Software is Achilles Heel of Hardware Cryptocurrency Wallets

Cryptocurrency exchanges and private wallets have been fully in cyberattacker crosshairs as criminals seek to make the most of an exploding new financial market that some analysts say will reach $1 trillion by the end of the year. In response to these attacks, a number of manufacturers have come out with secure hardware wallets meant to harden the storage of the cryptographic keys that serve as proof of ownership of vast sums of money. However, a new piece of research expected out of Black Hat USA next month shows that these secure hardware storage devices may not be as locked down as their users expect them to be.

Presented by Sergei Volokitin, the research will show how software attacks can be used to break the Secure Element, the supposedly tamper-resistant hardware platform upon which these hardware wallets base their protection. Volokitin found vulnerabilities in these wallets' trusted execution environment (TEE) operating systems that could be manipulated to compromise memory isolation and cause the wallet to give up operating system and application secrets.

"Despite the fact that the device makes use of secure hardware to protect the private keys, a number of flaws in the software design and implementation allowed us to create various attack scenarios, including remote, physical and supply chain attacks," explains Volokitin, who works as a security analyst for Riscure, a global security test lab based in the Netherlands. 

Using the identified vulnerabilities, anybody who can get physical access to the hardware wallet would be able to steal keys and data from the device. What's more, an attacker could theoretically create a supply chain attack where they poison the device from the get-go in order to gain full control of wallets on the device once users started putting data into the hardware's applications. It might sound like a far-fetched attack scenario, but given the stakes it's not unreasonable to consider.

"In cryptocurrency hardware wallets, the stakes are high, since single private key is the only asset preventing an attacker from stealing the coins and getting away with it," says Volokitin.

While particularly troubling for the cryptocurrency ecosystem, Volokitin's research also has broader implications across enterprise security. It's another lesson that hardened secure devices are only as tamper-proof as the firmware and other software embedded within them. 

"Although the hardware wallets are primarily designed to be used in cryptocurrency-related solutions, from a security point of view they are not much different from any other security devices," he says. "In fact, one of the compromised applications on the device was the secure application for FIDO authentication, which can be used in many other applications as well."

He explains that generally it is very difficult for end customers to evaluate the risk of using a hardware security device if it does not require mandatory certification.

"The main questions the end users of such secure devices need to ask themselves/the manufacturer is what manufacturer did to improve the security of the device," he says, explaining they should be looking for vendors that do extensive testing of their hardware products. "Doing an evaluation of a security solution by a third party, through an evaluation or a bug bounty, is an effective way to improve security of a product."

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