I just had all my bitcoins stolen and I don't understand how it happened

[slinkybob]

I just lost .73 of a bitcoin.. about £6k. I was making a small payment (about £50) through electrum and I got a message saying that I needed to apply a patch before the payment could be sent. The patch seemed to be legit and led directly to the electrum website. I downloaded Electrum 4.0. and when I started it up all my bitcoins had gone. my balance is now zero. What happened?

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[Abdussamad]

You installed malware:

https://www.reddit.com/r/Electrum/comments/brvsmv/333_danger_vulnerable_to_phishing_please_always/

[slinkybob]

Thanks.. 

[bob123]

The patch seemed to be legit and led directly to the electrum website.

Unfortunately not.

The one and only original electrum site is https://electrum.org/.

The message which was shown to your came from a malicious electrum server you were connected to.
And it linked to a (faked) github repository with no source code, and only a (malicious) binary available to download.


Unfortunately, you have been a victim of the phishing campaign. Your funds are gone.

[Lucius]

slinkybob, it's a shame you didn't register in the forum before or that you read just like guest, then you would see warnings about this attack which is start at the end of last year. We have dedicated board for Electrum, and there you can see many identical cases posted by victims.

I'm sorry for your loss, hope that hackers will pay one day for their crimes.

[crwth]

So he is a victim of a phishing technique — installed malware, etc.

I want to understand more. Is it because his original software of the wallet is already compromised or is it anything connected with his computer or something? Do the hackers know that he holds Bitcoin? Somehow, someway, they had access? I'm just worried about any other else that could jeopardize my funds.

[AB de Royse777]

Is it because his original software of the wallet is already compromised

Since the code is open source, anyone can alter the code and insert something that will open a door to steal your coins. If you download Electrum from any other website than electrum.org then you are risking your coins. That Electrum client can be infected.

So, it is always advised that to down the software from official https://electrum.org/#download and not only this - before installing the file make sure you have verified the signature: https://bitcoinelectrum.com/how-to-verify-your-electrum-download/

If you can successfully verity the download file then you are sure that you have the original version.

[o_e_l_e_o]

Electrum versions prior to 3.3.4 had a feature which allowed servers to display a pop up box to connected users to tell them about errors. Some third party hosted a malicious server, and anyone who connected to it (which can happen automatically) would be shown a pop up box advising them their Electrum client was out of date and they needed to update to version 4.0, along with a link to the fake wallet, which many users blindly follow, download, install, and use, without checking or verifying it first.

In this case, OP didn't need to have anything already compromised or anything connected to his computer as you suggest. The hackers don't know who he is, or have any access to his machine. They exploited a (now patched) flaw in older versions of Electrum to trick OP in to downloading malware.

You can read more about this flaw here: https://github.com/spesmilo/electrum/issues/4968

[UnruffledST]

Electrum versions prior to 3.3.4 had a feature which allowed servers to display a pop up box to connected users to tell them about errors. Some third party hosted a malicious server, and anyone who connected to it (which can happen automatically) would be shown a pop up box advising them their Electrum client was out of date and they needed to update to version 4.0, along with a link to the fake wallet, which many users blindly follow, download, install, and use, without checking or verifying it first.

In this case, OP didn't need to have anything already compromised or anything connected to his computer as you suggest. The hackers don't know who he is, or have any access to his machine. They exploited a (now patched) flaw in older versions of Electrum to trick OP in to downloading malware.

You can read more about this flaw here: https://github.com/spesmilo/electrum/issues/4968

Wow legit feel bad for the user, downloads a patch thinking hes doing the right thing just to find his coins gone. To be honest this technique would have even caught me off guard if presented with it. I mean not everyone usually checks the link before downloading even more when it comes from the program itself. Really man hope that you are keeping your head up even though you came out with a loss. 8k usd is not a small sum for alot.

