Binance Bridge Forged Proof Exploit: Difference between revisions

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(Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/binancebridgeforgedproofexploit.php}} {{Unattributed Sources}} thumb|BNB ChainAn attacker found a massive hole in the proof validation that Binance was using to validate that payments had been made to their bridge, and was able to extract $566m worth of BNB token. The nodes were shut down after $127m was taken off-chain, and the rest of the money was frozen. This is a global...")
 
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{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/binancebridgeforgedproofexploit.php}}
{{Case Study Under Construction}}{{Unattributed Sources}}
{{Unattributed Sources}}


[[File:Bnbchain.jpg|thumb|BNB Chain]]An attacker found a massive hole in the proof validation that Binance was using to validate that payments had been made to their bridge, and was able to extract $566m worth of BNB token. The nodes were shut down after $127m was taken off-chain, and the rest of the money was frozen.
[[File:Bnbchain.jpg|thumb|BNB Chain]]An attacker found a massive hole in the proof validation that Binance Smart Chain nodes were using to validate that payments had been made to their bridge. The attacker was able to extract $566m worth of BNB token. The nodes were shut down after $127m was taken off-chain, and the rest of the money was frozen.


This is a global/international case not involving a specific country.<ref name="newsletter-11414" /><ref name="samczsuntwitter-11415" /><ref name="samczsuntwitter-11416" /><ref name="newsletterarchive-11417" /><ref name="threadreaderapp-11418" /><ref name="techcrunch-11419" /><ref name="slowmistteamtwitter-11420" /><ref name="czbinancetwitter-11421" /><ref name="bnbchain-11422" /><ref name="investopedia-11423" /><ref name="bleepingcomputer-11424" /><ref name="zellic-11425" /><ref name="decrypt-11426" /><ref name="coindesk-11427" /><ref name="watcherguru-11428" /><ref name="bankinfosecurity-11429" /><ref name="bnbchain-11430" />
This is a global/international case not involving a specific country.<ref name="newsletterarchive-11417" /><ref name="techcrunch-11419" /><ref name="slowmistteamtwitter-11420" /><ref name="czbinancetwitter-11421" /><ref name="bnbchain-11422" /><ref name="investopedia-11423" /><ref name="bleepingcomputer-11424" /><ref name="zellic-11425" /><ref name="decrypt-11426" /><ref name="coindesk-11427" /><ref name="watcherguru-11428" /><ref name="bankinfosecurity-11429" />


== About Binance Bridge ==
== About Binance Bridge ==
<ref name="bnbchain-11430" />
== The Reality ==
The Binance Bridge contained an exploit in the proof mechanism.
== What Happened ==
"an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge." "the attack appears to have started at 2:30 PM EST [on October 6th, 2022], with the attacker's wallet receiving two transactions [1, 2], each consisting of 1,000,000 BNB."
"an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge." "the attack appears to have started at 2:30 PM EST [on October 6th, 2022], with the attacker's wallet receiving two transactions [1, 2], each consisting of 1,000,000 BNB."
{| class="wikitable"
|+Key Event Timeline - Binance Bridge Forged Proof Exploit
!Date
!Event
!Description
|-
|October 6th, 2022 5:35:00 PM MDT
|Samczson Post
|Samczsun starts posting a technical analysis<ref name="samczsuntwitter-11415" /><ref name="samczsuntwitter-11416" /><ref name="threadreaderapp-11418" />.
|-
|
|
|
|}


== Technical Details ==
"there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse"
"there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse"


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“The hacker managed to forge such a message that it tricked the logic of the contract into thinking the message was indeed valid, even though the hacker didn’t have valid claims to the funds. BSC Token Hub then proceeded with the payout as everything was valid,” said Hetman.
“The hacker managed to forge such a message that it tricked the logic of the contract into thinking the message was indeed valid, even though the hacker didn’t have valid claims to the funds. BSC Token Hub then proceeded with the payout as everything was valid,” said Hetman.


"When hackers exploited a bug in the BSC Token Hub (a cross-chain bridge connecting the BNB Beacon Chain and BNB Chain) which allowed them to extract 2M BNB (~$570M), the entire chain was “paused” before the hacker could make off with his exploits. As a result, the hacker only managed to snag ~127M off chain."
=== SlowMist Technical Analysis ===
<ref name="slowmistteamtwitter-11420" /> TBD
 
=== Samczsun Technical Analysis ===
Samczsun published a technical analysis of the exploit on Twitter<ref name="samczsuntwitter-11415" /><ref name="samczsuntwitter-11416" /><ref name="threadreaderapp-11418" />.<blockquote>Five hours ago, an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge. During that time, I've been working closely with multiple parties to triage and resolve this issue. Here's how it all went down.
 
