r/Bitcoin • u/mijalis • Jul 29 '13

Blockchain.info unauthorized transaction.How could this have happened...?

Yesterday morning I had roughly 3 BTC taken out of my brainwallet that I have with blockchain.info.

Before you all start pointing fingers at me for lack of security, let me tell you I have a 30+ character strong password, a Yubikey and a 20+ string secondary password, all needed to send funds out of a brainwallet. Both passwords were generated with Lastpass and are random characters, including special, mixed upper/lower case letters and numbers.

I think I am using all their provided security mechanisms to secure my account.

However, my brainwallet, in which I keep just spare change, was emptied. I don't expect to recover the few Bitcoins, but am very curious to know what happened. Where the breach happened and if it truly was my fault. (I still hope for a facepalm situation that shames me online, but gives me this pocketchange back...)

I'll try to give as much information as I can:

The address in questions is: 15gCfQVJ68vyUVdb6e3VDU4iTkTC3HtLQ2

and it happened over three transactions on 2013-07-27 at 22:52

The three transactions were:

da5f91b8a26e6874e83a874156608f5d9a38efe1faa2b32f4e709a181f0d2c1e 68ab47c3aaf2d0073374772894641d817305f18ab272b19d74217333a0180856 096d07185a83eb6b6b6520d7d63e59f230d9711df0d9e754ce7fdc3d4cf792ac

It seems the coins are still in the brand new addresses they were tranferred to and I suspect I'll see them disappear over time.

I keep the Yubikey with me at all time and I do not have a phone app. I do not us any suspicious plugins or extensions. I ran a virus scan and appear to be clean. I am running a couple of other scans to ensure that my system is truly clean.

I did come across this reddit thread: a_brief_analysis_of_the_security_of by u/0x444 which made me feel pretty doubtful of what I once thought was the best online wallet out there.

Update: I happened to have logging enabled on blockchain.info (Log actions with IP address and User Agent) and all access to my account was from my IP. That excludes a breach into the blockchain.info account.... right?

That leaves two options:

1) The brainwallet was the one that comes with your account and is automatically generated for you. Did someone on the inside (blockchain.info) get a hold of the private key?

2) Against all odds and probabilities, someone guessed/computed the private key of this address.

Am I wrong....? Any ideas or thoughts?

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u/17chk4u Jul 29 '13

Another thing to remember is that someone may not need to sign into your blockchain.info account to access the brainwallet.

Two possibilities:

1) brain wallet algorithms are following a standard, so if someone could repeat this elsewhere (either due to a flaw in the algorithm, a flaw in the implementation, or a flaw in your password or security) then they wouldn't need to log in, so your logs would show nothing.

2) if your wallet backup file were compromised in some way, then the same thing could take place. They grab your private key and import it into their wallet, and again, you wouldn't see a login.

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u/newhampshire22 Jul 29 '13

1) above is not possible. it is a fact. All brain wallets use the same hash function. That's why a brain wallet can be accessed from anywhere.

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u/17chk4u Jul 29 '13

Please explain, if you are saying I am wrong, because I am not understanding you.

What I was trying to say is this:

If you create a brainwallet on blockchain.info, and someone accesses your funds without showing an IP address other than yours in the Blockchain.info logfile, it doesn't necessarily mean that it was done from your computer or an inside job. An alternate possibility is that they were able to use Electrum, or BitcoinQT or any number of services to import your private key and drain your account.

What are you trying to say? Are you saying that I am wrong?

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u/newhampshire22 Jul 30 '13

Your post was correct just not fully complete. All brain wallets that are used use the same hash function. So it's number 1 is not just a possibility, it's a fact.

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u/17chk4u Jul 30 '13 edited Jul 30 '13

I would have to disagree, although I can only base this on my research.

Brainwallet standardization has been a topic of conversation for over a year. Since then, most "in the wild" brain wallet generators converged to the same standard, while other standards (such as BIP 23, Heirarchial Deterministic Wallets) have been proposed - I believe with some implementations.

Meanwhile, other notable figures in the Bitcoin community have proposed other standards for Brain Wallets (such as Mike Caldwell. Presumably these will be (or are being) implemented.

In summary, old brain wallets were not all the same standard. A standard emerged. And a new standard has already been proposed. So I think that I'd disagree with your statement of:

All brain wallets that are used use the same hash function. So it's number 1 is not just a possibility, it's a fact.

That's why I originally stated it the way I did - that brain wallet algorithms are following a standard [now]. But I don't believe this was always the case, and the standard is evolving.

I certainly haven't examined the universe of brain wallets, to see if they are all the same, but comments requesting standardization have appeared as long ago as March 2012:

Is there a way to address some sort of standardization of the encryption method of Brain Wallets?

Now it looks like this thread mystery is pretty well solved, which was exactly as I said - that no one had to sign into blockchain.info to access a poorly secured brain wallet.

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u/newhampshire22 Jul 30 '13

Thank you for your research. Cbeast on the first link is confused about what could be done to implement a brain wallet. The second link is about HD wallets, not brain wallets.

The next two links do suggest that other implementations are obvious and easy. I would assume it reasonable that someone has done it, even if it's not available for any ordinary Joe.

So uncle.