[bob123]

To be honest this technique would have even caught me off guard if presented with it. I mean not everyone usually checks the link before downloading [...]

Well.. then you should reconsider your security measurements.

You should never download anything without double-checking the URL.
And additionally you also should never install sensitive software (e.g. wallet software) without verifying the signature.

There are tons of guides available how to verify the signature. It is even mentioned on electrum.org.

[pereira4]

Even signatures don't guarantee anything, the MIT server where they store them could have been compromised, the people involved could have been compromised... etc

This is why you want to ideally run a full client and validate your own transactions, otherwise you are basically running a webwallet.

[TryNinja]

Even signatures don't guarantee anything, the MIT server where they store them could have been compromised, the people involved could have been compromised... etc

This is why you want to ideally run a full client and validate your own transactions, otherwise you are basically running a webwallet.

Well, you don't actually need to get a new signature every time a new update is released. Get it now while the MIT server hasn't been compromised and use it for every new update. Also, a full client (node) is as much as of a software as any other wallet (such as Electrum). How would you confirm the full client you are running is legit if even the signature server is potentially compromised? At some point you will have to trust something/someone.

[ranochigo]

Even signatures don't guarantee anything, the MIT server where they store them could have been compromised, the people involved could have been compromised... etc

This is why you want to ideally run a full client and validate your own transactions, otherwise you are basically running a webwallet.

That isn't secure either. Even running a full client isn't enough. Bitcoin Core can be compromised in that scenario too. The problem here isn't with the validation of the transaction. I don't agree with that either. The difference between SPV clients and Web wallets is huge; SPV clients still do give you full control over your private keys. IMO, SPV clients gives its user the balance between convenience and security.

If you want to protect against the scenario that you've described, you have to review and build the client from scratch. This isn't something everyone can do.

[crwth]

Is it because his original software of the wallet is already compromised

Since the code is open source, anyone can alter the code and insert something that will open a door to steal your coins. If you download Electrum from any other website than electrum.org then you are risking your coins. That Electrum client can be infected.

Well, then there's no problem with that but as o_e_l_e_o said, even if you downloaded the legitimate one and it prompts an update or something, it could somehow show a pop-up box saying to update it, knowing that there is already an update, they are taking advantage of that part, if I understood correctly. It's because hackers are somehow signaling from their electrum node or something to do that? That must have happened to a lot of users. Sad to say, it's better to be skeptical about these kinds of things.

[AB de Royse777]

~snip~
Well, then there's no problem with that but as o_e_l_e_o said, even if you downloaded the legitimate one and it prompts an update or something, it could somehow show a pop-up box saying to update it,

Since I learnt about the hack of clicking the update button few months ago I never use auto update feature. Luckily I have never seen the update pop up as well.

This is what I recommend, if you somehow find yourself in this kind of situation that Electrum is asking for update with a pop up then just close entire Electrum and download a a fresh copy from their official website. Verify it before installing and start over again. This way, you are safe that you are using authentic Electrum and also the latest version.

Do not forget to keep your seeds safe in somewhere else. You need them to restore your wallet if you have not backed up your files in the wallet folder before uninstalling the old version.

[o_e_l_e_o]

Well, you don't actually need to get a new signature every time a new update is released. Get it now while the MIT server hasn't been compromised and use it for every new update.

Thomas Voegtlin's GPG key can be found in many places online, and it is impossible for an attacker to compromise them all. If you were really paranoid, you could access it from several sources and compare them.

the people involved could have been compromised.

If you are worried about a piece of software such as Electrum becoming compromised, then probably the easiest way to mitigate against this is to pair it with a hardware wallet. Even if you were using the malicious version of Electrum we are talking about in this thread, an attacker wouldn't be able to steal your coins unless you were stupid enough/not paying attention enough to confirm their malicious transaction on your hardware device. The only way to fully mitigate against it so examine the source code yourself.