It all started when @zachxbt sent me the attacker's address out of the blue. When I clicked into it, I saw an account worth hundreds of millions of dollars. Either someone had pulled off a huge rug, or there was a massive hack underway


"The Binance blockchain, also known as BNB Chain and Binance Smart Chain, took the rare step of suspending transactions and fund transfers after discovering a vulnerability affecting the BSC Token Hub cross-chain bridge. These bridges are designed to facilitate the transfer of assets from one independent blockchain to another."
At first, I thought that @VenusProtocol had been hacked yet again. However, it only took a couple seconds to determine that the attacker *really did* deposit over $200M USD into Venus Instead, I needed to figure out where those funds came from


"Simply put, Binance “asked” all its validators (real nicely) to temporarily suspend the chain."
The answer was that the attacker had somehow convinced the Binance Bridge to simply send them 1,000,000 BNB. Twice.


"That’s easy for Binance to do because Binance is also a highly centralized chain with a total of 25 validators, all of whom were pre-approved by Binance themselves."
Either Binance was finally running the biggest giveaway that Web3 had ever seen, or the attacker had found a critical bug


"Binance acknowledged the security incident at 6:19 PM EST and paused the BNB Smart Chain while they investigated the incident.
I started by comparing the attacker's transactions with legitimate withdrawals. The first thing I noticed was that the height used by the attacker was always the same - 110217401. The heights used by legitimate withdrawals were much bigger, such as 270822321


At 7:51 PM EST, the CEO of Binance tweeted that an exploit was used in the BSC Token Hub to transfer the BNB to the attacker and that they had asked all validators to suspend the Binance Smart Chain."
I also noticed that the attacker's proof was significantly shorter than the legitimate withdrawal's proof. These two facts led me to believe that the attacker had found a way to forge a proof for that specific block - 110217401. Now I had to figure out how these proofs worked


"In a blog post on Friday, the BNB Chain team said that a total of 2 million BNB — worth approximately $568 million — were initially withdrawn by the hacker. But blockchain security company SlowMist says the attacker only managed to take about $110 million because the majority of the stolen tokens, worth about $430 million, couldn’t be transferred following the suspension of the BNB Chain."
On Binance, there's a special precompile contract used to verify IAVL trees. If you don't know anything about IAVL trees, don't worry. I still don't understand about 95% of it. Fortunately, all you and I need to reproduce the hack is the remaining 5%


"Binance chief executive Changpeng Zhao said in a tweet that the company estimates the impact of the breach to be between $100 million and $110 million."
Ok, so basically, when you verify an IAVL tree, you specify a list of "operations". The Binance Bridge typically expects two of them: an "iavl:v" operation, and a "multistore" operation. Here are their implementations


"When approached for comment, Binance spokesperson Ismael Garcia declined to comment beyond the blog posted by the BNB Chain team, which says that the BNB Chain is now back up and running. The blog post adds that a new on-chain governance mechanism will be introduced on the BNB Chain to fight and defend against future possible attacks."
In order to forge a proof, we need both operations to succeed, and we need to last operation (the multistore) to return a fixed value (the hash of the specified block: 110217401)


"Moving forward, BNB Chain’s validators said they would hold a series of on-chain governance votes that would decide whether the hacked funds should be frozen, as well as whether a bug bounty reward system should be put in place to prevent future hacks."
Looking at the implementation, we can convince ourselves with some effort that it's impossible, or at least very difficult, to manipulate the root hash. Or you can just take my word for it. This means that we need our input value to be equal to one of the commit IDs


"The Moran hard fork seeks to amend several issues on the BNB Chain stemming from its $100 million hack last week."
The input value of the "multistore" operation is the output value of the "iavl:v" operation. This means that we want to somehow control the root variable here, while still passing the value verification


This is a global/international case not involving a specific country.
So how is the root hash computed? Well, it happens in this monster of a function called COMPUTEHASH. At a very very high level, it recursively goes over each path and leaf and does a bunch of hashing and really the implementation details don't matter


The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
What does matter is that due to the way that hash functions are intended to work, we can basically say with certainty that any (path, nleaf) pair will produce a unique hash. If we want to forge a proof, those will need to stay the same


Include:
Looking at the way that the proof is laid out in a legitimate transaction, we see it has a very long path, no inner nodes, and only one leaf node. This leaf node contains the hash of our malicious payload! If we can't modify this leaf node, then we'll need to add a new one


* Known history of when and how the service was started.
Of course, if we add a new leaf node, we'll also need to add a new inner node to match
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.


Don't Include:
Now we just have one last obstacle to face. How do we actually get COMPUTEHASH to return the root hash we want? Well, notice that eventually we'll need a path to contain a non-zero right hash. When we find one that does, we assert it matches the intermediate root hash
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.


