Parity Wallet Hack Explained

etheraveum (46)in #cryptocurrency • 7 years ago

What happened!!?

At around 12:19 pm UTC today, 153,037 ETH (30M USD) was stolen from Edgeless Casino, Aeternity, and Swarm City. The funds were stolen from these accounts by likely the same core of hackers that pulled of the infamous DAO hack. The Ethereum client Parity was exploited even though it had been touted as the safest method of interacting with the Ethereum network.

Parity was quick to issue a security alert, but not all were too impressed with this second major hack.

How did it happen!?

The hackers exploited a deficiency in the multi sig wallet "init" code (this is where the contract is developed/constructed), and a work around (forwarding of contracts; delegatecall) that developers have been using to reduce the transaction costs by up to 95%.

The hack was completed by initiating two separate transactions, the first was likely to take advantage of the "init" code not having a defined scope; this deficiency allowed the hackers to basically make themselves the owners of the accounts/contracts. The second transaction was used to drain the targeted accounts. If you take a look at the Etherscan screenshots below, you can see the functions sent in the Input Data field.

First Transaction

Second Transaction

If you want to take a look at the multi sig wallet code repository, it is linked below. Lines 216, and 424 are the functions used by the hackers.

https://github.com/paritytech/parity/blob/4d08e7b0aec46443bf26547b17d10cb302672835/js/src/contracts/snippets/enhanced-wallet.sol#L216

Now what!?

Some good news is White Hat hackers caught on to the hack and quickly started moving funds from wallets that could be attacked in to safer storage. White Hat Hackers have moved these funds to safety:

If we look back, the DAO hack resulted in a "refund" for those affected. I'm not sure that this will happen again because it did result in a hard fork, but nothing is for sure. I'm not the only one that is curious though...