The $1.5B Bybit Hack

My understanding of "cold storage" was always that they keys are not accessible to the internet. That could be stored on paper, a flash drive or engraved in metal and put in a safe, or it could be in a regular digital wallet on a device never connected to the internet. If you want to do transactions, put it on an airgapped device, create the transaction, then move the transaction to an internet-connected device to broadcast the transaction.

There is no concept of "coin storage" in the actual security model of cryptocurrency. The security model of cryptocurrency is about the storage of keys.

"Cold storage" has come to mean that the keys are stored in some offline location. It doesn't necessarily mean that the keys are hard to access or that the money being moved is otherwise hard to get to. That is used to be what it means, but practically, a wallet on a hardware keychain is called "cold" exactly the way a wallet whose keys are split up on slips of paper between 5 different physical vaults is "cold."

Usually you want to boot from a cryptographic-ally verified medium where a checksum can be verified before you execute the system.

The emphasis is on running the correct software. If you have to input cryptographic data every time you boot that's okay because you're offline and should be in a secure room (no internet connected devices).

But yeah, malware attack is still possible if you don't have a secure chain and that's a long one.

not at all

Why should it go online at all? $1.5 billion buys a lot of plane tickets to the same physical place, and how frequently do they need to be accessing the whole lump, anyway?

For that matter, I know signatures are long and human-unfriendly, but isn’t it on the order of a couple hundred bytes? Surely $1.5 billion buys transcribing the putative signature request into an isolated machine in a known state, validating/interpreting/displaying the request’s meaning on that offline machine, performing your signing there offline, copying down the result, and carrying the attestation to your secret conclave lair to combine with the others’ or whatever?

That’s precisely what happened in this attack.

They were attacked when they went online

>But, if you are in a active war and being actively bombed, then you absolutely design your factories to be resistant to sustained aerial bombardment.

That's not really a viable strategy. It has been tried a few times - Mittelwerk and Kőbánya spring to mind - but you can't really build a self-contained factory. If your enemy can't bomb the factory, they'll bomb the roads and railways serving your factory, they'll bomb the worker housing, they'll bomb the less-sensitive factories that supply your factory with raw materials and components. You very quickly run into the diseconomies of operating under siege conditions.

At least during WWII, it was generally far more effective to rely on camouflage, secrecy and redundancy. Rather than having a super-fortified factory that shouts "this is vital national infrastructure", spread your capacity out into lots of mundane-looking facilities and plan for a certain level of attrition. Compartmentalise information to prevent your enemy from mapping out your supply chain and identifying bottlenecks. Your overall system can be highly resilient, even if the individual parts of that system are fragile.

Sure, if there was an active war going on. But while NK and the USA are not exactly friendly, they're definitely not at war either. In basically any other field, the question of "what do we do when a nation state deploys hundreds of people, well funded and well trained, specifically to screw us over?" is met with some variant of "that's why we pay taxes, so the army can protect us from that".

A normal bank being robbed for 1.5 billion, ESPECIALLY by a pariah country like North Korea, would absolutely not be met with "oh that was definitely your own fault" as many of the sibling comments seem to imply.

No one said "they didn't need to defend", or at least that's not how I read OP. The observation is merely that the situation is so wildly different from the physically local world. It's remarkable.

I suspect the truth lies between the two - we are under constant attack, but we aren’t as a society reacting as if we were.

It’s like a building occasionally gets hit by a shell and we dont get on a war footing.

The closest analogy I can come up with is England in the 1600s and early 1700s. Fairly regularly ships would be attacked by pirates from North Africa, and sometimes an actual land raid woukd occur- pirates from North Africa would take slaves from small seaside towns.

It was not till Englands navy grew strong enough that the threat was eliminated - and perhaps that’s the real issue here - we know it’s happening, we cannot turn the Wild West into urban peace, so we just have to keep taking the licks and keep building more secure and stronger

There's a long BBC podcast on Lazarus that touches on the spending.

The members are state sponsored and young/bright. Top 0.1℅ academic sorts. At one point, the BBC got access to a conversation with one of the hackers, and their only question was "how much do you get paid?" (the context was that the hacker thought they were talking to Someone else in the tech space)

Apparently they aren't paid very well at all. Far less than the average Western IT worker. Their lives are not luxurious either. They're in barracks style living quarters with strict schedules and travel. Presumably, the anonymous Lazarus hacker was putting out a probing question because they must have been ruminating about what life on the other side would be like, what they are really worth, etc.

That's part of the power of Lazarus, the ability to dedicate resources far in excess of what most expect due to their indentured servant hackers (the opportunity to join is presented as a gift, Which to some extent it is because it does come with the extremely rare opportunity to travel. Many of them are in China.)

Eh said financial institution chose a field of operation where certain risks are present by design. They make good profits because other institutions judge those risks too high.

It's the mob attacking a casino and making off with chips. That people keep valuing those chips is one of the mysteries of our days.

Well, there's a couple of airliner shootdowns that kind of go in this category. MH17, PS752, AHY8243... That's at least $0.5B in damage plus many hundreds of civilian lives.

If your small business has $1.5billion in the safe then it’s not a “small business”

This is why it is dangerous to replace people and laws with code. With laws, you eventually get to talk to a human being who has leeway in interpreting the situation. With code, it just works the way it does, regardless of circumstances.

Cryptocurrencies avoid a central authority, but by doing that, they also avoid any possibility of human discretion, oversight, or recourse. There is no institution to appeal to, no customer service to call, and no regulator to enforce fairness.

What concerns me is the idea that risks like these might leak into the regulated financial sector.

Right now, if I want to avoid my dollars being among those billions stolen, I can (and do) keep them someplace far away from instant digital currency. With firms that, while they could move large sums of their money somewhere else, build in a whole lot of friction in proportion to the amount being moved—by their customers, their staff, and their counterparties. Limited and well-understood modes of potential malfeasance, and strong structural discouragement for each of them.

There is nothing that I need to do that needs to move fast. But I’d hate for the firms servicing my slow, boring needs to be tempted by the new shiny.

TFA seems to suggest that the thieves modified the signers’ applications to display a routine transaction but actually sign the heist transaction.

Given that the UI they saw was compromised, they likely believed they were signing some routine 1M rebalancing transaction.

Indeed. As in, the organization should only sign such transactions when all signers are present in person in a secure location and they follow a procedure witnessed by independent auditors. “Work from home” when you control billion in value does not cut it.

> the signers failed to verify what they were signing on air-gapped devices

This is the part that really surprises me given the amount of money involved.

Multi-sig means multiple signatures, by multiple private keys. Nothing about that means that they have to be by multiple people - this isn’t secure like a bank - or that they aren’t vulnerable to the same attack.