== The Reality ==
Let's just instrument the code a bit so we can figure out what hash we need and....
This sections is included if a case involved deception or information that was unknown at the time. Examples include:


* When the service was actually started (if different than the "official story").
All that's left is to put it all together. We'll take a legitimate proof and modify it so that: 1) we add a new leaf for our forged payload 2) we add a blank inner node to satisfy the prover 3) we tweak our leaf to exit early with the correct root hash
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.


== What Happened ==
(It's worth noting that this wasn't the exact method the attacker used. Their proof path is much shorter, and I'm not sure how exactly they generated that. However, the rest of the exploit is identical, and I believe showing how to build it from the ground up is valuable)
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
{| class="wikitable"
|+Key Event Timeline - Binance Bridge Forged Proof Exploit
!Date
!Event
!Description
|-
|October 6th, 2022 5:35:00 PM MDT
|Samczson Post
|Samczsun posts a technical analysis.
|}


== Technical Details ==
In summary, there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse</blockquote>
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?


== Total Amount Lost ==
== Total Amount Lost ==
The total amount lost has been estimated at $566,000,000 USD.
The total amount lost has been estimated at $566,000,000 USD.


How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
"an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge." "the attack appears to have started at 2:30 PM EST [on October 6th, 2022], with the attacker's wallet receiving two transactions [1, 2], each consisting of 1,000,000 BNB."
 
"there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse"


== Immediate Reactions ==
== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
The Binance Bridge was paused and Binance immediately acknowledged the incident.
 
=== Pausing Of The Binance Bridge ===
"When hackers exploited a bug in the BSC Token Hub (a cross-chain bridge connecting the BNB Beacon Chain and BNB Chain) which allowed them to extract 2M BNB (~$570M), the entire chain was “paused” before the hacker could make off with his exploits. As a result, the hacker only managed to snag ~127M off chain."
 
"The Binance blockchain, also known as BNB Chain and Binance Smart Chain, took the rare step of suspending transactions and fund transfers after discovering a vulnerability affecting the BSC Token Hub cross-chain bridge. These bridges are designed to facilitate the transfer of assets from one independent blockchain to another."
 
"Simply put, Binance “asked” all its validators (real nicely) to temporarily suspend the chain."
 
"That’s easy for Binance to do because Binance is also a highly centralized chain with a total of 25 validators, all of whom were pre-approved by Binance themselves."
 
=== Binance Acknowledgement of Incident ===
"Binance acknowledged the security incident at 6:19 PM EST and paused the BNB Smart Chain while they investigated the incident.
 
At 7:51 PM EST, the CEO of Binance tweeted that an exploit was used in the BSC Token Hub to transfer the BNB to the attacker and that they had asked all validators to suspend the Binance Smart Chain."


== Ultimate Outcome ==
== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Binance shared an incident summary. A vote was held regarding what should be done with the frozen funds from teh exploit. The Binance Smart Chain was ultimately hard-forked in the Moran hard fork to resolve the vulnerability.
 
=== Binance Blog Post Incident Summary ===
"In a blog post on Friday, the BNB Chain team said that a total of 2 million BNB — worth approximately $568 million — were initially withdrawn by the hacker. But blockchain security company SlowMist says the attacker only managed to take about $110 million because the majority of the stolen tokens, worth about $430 million, couldn’t be transferred following the suspension of the BNB Chain."
 
"Binance chief executive Changpeng Zhao said in a tweet that the company estimates the impact of the breach to be between $100 million and $110 million."
 
"When approached for comment, Binance spokesperson Ismael Garcia declined to comment beyond the blog posted by the BNB Chain team, which says that the BNB Chain is now back up and running. The blog post adds that a new on-chain governance mechanism will be introduced on the BNB Chain to fight and defend against future possible attacks."
 
=== Hacked Funds Frozen ===
"Moving forward, BNB Chain’s validators said they would hold a series of on-chain governance votes that would decide whether the hacked funds should be frozen, as well as whether a bug bounty reward system should be put in place to prevent future hacks."
 
=== Hard Fork of Binance Smart Chain ===
"The Moran hard fork seeks to amend several issues on the BNB Chain stemming from its $100 million hack last week."


== Total Amount Recovered ==
== Total Amount Recovered ==
The total amount recovered has been estimated at $439,000,000 USD.
The total amount frozen and redistributed has been estimated at $439,000,000 USD.


What funds were recovered? What funds were reimbursed for those affected users?
None of the funds which were bridged to other chains are reported as having been recovered. TBD - Confirm.


