QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
UNKNOWN
MARCH 2022
UNITED STATES
UNCHAINED CAPITAL
DESCRIPTION OF EVENTS
"Established at block height 433179, Unchained Capital is the world’s premier bitcoin financial services company." "We make it easy for you to get the most from your bitcoin while holding your own keys." "Secure your bitcoin with multisig keys that you control." "Multisig vaults for teams with granular access permissions."
"In March 2019, we launched our bitcoin multisig vault platform, a superior approach to security that combines the control of self-custody with the benefits of a managed financial service. This approach allows users to control private keys and to create redundancy by distributing keys among participants who know and trust each other."
"When a client chooses Unchained, they are making a decision to reveal themselves selectively to our company, and not to anyone else, in exchange for better security, redundancy, support, and more value from their holdings through our financial services. In doing so, we recognize that clients sacrifice anonymity and entrust us with their privacy in return for the value of our service."
"We go to great lengths to secure client data through our internal infrastructure, proprietary applications, and the third parties we rely upon to run our business. We utilize encryption, access control, user management, and are extremely conservative about what information we share with third parties, far more conservative than the standard in our industry. We perform due diligence before engaging any new vendor to process data for us, including a review of any independent security audits (such as SOC II reports), and hold our vendors to a high standard."
"Ensuring the privacy of our clients is critical to our business as is transparency around the information we collect and the associated risks. We want our customers to not only be informed about the value and services we deliver but also potential tradeoffs. Prior to using our services, we recommend all potential clients review our materials on privacy and security and please reach out to us with any questions."
"Most individuals don’t understand the power of a CRM. At minimum, these tools allow companies to acquire, sort and manage incoming customers (and their data) in a way that provides the best user experience. At maximum, these tools are capable of an extreme degree of web monitoring and AI-based user segmentation and prediction."
"ActiveCampaign (“AC”) [was] a third-party email marketing provider that Unchained Capital used." "Unchained Capital used AC until February 2022 to support [their] marketing and sales functions. As a result, limited data was shared with AC depending on the nature of services clients or prospective clients were interested in or used." "For clients, this data included: email addresses, usernames, account status (active/inactive) and whether the client had an active vault or loan with Unchained Capital (yes or no)." "For individuals that purchased a service directly through our website, such as Concierge Onboarding, scheduled a consultation, or signed up on our website for updates and our newsletter, this data included: their name, email address, and IP address (but no shipping addresses were ever stored in AC)."
On March 10th, "ActiveCampaign (“AC”) was the subject of a social engineering attack." "The attack was conducted through a live chat tool on AC’s public website, which did not require any user authentication, on Thursday March 10th between approximately 8-9am CST."
"An attacker impersonating an Unchained Capital employee socially engineered an AC support chat representative to reactivate Unchained Capital’s account which had been closed on February 17th, 2022. Subsequently, the attacker(s) then socially engineered a second AC support chat representative to add an administrative user using a username and password provided by the attacker. The attacker then gained unauthorized access to the reopened Unchained Capital account without needing a valid email and was able to export data from our previously closed AC account."
"The social engineering attack took place on the AC platform, and involved AC personnel, procedures, systems and applications." "[O]nly information shared with AC – client email addresses, usernames, account status, whether the client had an active multisig vault or loan with Unchained Capital and possibly IP addresses – may have been exported without authorization." "This attack occurred after Unchained Capital had closed its AC account and requested that all data be purged."
"Though [Unchained] had requested this data be deleted, it was not. Unfortunately, we only learned that AC had not deleted this data after discovering the social engineering attack. Within 20 minutes of the attack, an Unchained Capital administrator received emails with the fraudulent chat transcripts and took immediate measures to restrict further access. After the attack was identified, Unchained Capital worked to gather these relevant facts. Ultimately, on Tuesday, March 15th, AC confirmed unauthorized access did occur and that the attacker was able to export the data described above."
"In an email to clients and a letter posted on the company website on Wednesday [a week after the attack], Unchained Capital CEO Joe Kelly said ActiveCampaign (AC), an outside email marketing provider used by Unchained until earlier this year, was hit with a social engineering attack."
"[C]lient profile information that was never shared with AC was not leaked. This would include data including physical addresses, Social Security numbers, dates of birth, IDs, phone numbers, bank account numbers, passwords, bitcoin (BTC) addresses, bitcoin balances, loan balances, trading activity, vault statements and loan statements."
"Please be diligent, and where there is any doubt, it is best to always err on the side of caution and reach out to us for confirmation. Specifically, if clients receive suspicious emails requesting to change passwords, perform any actions to sign transactions or replace any keys that secure your bitcoin, please do not take any such actions and reach out to us immediately. Our client services team and executives are on standby to take calls and answer all questions clients have. We will also be hosting a continuing education webinar on spear phishing and general best practices to avoid any associated risks."
"Kelly added that while client bitcoin custody is protected by multisig cold storage, clients nevertheless should be aware of what happened and be vigilant against phishing attacks."
"We are deeply sorry this incident occurred as we take our clients’ privacy very seriously," concluded Kelly. "We want to reinforce the fact that, due to our collaborative custody model, no such incidents could ever put any client funds at risk."
"We have ensured that this social engineering attack vector is not possible with our current email marketing provider and over the coming weeks, we will be carefully reviewing all security measures and processes including vendor risk management."
"While we minimize the need for trust in the ultimate security of client funds through our approach to custody, our clients still put an immense amount of trust in us to protect their privacy and to ensure these incidents do not occur. As bitcoiners and clients of Unchained Capital ourselves, we have taken on these responsibilities with a clear understanding of the weight of our obligations. While we carry the gravity of this disclosure and security incident with us, we will learn from mistakes and strive to do better."
Unchained Capital is a bitcoin custody service which assists individuals in setting up multi-signature wallets. For marketing, they used a customer relationship management tool called ActiveCampaign. In February 2022, they closed down their account and requested all data to be deleted. However, the following month, fraudsters impersonated them and succeeded in reopening the account. This gave the fraudsters access to all the contact information of different customers that had been stored in the platform.
Unchained Capital appears to have been transparent around which information was leaked and how the events unfolded. They have advised customers to be vigilantly looking out for any spear-phishing attempts using their stolen data.
HOW COULD THIS HAVE BEEN PREVENTED?
The situation involved a failure to verify the identity of the account holder, and a failure to remove customer data which was requested to be removed already. Beyond this, access to the entire mailing list was possible for a single employee of the company. Greater security can be achieved when the actual contact information is not directly handled by employees without multi-signature approval, especially to access full mailing lists.
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