Someone Just Lost $16M in Bitcoin by Using a Malicious Install of the Electrum Wallet
In a Sunday post on GitHub, the individual described the loss of more than 1,400 bitcoin (worth around $16.2 million at press time) as a result of “foolishly” installing an old version of the lightweight wallet.
Going by the username “1400BitcoinStolen,” they described how a pop-up message asked to update their security prior to being allowed to transfer any funds.
Upon installing a purported “security update” for the wallet, it immediately triggered a transfer of the user’s entire balance to an address in the possession of a hacker.
Binance’s CEO Changpeng “CZ” Zhao has moved to blacklist the stolen funds from his exchange, stating users should “beware of this Electrum official update.”
1400BitcoinStolen said they had contacted blockchain analytics company Coinfirm for assistance in tracking the bitcoin and were awaiting a response.
Electrum has been around since 2011 and has gone through multiple updates while also being unable to stop bad actors exploiting previous versions by Sybil attacks using malicious servers.
Another member on the GutHub thread, “gits7r” – who seems to be associated with Electrum – said the problem comes from the decision by the team early on to allow users to “run their own servers or use servers that they trust.”
If users download a version from a different source than electrum.org and don’t check signatures, they may “install a backdoored Electrum,” gits7r said.
In 2018, the Electrum network suffered such an attack from a bad actor who created multiple fake servers on the Electrum network that saw 245 bitcoin siphoned from unsuspecting victims.