== Ongoing Developments ==
== Ongoing Developments ==
What parts of this case are still remaining to be concluded?
TBD
== Individual Prevention Policies ==
== Individual Prevention Policies ==
{{Prevention:Individuals:Placeholder}}
{{Prevention:Individuals:Placeholder}}
{{Prevention:Individuals:Safe Smart Contract Usage}}
{{Prevention:Individuals:Store Funds Offline}}


{{Prevention:Individuals:End}}
{{Prevention:Individuals:End}}
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{{Prevention:Platforms:Placeholder}}
{{Prevention:Platforms:Placeholder}}


{{Prevention:Platforms:End}}
{{Prevention:Platforms:Implement Multi-Signature}}


== Regulatory Prevention Policies ==
{{Prevention:Regulators:Placeholder}}


{{Prevention:Regulators:End}}
{{Prevention:Platforms:Regular Audit Procedures}}


== References ==
<references><ref name="newsletter-11414">[https://newsletter.banklesshq.com/p/stoppable-finance-lite https://newsletter.banklesshq.com/p/stoppable-finance-lite] (Oct 11, 2022)</ref>


<ref name="samczsuntwitter-11415">[https://twitter.com/samczsun/status/1578167198203289600 @samczsun Twitter] (Jul 24, 2023)</ref>
{{Prevention:Platforms:Establish Industry Insurance Fund}}


<ref name="samczsuntwitter-11416">[https://twitter.com/samczsun/status/1578169420194934784 @samczsun Twitter] (Jul 24, 2023)</ref>
{{Prevention:Platforms:End}}


<ref name="newsletterarchive-11417">[https://web.archive.org/web/20221010212053/https://newsletter.banklesshq.com/p/stoppable-finance-lite <nowiki>Stoppable Finance [LITE] - by Donovan Choy - Bankless</nowiki>] (Jul 24, 2023)</ref>
== Regulatory Prevention Policies ==
{{Prevention:Regulators:Placeholder}}


<ref name="threadreaderapp-11418">[https://threadreaderapp.com/thread/1578167198203289600.html Thread by @samczsun on Thread Reader App – Thread Reader App] (Jul 24, 2023)</ref>
{{Prevention:Regulators:Platform Security Assessments}}


<ref name="techcrunch-11419">[https://techcrunch.com/2022/10/07/blockchain-bridge-hack/ Binance hit by $100 million blockchain bridge hack | TechCrunch] (Jul 24, 2023)</ref>


<ref name="slowmistteamtwitter-11420">[https://twitter.com/SlowMist_Team/status/1578220472373649408 @SlowMist_Team Twitter] (Jul 24, 2023)</ref>
{{Prevention:Regulators:Blockchain Level Exploit Handling}}


<ref name="czbinancetwitter-11421">[https://twitter.com/cz_binance/status/1578171072067031042 @cz_binance Twitter] (Jul 24, 2023)</ref>


<ref name="bnbchain-11422">[https://www.bnbchain.org/en/blog/bnb-chain-ecosystem-update/ BNB Chain Ecosystem Update] (Jul 24, 2023)</ref>
{{Prevention:Regulators:Establish Industry Insurance Fund}}


<ref name="investopedia-11423">[https://www.investopedia.com/binance-got-hacked-6748215 Binance Hit By $570 Million Blockchain Bridge Hack] (Jul 24, 2023)</ref>
{{Prevention:Regulators:End}}


<ref name="bleepingcomputer-11424">[https://www.bleepingcomputer.com/news/security/hacker-steals-566-million-worth-of-crypto-from-binance-bridge/ Hacker steals $566 million worth of crypto from Binance Bridge] (Jul 24, 2023)</ref>
== References ==
 
<references>
<ref name="zellic-11425">[https://www.zellic.io/blog/binance-bridge-hack-in-laymans-terms Binance Bridge Hack in Layman's Terms] (Jul 24, 2023)</ref>
<ref name="newsletter-11414">[https://newsletter.banklesshq.com/p/stoppable-finance-lite <nowiki>Stoppable Finance [LITE] - by Donovan Choy - Bankless</nowiki>] (Oct 11, 2022)


