Saleem Rashi, a 15-year-old researcher from the UK, has discovered a severe vulnerability in cryptocurrency hardware wallets made by the Ledger company.

Hardware wallets enable transactions via a connection to a USB port on the user’s machine, but they don’t share the private key with the host machine impossible malware to harvest the keys.

Saleem Rashid has found a way to retrieve the private keys from Ledger devices once obtained a physical access to the device.

The researchers discovered that a reseller of Ledger’s devices could update the devices with malware designed to steal the private key and drain the user’s cryptocurrency accounts when the user will use it.

Giving a close look at the Ledger’s hardware device, Saleem Rashid discovered that they include a secure processor chip and a non-secure microcontroller chip. The nonsecure chip is used for different non-security tacks such as displaying text on the display. The problem ties the fact that the two chips exchange data and an attacker could compromise the insecure microcontroller on the Ledger devices to run malicious code in stealth mode.

Even is Ledger devices implement a way to protect the integrity of the code running on them, the expert developed a proof-of-concept code to bypass it and run malicious code on the products.

nano s ledger wallet

The PoC code was published along with the official announcement from Ledger about the availability of a new firmware update that addresses the vulnerability.

“You’re essentially trusting a non-secure chip not to change what’s displayed on the screen or change what the buttons are saying,” Rashid told to the popular cyber security expert Brian Krebs. “You can install whatever you want on that non-secure chip, because the code running on there can lie to you.”

Rashid published a research paper on the flaw and a video PoC of the attack against a Nano-S device, one of the most popular hardware wallets sold by the company.

“This attack would require the user to update the MCU firmware on an infected computer. This could be achieved by displaying an error message that asks the user to reconnect the device with the le/ button held down (to enter the MCU bootloader). Then the malware can update the MCU with malicious code, allowing the malware to take control of the trusted display and confirmation buttons on the device.” wrote the researcher.
This attack becomes incredibly lucrative if used when a legitimate firmware update is released, as was the case two weeks ago.”

“As you can tell from the video above, it is trivial to perform a supply chain attack that modifies the generated recovery seed. Since all private keys are derived from the recovery seed, the attacker could steal any funds loaded onto the device.” continues the expert.

The Ledger MCU exploit relies on the fact that the process for generating a backup code for a user’s private key leverages on a random number generator that can be forced to work in a predictable way and producing non-random results.

Curiously, when Rashid first reported his findings to Ledger, the company dismissed them.

“the firmware update patches three security issues. The update process verifies the integrity of your device and a successful 1.4.1 update is the guarantee that your device has not been the target of any of the patched attack. There is no need to take any other action, your seed / private keys are safe.” reads the security advisory published by the French company.

“Thimotee Isnard and Sergei Volokitin followed the responsible disclosure agreement process and were awarded with a Bounty, while Saleem Rashid refused to sign the Ledger Bounty Program Reward Agreement.”

Rashid pointed out that Ledger doesn’t include anti-tampering protection to avoid that an attacker could physically open a device, but the company replied that such kind of measures is very easy to counterfeit.

In this case, let me suggest buying the devices directly from the official vendor and not from third-party partners and update them with the last firmware release.