gnosis Safe. Talk about creating a huge risk if it would have a problem.

It would make the tampering more expensive, but not too expensive given the 100 million dollar reward, while also making inspection of the device practically impossible for users.

If you can't get to the insides without breaking it, the only devices verified to likely be safe would be unusable too, so the product would in practice be even more unsafe.

If the user first inspects it and then glue it on their own, that would work, but it wouldn't solve this problem. Evil maid attack is something else and obviously harder at scale.

> the latest incident, which arguably isn't their fault

I'd not release them soo easily from their share of responsibility. Tamper-proof hardware is a thing, electronic funds transfer terminals for example already implement ways to detect or prevent physical intrusion into safety-relevant parts of the device. Would probably have cost a few cents in manufacturing to add countermeasures to physical modification into the Ledgers. The fact that there is not even the slightest attempt at securing the device against this kind of attacks is entirely on the manufacturer.

> How a French (EU based) company is still in business after all of this, is an indicator of selective enforcement of EU privacy laws (GDPR, etc).

Surely you can name a dozen of US companies that have been driven out of business by enforcement of EU privacy laws. But I'd be glad if you'd at least name a single one!

because the longer they wait, the higher the chance of being discovered before they're able to steal anything. I'm sure there's some game theory about this

Not really. We have physical proof of the compromised Ledger devices; no one has ever presented any specific evidence that Supermicro hardware was similarly compromised.

https://kycnot.me/?categories=esim or simply used a fake identity on some online supplier's website.

UPD: NL, just like some other few countries in EU, doesn't require mandatory identification for SIM card purchases and activation

Even if you have perfect provenance over every component you put in, the moment it leaves your factory to be shipped to customers, it can be tampered with.

Even if you would hand it from the factory straight to a customer that comes physically to your factory to pick it up, then you would still require some sort of ID to know that that person is in fact the customer I suppose. Which removes some of the advantages of cryptocurrencies

At the bottom:

> This article was originally published in German. It was translated with technical assistance and editorially reviewed before publication.

Presumably "technical assistance" covers just about everything.

What made you purchase the ledger from a third party and not directly from ledger itself?

The #1 rule that you keep what you can get away with just seems to apply a lot harder. See also the Abramovich/Deloitte story on HN today.

(The previous comment ended up getting merged into this thread: https://news.ycombinator.com/item?id=50046048)

You might be interested by the Tillltis TKey - it's an open-source open-hardware programmable-by-the-user secure element.

m-of-n provides increased security AND redundancy.

2-of-3 allows loss of one key, 3-of-5 allows loss of two keys, etc

The cost is increased complexity, but the alternative is potentially losing everything due to a single mistake. So far people seem to overweigh the complexity of multisig, and to overestimate their understanding of using a single signing device.

You should have a paper backup of your hardware wallet anyway. The point of the wallet is to perform cryptographic calculations you’ll probably rather not do in your head.

And yet on this exact website people critical of the industry were ridiculed with the exact same rhetoric adopted by the AI industry. It was touted by so many as inevitable, and how we will all be left behind if we don’t join the cult

Yep. Crypto is more clever than I am—and there are scammers in the field equally so.

(My hardware wallet is made of pleather and holds paper bills.)

your fiat goes brrrrr

Like any HSMs, to put private keys in it and to let things be signed with it.

Making sure malware on your PC can't steal your private keys.

use leather wallets and paper cash...

>Use paper-wallets, old phones and encrypted USBs instead.

None of these prevent thieves or anybody from knowing you have one worth stealing. The actual solution is to not use fundamentally broken transparent crypto like BTC that broadcasts to the whole world your exact funds and ties them to your identity on every transaction. With monero your funds could be 0,10 or 10 billion and that is nobody's business.

Or just open a bank account like a normal person. But I suppose that requires deprogramming yourself out of the crypto cult.

Just delete the cookies after if you absolutely must go to the site.

Most websites do this, they just don't give you the option.