[https://web.archive.org/web/20221010212053/https://newsletter.banklesshq.com/p/stoppable-finance-lite <nowiki>Stoppable Finance [LITE] - by Donovan Choy - Bankless Archive October 10th, 2022 3:20:53 PM MDT</nowiki>] (Jul 24, 2023)</ref>
<ref name="samczsuntwitter-11415">[https://twitter.com/samczsun/status/1578167198203289600 samczsun - "Five hours ago, an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge. During that time, I've been working closely with multiple parties to triage and resolve this issue. Here's how it all went down." - Twitter] (Jul 24, 2023)</ref>
<ref name="samczsuntwitter-11416">[https://twitter.com/samczsun/status/1578169420194934784 samczsun - "Either Binance was finally running the biggest giveaway that Web3 had ever seen, or the attacker had found a critical bug" - Twitter] (Jul 24, 2023)</ref>
<ref name="newsletterarchive-11417">[https://web.archive.org/web/20221010212053/https://newsletter.banklesshq.com/p/stoppable-finance-lite <nowiki>Stoppable Finance [LITE] - by Donovan Choy - Bankless Archive October 10th, 2022 3:20:53 PM MDT</nowiki>] (Jul 24, 2023)</ref>
<ref name="threadreaderapp-11418">[https://threadreaderapp.com/thread/1578167198203289600.html Thread by @samczsun on Thread Reader App – Thread Reader App] (Jul 24, 2023)</ref>
<ref name="techcrunch-11419">[https://techcrunch.com/2022/10/07/blockchain-bridge-hack/ Binance hit by $100 million blockchain bridge hack - TechCrunch] (Jul 24, 2023)</ref>
<ref name="slowmistteamtwitter-11420">[https://twitter.com/SlowMist_Team/status/1578220472373649408 SlowMist - "Since the $BNB Chain was suspended, the ~$430M on it cannot be transferred any further.  In total, over $110M was moved off the BNB Chain Frozen: ~6,5M $USDT Supplied to lending pools: ~$37.5M Borrowed: ~$16.5M Still have access to: $83.3M" - Twitter] (Jul 24, 2023)</ref>
<ref name="czbinancetwitter-11421">[https://twitter.com/cz_binance/status/1578171072067031042 @cz_binance Twitter] (Jul 24, 2023)</ref>
<ref name="bnbchain-11422">[https://www.bnbchain.org/en/blog/bnb-chain-ecosystem-update/ BNB Chain Ecosystem Update - BNBChain Blog] (Jul 24, 2023)</ref>
<ref name="investopedia-11423">[https://www.investopedia.com/binance-got-hacked-6748215 Binance Hit By $570 Million Blockchain Bridge Hack - Investopedia] (Jul 24, 2023)</ref>
<ref name="bleepingcomputer-11424">[https://www.bleepingcomputer.com/news/security/hacker-steals-566-million-worth-of-crypto-from-binance-bridge/ Hacker steals $566 million worth of crypto from Binance Bridge - BleepingComputer] (Jul 24, 2023)</ref>
<ref name="zellic-11425">[https://www.zellic.io/blog/binance-bridge-hack-in-laymans-terms Binance Bridge Hack in Layman's Terms - Zellic] (Jul 24, 2023)</ref>
<ref name="decrypt-11426">[https://decrypt.co/111773/bnb-chain-upgrade-restores-cross-chain-transfers-following-binance-bridge-hack BNB Chain Upgrade Restores Cross-Chain Transfers Following Binance Bridge Hack - Decrypt] (Jul 24, 2023)</ref>
<ref name="decrypt-11426">[https://decrypt.co/111773/bnb-chain-upgrade-restores-cross-chain-transfers-following-binance-bridge-hack BNB Chain Upgrade Restores Cross-Chain Transfers Following Binance Bridge Hack - Decrypt] (Jul 24, 2023)</ref>
 
<ref name="coindesk-11427">[https://www.coindesk.com/business/2022/10/10/binance-exec-bnb-smart-chain-hack-could-have-been-worse-if-validators-hadnt-sprung-into-action/ Binance Exec: BNB Smart Chain Hack Could Have Been Worse if Validators Hadn’t ‘Sprung Into Action’ - CoinDesk] (Jul 24, 2023)</ref>
<ref name="coindesk-11427">[https://www.coindesk.com/business/2022/10/10/binance-exec-bnb-smart-chain-hack-could-have-been-worse-if-validators-hadnt-sprung-into-action/ Binance Exec: BNB Smart Chain Hack Could Have Been Worse if Validators Hadn’t ‘Sprung Into Action’] (Jul 24, 2023)</ref>
<ref name="watcherguru-11428">[https://watcher.guru/news/binance-bridge-2-0-is-set-to-welcome-almost-all-ethereum-tokens Binance Bridge 2.0 is set to welcome almost all Ethereum tokens - Watcher.Guru] (Jul 24, 2023)</ref>
 
<ref name="bankinfosecurity-11429">[https://www.bankinfosecurity.com/hacker-exploits-bug-to-steal-millions-from-binance-bridge-a-20224 Hacker Exploits Bug to Steal Millions Fom Binance Bridge - BankInfoSecurity] (Jul 24, 2023)</ref>
<ref name="watcherguru-11428">[https://watcher.guru/news/binance-bridge-2-0-is-set-to-welcome-almost-all-ethereum-tokens Binance Bridge 2.0 is set to welcome almost all Ethereum tokens] (Jul 24, 2023)</ref>
<ref name="bnbchain-11430">[https://www.bnbchain.org/en/bridge Binance Smart Chain | Binance Bridge | Binance Panama] (Jul 24, 2023)</ref>
 
</references>
<ref name="bankinfosecurity-11429">[https://www.bankinfosecurity.com/hacker-exploits-bug-to-steal-millions-from-binance-bridge-a-20224 Hacker Exploits Bug to Steal Millions Fom Binance Bridge] (Jul 24, 2023)</ref>
 
<ref name="bnbchain-11430">[https://www.bnbchain.org/en/bridge Binance Smart Chain | Binance Bridge | Binance Panama] (Jul 24, 2023)</ref></references>

Revision as of 15:35, 25 July 2023

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BNB Chain

An attacker found a massive hole in the proof validation that Binance Smart Chain nodes were using to validate that payments had been made to their bridge. The attacker was able to extract $566m worth of BNB token. The nodes were shut down after $127m was taken off-chain, and the rest of the money was frozen.