[erikalui]

Similar case here: https://twitter.com/gage5144/status/1149538691989135362 (They only have 3.3.8 till now so 4.0 is out of question for years. That should have been a warning sign to upgrade from 3.3.x directly to 4.).

Since I learnt about the hack of clicking the update button few months ago I never use auto update feature. Luckily I have never seen the update pop up as well.

This is what I recommend, if you somehow find yourself in this kind of situation that Electrum is asking for update with a pop up then just close entire Electrum and download a a fresh copy from their official website. Verify it before installing and start over again. This way, you are safe that you are using authentic Electrum and also the latest version.

Do not forget to keep your seeds safe in somewhere else. You need them to restore your wallet if you have not backed up your files in the wallet folder before uninstalling the old version.

But there should be an option to disable the popups as there have been so many cases where users have lost their money. Last year the same happened and they updated their wallet and now again a new hack since April. Except warning they do nothing.

[o_e_l_e_o]

Except warning they do nothing.

They patched the flaw in version 3.3.3, which was released over 6 months ago. There have been 5 new versions since then. The flaw has been widely publicized (including right at the top of the electrum.org landing page), and pretty much everyone who regularly uses these forums, reddit, or reads any crypto media sites would have heard about it. The only people still falling victim to it are those who are using 6 months/6 versions out-of-date software, don't read any crypto sites or news, and don't follow the instructions on how to update and verify Electrum properly. They've done literally everything they could do. There is no way for them to remotely disable all vulnerable clients.

It's like the people who type their seed in to random websites despite constant and repeated warnings to keep your seed confidential and never reveal it to anybody or anything. Sometimes you just can't save people from themselves, regardless of how much you try. It's pretty basic security practices to not follow random links, and especially not to download and install software from random links.

[bob123]

Even signatures don't guarantee anything, the MIT server where they store them could have been compromised, the people involved could have been compromised... etc

You know.. what happens if the internals of ledger get compromised ?
What if the hardware manufacturer of your computer (e.g. Intel / AMD) intentionally builds in a backdoor in your computer ?

If you really want to go THAT far, the only option is an absolute offline computer (never went / going online) in a faraday cage inside of a highly secured (talking about physical access) room.

Everything can be compromised. But you have to look at the probabilities.

This is why you want to ideally run a full client and validate your own transactions, otherwise you are basically running a webwallet.

What if the github repository of core gets compromised ?

Also.. there are tons of differences between a SPV desktop client and a web wallet security-wise.


ETFbitcoin and i have already discussed this topic about one week ago:

But the web wallet has a lot more points of failure.
For example, a MitM, compromised server, DNS spoofing, etc.. Those all only apply to web wallets and not to desktop wallets.

On the other hand, there is not a single attack point which could target a desktop wallet, but not a web wallet.

~snip~
Don't forget hostile takeover by government, phishing website, malicious browser extension & people in the company went rogue.

[Stedsm]

I'm sorry for your loss OP.

I believe we should start up a campaign (not speaking about signature campaign) where we should make newbies aware of such vulnerabilities to save them from becoming a victim for those hackers who just want free money and don't really wanna work for it. Else, I'd urge @theymos and @admins (administration) to please display these things as warnings in the News part (top left of your page under avatar) as it'd actually save many of them and even us if we remain unaware until scammed.

[HCP]

Else, I'd urge @theymos and @admins (administration) to please display these things as warnings in the News part (top left of your page under avatar) as it'd actually save many of them and even us if we remain unaware until scammed.

Theymos did... when this was actually "news"

There was a link to an announcement regarding the Electrum phishing vulnerability posted in the "News" bar at the top of the page. This was all the way back when this first blew up at the end of December 2018... it's now August 2019, this is not "news" anymore.

"Be Your Own Bank (Security Department)"

[pereira4]

Even signatures don't guarantee anything, the MIT server where they store them could have been compromised, the people involved could have been compromised... etc

This is why you want to ideally run a full client and validate your own transactions, otherwise you are basically running a webwallet.

