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During the C5C3 Refreshing Memories Conference, security researchers from Wallet.fail successfully demonstrated a hack of the Trezor One, Ledger Nano S, and Ledger Blue cold storage wallets.

The team demonstrated how they were able to manipulate the firmware of the cold wallets with physical access to the devices to reveal the private keys and recovery seeds of the wallet. The team of security researchers includes Dmitry Nedospasov, Thomas Roth, and Josh Datko.

A Successful Demonstration With Some Important Caveats

The Wallet.fail team Trezor hack requires physical access to the cold wallet device, where they subsequently inject firmware into the device and overwrite the data to extract the necessary private keys and recovery seeds.

The team was able to overwrite data on the Trezor One and extract the private key with physical access to the device.

With the Ledger Nano, the team revealed how they could inject nearly any firmware into the device, even playing the game Snake on the Ledger Nano. The researchers were also able to send malicious transactions to the device and remotely sign them, while the device showed a different transaction, masking the actual transaction from the user.

However, both hacks only work with physical access to the device and if the user does not set a passphrase. If the user sets a strong passphrase, the resulting hacking vector would amount to the same brute force tactics that are what make cold wallets so secure in the first place since successful brute forcing is infeasible.

The high-end Ledger Blue hack is slightly more sophisticated and leverages leaked radio wave signals from the device’s touchscreen. The team attached a USB device to the Ledger Blue and determined the user’s PIN by analyzing the leaked radio wave signals from the device’s screen when the PIN is entered. They could reliably predict what the user’s PIN was, but this hack also requires physical access to the device.

Ledger and Trezor Response and Mitigating These Hacks

Ledger responded to the hacks yesterday detailing how they are not critical and will be updating their firmware to mitigate them in the future. Additionally, they welcome the attempt to hack their devices as it is an excellent method for improving hardware security and adapting to evolving threats.

The company by the Trezor device — SatoshiLabs — also responded with a similar sentiment, stating that they wished the researchers had presented this through their Responsible Disclosure Program but welcomed new improvements. The CTO of SatoshiLabs — Pavol Rusnak — commented that Trezor would introduce new security firmware upgrades at the end of January.

Work by Wallet.fail is critical for keeping hardware security at the forefront of innovation. While their presentation is intriguing, the qualifiers necessary to successfully perform the attack are significant, and the hacks can easily be mitigated with strong passphrases.

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