This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8][9][10][11][12]

About Binance Bridge

[13]

The Reality

The Binance Bridge contained an exploit in the proof mechanism.

What Happened

"an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge." "the attack appears to have started at 2:30 PM EST [on October 6th, 2022], with the attacker's wallet receiving two transactions [1, 2], each consisting of 1,000,000 BNB."

Key Event Timeline - Binance Bridge Forged Proof Exploit
Date Event Description
October 6th, 2022 5:35:00 PM MDT Samczson Post Samczsun starts posting a technical analysis[14][15][16].

Technical Details

"there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse"

“The bug itself lies in how Binance Bridge processes the proofs of transactions sending the money from one chain to another,” Adrian Hetman, tech lead of the Triaging Team at Immunefi, a web3 bug bounty program provider, told TechCrunch. “The logic checks the message proof, something a user submits, and proceeds with the payout if the proof is valid.”

“The hacker managed to forge such a message that it tricked the logic of the contract into thinking the message was indeed valid, even though the hacker didn’t have valid claims to the funds. BSC Token Hub then proceeded with the payout as everything was valid,” said Hetman.

SlowMist Technical Analysis

[3] TBD

Samczsun Technical Analysis

Samczsun published a technical analysis of the exploit on Twitter[14][15][16].

Five hours ago, an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge. During that time, I've been working closely with multiple parties to triage and resolve this issue. Here's how it all went down.

It all started when @zachxbt sent me the attacker's address out of the blue. When I clicked into it, I saw an account worth hundreds of millions of dollars. Either someone had pulled off a huge rug, or there was a massive hack underway

At first, I thought that @VenusProtocol had been hacked yet again. However, it only took a couple seconds to determine that the attacker *really did* deposit over $200M USD into Venus Instead, I needed to figure out where those funds came from

The answer was that the attacker had somehow convinced the Binance Bridge to simply send them 1,000,000 BNB. Twice.

Either Binance was finally running the biggest giveaway that Web3 had ever seen, or the attacker had found a critical bug

I started by comparing the attacker's transactions with legitimate withdrawals. The first thing I noticed was that the height used by the attacker was always the same - 110217401. The heights used by legitimate withdrawals were much bigger, such as 270822321

I also noticed that the attacker's proof was significantly shorter than the legitimate withdrawal's proof. These two facts led me to believe that the attacker had found a way to forge a proof for that specific block - 110217401. Now I had to figure out how these proofs worked

On Binance, there's a special precompile contract used to verify IAVL trees. If you don't know anything about IAVL trees, don't worry. I still don't understand about 95% of it. Fortunately, all you and I need to reproduce the hack is the remaining 5%

Ok, so basically, when you verify an IAVL tree, you specify a list of "operations". The Binance Bridge typically expects two of them: an "iavl:v" operation, and a "multistore" operation. Here are their implementations

In order to forge a proof, we need both operations to succeed, and we need to last operation (the multistore) to return a fixed value (the hash of the specified block: 110217401)

Looking at the implementation, we can convince ourselves with some effort that it's impossible, or at least very difficult, to manipulate the root hash. Or you can just take my word for it. This means that we need our input value to be equal to one of the commit IDs

The input value of the "multistore" operation is the output value of the "iavl:v" operation. This means that we want to somehow control the root variable here, while still passing the value verification

So how is the root hash computed? Well, it happens in this monster of a function called COMPUTEHASH. At a very very high level, it recursively goes over each path and leaf and does a bunch of hashing and really the implementation details don't matter

What does matter is that due to the way that hash functions are intended to work, we can basically say with certainty that any (path, nleaf) pair will produce a unique hash. If we want to forge a proof, those will need to stay the same

Looking at the way that the proof is laid out in a legitimate transaction, we see it has a very long path, no inner nodes, and only one leaf node. This leaf node contains the hash of our malicious payload! If we can't modify this leaf node, then we'll need to add a new one

Of course, if we add a new leaf node, we'll also need to add a new inner node to match

Now we just have one last obstacle to face. How do we actually get COMPUTEHASH to return the root hash we want? Well, notice that eventually we'll need a path to contain a non-zero right hash. When we find one that does, we assert it matches the intermediate root hash

Let's just instrument the code a bit so we can figure out what hash we need and....