That isn't secure either. Even running a full client isn't enough. Bitcoin Core can be compromised in that scenario too. The problem here isn't with the validation of the transaction. I don't agree with that either. The difference between SPV clients and Web wallets is huge; SPV clients still do give you full control over your private keys. IMO, SPV clients gives its user the balance between convenience and security.

If you want to protect against the scenario that you've described, you have to review and build the client from scratch. This isn't something everyone can do.

If you are serious about Bitcoin then SPV wallets aren't much different from a webwallet. Obviously no software is free from MITM attacks, but all things equal, a full node is the way to go. Im a bit of an extremist in this case. Why bother at all if you don't get the real thing. As Luke JR would put it, if you aren't running a full node you aren't using Bitcoin.

[HCP]

If you are serious about Bitcoin then SPV wallets aren't much different from a webwallet. Obviously no software is free from MITM attacks, but all things equal, a full node is the way to go. Im a bit of an extremist in this case. Why bother at all if you don't get the real thing. As Luke JR would put it, if you aren't running a full node you aren't using Bitcoin.

What about if you run your SPV wallet by connecting it to your own full node?

Bitcoin Core+electrs+Electrum+Nano S

[Boriss]

..... As Luke JR would put it, if you aren't running a full node you aren't using Bitcoin.

If that was absolutely true then you would never go out from your house or a flat and use your bike or motorcycle instead we would all live our life under the iron doom and if we need to go out to our friend or to our jobs we would order armored vehicle. This is the same statement as that every bitcoiner must run a full node. Don't get me wrong I agree with the statement about  armored vehicle being more secure then a bike, but it's just not possible for majority of people and especially for something that we try to achieve and that is better adoption on the bigger scale.

[Pmalek]

I believe we should start up a campaign (not speaking about signature campaign) where we should make newbies aware of such vulnerabilities to save them from becoming a victim for those hackers who just want free money and don't really wanna work for it.

I am afraid that wouldn't change much.
If you browsed through all of these threads that were opened where members had issues involving their wallets many of them have one thing in common:
Users are not sure what they are doing but they do it anyway before understanding the risks involved.

Usually it goes like I didn't use my Electrum wallet for 2 years and when I opened it I needed to download Electrum 4.0 which I did. After that all my coins were gone.

It is like people are afraid or in too much hurry to ask questions and they usually do it when it is too late.

[o_e_l_e_o]

It is like people are afraid or in too much hurry to ask questions and they usually do it when it is too late.

They don't even need to ask the question. Type "Electrum 4.0" in to any search engine you like, and you will be bombarded with links to "Phishing attempts", "Serious errors", "Malware", "I got scammed", and similar. Literally 5 seconds of time is all it would take to do a quick web search and avoid this issue entirely.

Before "upgrading" to version 4.0.0, these users have, at some point, downloaded the legitimate version of Electrum, so they have been on electrum.org which tells them not to download from any other site and to always verify the signature before installing. If you give people crystal clear instructions on how to do things safely, and they still ignore them all and download and install software from random links which pop up on their screen, then nothing short of physically showing up at their house and doing it for them is going to protect their coins.

[DarkDays]

The patch seemed to be legit and led directly to the electrum website.

Unfortunately not.

The one and only original electrum site is https://electrum.org/.

The message which was shown to your came from a malicious electrum server you were connected to.
And it linked to a (faked) github repository with no source code, and only a (malicious) binary available to download.


Unfortunately, you have been a victim of the phishing campaign. Your funds are gone.

That is way too much of an elaboration made for a guy who just lost  0.73 bitcoins and all he had to say was this

Thanks..  

Speak about an underwhelming response!! (it could be shock lol)

This is why I ask people to always double-check everything before installing any new binary file or anything disguised as an official patch. I've even adviced some professionals to completely do away with Electrum for the time being.