All that's left is to put it all together. We'll take a legitimate proof and modify it so that: 1) we add a new leaf for our forged payload 2) we add a blank inner node to satisfy the prover 3) we tweak our leaf to exit early with the correct root hash

(It's worth noting that this wasn't the exact method the attacker used. Their proof path is much shorter, and I'm not sure how exactly they generated that. However, the rest of the exploit is identical, and I believe showing how to build it from the ground up is valuable)

In summary, there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse

Total Amount Lost

The total amount lost has been estimated at $566,000,000 USD.

"an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge." "the attack appears to have started at 2:30 PM EST [on October 6th, 2022], with the attacker's wallet receiving two transactions [1, 2], each consisting of 1,000,000 BNB."

"there was a bug in the way that the Binance Bridge verified proofs which could have allowed attackers to forge arbitrary messages. Fortunately, the attacker here only forged two messages, but the damage could have been far worse"

Immediate Reactions

The Binance Bridge was paused and Binance immediately acknowledged the incident.

Pausing Of The Binance Bridge

"When hackers exploited a bug in the BSC Token Hub (a cross-chain bridge connecting the BNB Beacon Chain and BNB Chain) which allowed them to extract 2M BNB (~$570M), the entire chain was “paused” before the hacker could make off with his exploits. As a result, the hacker only managed to snag ~127M off chain."

"The Binance blockchain, also known as BNB Chain and Binance Smart Chain, took the rare step of suspending transactions and fund transfers after discovering a vulnerability affecting the BSC Token Hub cross-chain bridge. These bridges are designed to facilitate the transfer of assets from one independent blockchain to another."

"Simply put, Binance “asked” all its validators (real nicely) to temporarily suspend the chain."

"That’s easy for Binance to do because Binance is also a highly centralized chain with a total of 25 validators, all of whom were pre-approved by Binance themselves."

Binance Acknowledgement of Incident

"Binance acknowledged the security incident at 6:19 PM EST and paused the BNB Smart Chain while they investigated the incident.

At 7:51 PM EST, the CEO of Binance tweeted that an exploit was used in the BSC Token Hub to transfer the BNB to the attacker and that they had asked all validators to suspend the Binance Smart Chain."

Ultimate Outcome

Binance shared an incident summary. A vote was held regarding what should be done with the frozen funds from teh exploit. The Binance Smart Chain was ultimately hard-forked in the Moran hard fork to resolve the vulnerability.

Binance Blog Post Incident Summary

"In a blog post on Friday, the BNB Chain team said that a total of 2 million BNB — worth approximately $568 million — were initially withdrawn by the hacker. But blockchain security company SlowMist says the attacker only managed to take about $110 million because the majority of the stolen tokens, worth about $430 million, couldn’t be transferred following the suspension of the BNB Chain."

"Binance chief executive Changpeng Zhao said in a tweet that the company estimates the impact of the breach to be between $100 million and $110 million."

"When approached for comment, Binance spokesperson Ismael Garcia declined to comment beyond the blog posted by the BNB Chain team, which says that the BNB Chain is now back up and running. The blog post adds that a new on-chain governance mechanism will be introduced on the BNB Chain to fight and defend against future possible attacks."

Hacked Funds Frozen

"Moving forward, BNB Chain’s validators said they would hold a series of on-chain governance votes that would decide whether the hacked funds should be frozen, as well as whether a bug bounty reward system should be put in place to prevent future hacks."

Hard Fork of Binance Smart Chain

"The Moran hard fork seeks to amend several issues on the BNB Chain stemming from its $100 million hack last week."

Total Amount Recovered

The total amount frozen and redistributed has been estimated at $439,000,000 USD.

None of the funds which were bridged to other chains are reported as having been recovered. TBD - Confirm.

Ongoing Developments

TBD

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

Avoid the use of smart contracts unless necessary. Minimize the level of exposure by removing or withdrawing assets whenever possible. Aim to choose smart contracts which have obtained third party security audits, preferably having been audited by at least three separate reputable firms. Pay attention to the audit reports, which smart contracts are covered, and whether the smart contract has been upgraded or modified since the report. Ensure that any administrative functions with the ability to remove funds from the smart contract are under the authority of a multi-signature wallet which is controlled by at least three separate and reputable entities.

Store the majority of funds offline. By offline, it means that the private key and/or seed phrase is exclusively held by you and not connected to any networked device. Examples of offline storage include paper wallets (seed phrase or key written down and deleted from all electronic media), hardware wallets, steel wallet devices, etc...

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

All wallets, minting functions, and critical infrastructure should be implemented with a multi-signature requirement, with a recommended minimum of 3 signatures required. This means that making important changes or approving spending will require the keys held by at least 3 separate individuals within the organization to approve. The multi-signature should be implemented at the lowest layer possible, all key holders should have security training, and all key holders should be empowered and encouraged to exercise diligence.


All aspects of any platform should undergo a regular validation/inspection by experts. This validation should include a security audit of any smart contracts, reporting any risks to the backing (of any customer assets, ensuring treasuries or minting functions are properly secured under the control of a multi-signature wallet, and finding any inadequacies in the level of training or integrity of the team. The recommended interval is twice prior to launch or significant system upgrade, once after 3 months, and every 6 months thereafter. It is recommended that the third party performing the inspection not be repeated within a 14 month period.


Work with other industry platforms to set up a multi-signature wallet with private keys held separately by delegate signatories from seven prominent platforms and services within the industry. Establish requirements for contributions by all platforms and services, designed to be affordable for small platforms yet large enough to cover anticipated breach events. Any breach event can be brought forth by a member platform or a petition of 100 signatures for consideration by the delegate signatories. A vote of 4 or more delegate signatures is required to release any funds, which could partially or fully restore lost funds based on their assessment.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

All platforms should undergo published security and risk assessments by independent third parties. Two assessments are required at founding or major upgrade, one after 3 months, and one every 6 months thereafter. The third parties must not repeat within the past 14 months. A risk assessment needs to include what assets back customer deposits and the risk of default from any third parties being lent to. The security assessment must include ensuring a proper multi-signature wallet, and that all signatories are properly trained. Assessments must be performed on social media, databases, and DNS security.


In general, blockchain-level exploits can be resolved by reverting the blockchain to a prior state, which restores all funds to their prior ownership and limits potential losses to those who are transacting between the time of the exploit and the time of the revert. Effort should be undertaken by node operators to switch to a branch that eliminates the exploit as soon as possible to minimize losses. Any remaining losses would be resolved through the industry insurance fund.


Set up a multi-signature wallet with private keys held separately by delegate signatories from seven prominent platforms and services within the industry. Establish requirements for contributions by all platforms and services within the country, designed to be affordable for small platforms yet large enough to cover anticipated breach events. Any breach event can be brought forth by a member platform or a petition of 100 signatures for consideration by the delegate signatories. A vote of 4 or more delegate signatures is required to release any funds, which could partially or fully restore lost funds based on their assessment.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ Stoppable Finance [LITE] - by Donovan Choy - Bankless Archive October 10th, 2022 3:20:53 PM MDT (Jul 24, 2023)
  2. ↑ Binance hit by $100 million blockchain bridge hack - TechCrunch (Jul 24, 2023)
  3. ↑ 3.0 3.1 SlowMist - "Since the $BNB Chain was suspended, the ~$430M on it cannot be transferred any further. In total, over $110M was moved off the BNB Chain Frozen: ~6,5M $USDT Supplied to lending pools: ~$37.5M Borrowed: ~$16.5M Still have access to: $83.3M" - Twitter (Jul 24, 2023)
  4. ↑ @cz_binance Twitter (Jul 24, 2023)
  5. ↑ BNB Chain Ecosystem Update - BNBChain Blog (Jul 24, 2023)
  6. ↑ Binance Hit By $570 Million Blockchain Bridge Hack - Investopedia (Jul 24, 2023)
  7. ↑ Hacker steals $566 million worth of crypto from Binance Bridge - BleepingComputer (Jul 24, 2023)
  8. ↑ Binance Bridge Hack in Layman's Terms - Zellic (Jul 24, 2023)
  9. ↑ BNB Chain Upgrade Restores Cross-Chain Transfers Following Binance Bridge Hack - Decrypt (Jul 24, 2023)
  10. ↑ Binance Exec: BNB Smart Chain Hack Could Have Been Worse if Validators Hadn’t ‘Sprung Into Action’ - CoinDesk (Jul 24, 2023)
  11. ↑ Binance Bridge 2.0 is set to welcome almost all Ethereum tokens - Watcher.Guru (Jul 24, 2023)
  12. ↑ Hacker Exploits Bug to Steal Millions Fom Binance Bridge - BankInfoSecurity (Jul 24, 2023)
  13. ↑ Binance Smart Chain | Binance Bridge | Binance Panama (Jul 24, 2023)
  14. ↑ 14.0 14.1 samczsun - "Five hours ago, an attacker stole 2 million BNB (~$566M USD) from the Binance Bridge. During that time, I've been working closely with multiple parties to triage and resolve this issue. Here's how it all went down." - Twitter (Jul 24, 2023)
  15. ↑ 15.0 15.1 samczsun - "Either Binance was finally running the biggest giveaway that Web3 had ever seen, or the attacker had found a critical bug" - Twitter (Jul 24, 2023)
  16. ↑ 16.0 16.1 Thread by @samczsun on Thread Reader App – Thread Reader App (Jul 24, 2023)

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