Unchained Capital ActiveCampaign Privacy Breach

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Unchained Capital

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.

About Unchained Capital

"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."

About ActiveCampaign

ActiveCampaign is a customer relationship management tool.

"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."

The Reality

While Unchained Capital was no longer using the Active Campaign platform, the information remained stored there.

Failed Attempt To Delete Information

When leaving the Active Campaign platform, Unchained Capital had requested that their customer information be deleted, however this was not done.

The information included "email addresses, usernames, account status (active/inactive) and whether the client had an active vault or loan with Unchained Capital (yes or no)". In addition, "[f]or individuals that purchased a service directly through [the Unchained Capital] website, such as Concierge Onboarding, scheduled a consultation, or signed up on [their] 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)."

What Happened

Information on Unchained Capital customers was stored on Active Campaign. Shortly after the relationship was severed, malicious actors claiming to be Unchained Capital convinced Active Campaign staff to reopen the account, providing them with access to the customer data.

Key Event Timeline - Unchained Capital ActiveCampaign Privacy Breach

Date	Event	Description
March 10th, 2022	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
March 16th, 2022 12:58:12 PM MDT	Unchained Capital Announcement	Unchained Capital posts an announcement to their website. The attack on the former vendor, ActiveCampaign, a third-party email marketing provider, resulted in the compromise of Unchained Capital client and marketing data, including email addresses, usernames, account status, client name, and IP address. The firm emphasized that there was no impact on Unchained Capital’s systems, nor were client assets secured through its platform ever at risk. Clients were advised to be vigilant for spear-phishing attempts and confirmed communications with the firm. The attack on Unchained Capital comes amid a rising number of cyber threats to financial firms.
March 16th, 2022 4:04:00 PM MDT	Reported on CoinDesk	The incident is reported on CoinDesk. TBD different versions.
March 17th, 2022 8:20:00 AM MDT	CoinDesk Article Updated	TBD what updates?
March 18th, 2022 6:54:00 PM MDT	Praised on Twitter	The breach is publicly praised on Twitter by a user Zub79, responding about the BlockFi data breach.
March 18th, 2022 10:50:00 PM MDT	Another Twitter Reference	The breach is referenced.
March 21st, 2022 7:14:49 AM MDT	Bitcoinist Article Published	Bitcoinist publishes an article comparing and contrasting the privacy breach against others. In addition to Unchained Capital, NYDIG, Swan Bitcoin, and BlockFi, also recently suffered a data breach through their third-party providers. Although the companies all made public apologies and addressed the issue, the blame was shifted to the third-party vendors. Fortunately, the data stolen was mostly marketing-driven personal information rather than critical financial data. The companies urged affected clients to be extra vigilant and avoid clicking on any links to protect themselves from spear phishing attempts. The four companies have all said they are working with their third-party vendors and looking to move away from using vendors for email.
March 21st, 2022 5:05:26 PM MDT	Bitcoin Magazine Article	Bitcoin Magazine publishes an article on the Hubspot data breach. They report the unauthorized user with "super admin" access exported contact lists and data, including IP addresses, email histories, customer browsing behavior, financial value, and help tickets. While financial data was not compromised, the loss of user persona and behavioral data is severe, and users should expect spear phishing and spam attacks. Users are advised to be cautious of unsolicited communications and to use privacy best practices when browsing, buying, and communicating online.

Technical Details

Information on Unchained Capital customers was stored on the Active Campaign customer relationship management platform. Shortly after the relationship was severed, malicious actors claiming to be Unchained Capital convinced Active Campaign staff to reopen the account, providing the malicious actors with access to export the customer data.

Upon discovering the

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."

Total Amount Lost

No funds are believed to have been lost in this situation.

Immediate Reactions

"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 Announcement

Unchained Capital announced the breach with a detailed announcement on their website.

We are letting our clients and community know about a security incident that occurred at one of the vendors we previously used for email marketing, resulting in the compromise of Unchained Capital client and marketing data detailed below. Importantly, there is no impact whatsoever to Unchained Capital’s systems, nor were client assets secured through our platform ever at risk.

ActiveCampaign (“AC”), a third-party email marketing provider that Unchained Capital used until early in 2022, was the subject of a social engineering attack last week. This attack occurred after Unchained Capital had closed its AC account and requested that all data be purged. While the attack occurred on a third party, it has impacted our clients and it was ultimately the result of our decision to work with this vendor. Regardless of any failures by third parties, we are accountable to our clients in all cases. In this instance, we have let them down and it is necessary that we share details of the security incident which occurred on Thursday, March 10th.

What information was NOT compromised

The social engineering attack took place on the AC platform, and involved AC personnel, procedures, systems and applications. None of Unchained Capital’s systems, applications, employees, or accounts (admin or client) were compromised. Because none of Unchained Capital’s systems were compromised, the following information was NOT subject to the compromise: client profile information containing personally identifiable information (e.g. addresses, SSN, DOB, IDs, phone numbers used in our KYC process), bank account numbers, passwords, bitcoin addresses, bitcoin balances, loan balances, trading activity, vault statements, loan statements.

None of this information was provided to ActiveCampaign and was therefore never subject to compromise through the attack on AC. Given our bitcoin custody is built on multisig and cold storage, through which clients hold their own keys, no funds were ever at risk but it is critical that clients be diligent and on high alert for reasons described below.

What information was compromised

Unchained Capital used AC until February 2022 to support our 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. Elements of this data were compromised and exported by an unauthorized user as described below.

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).

What steps clients should consider taking

It is always important that our clients be diligent about confirming all communications and any requests that appear to come from Unchained Capital. Given the data leak, clients should be on high alert for any spear phishing attempts. Be especially careful about clicking on any links—always ensure that they are HTTPS links to unchained.com. If any email or communication looks suspicious, please contact us at clientservices@unchained.com or call us at 1-844-486-2424 to confirm its authenticity. 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.

Details of security incident

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.

Though we 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.

Duty to our clients

Regardless of any actions or failures by third parties, our commitments are to our clients, prospective clients, and partners that put their trust in Unchained Capital and to each of them, we take responsibility. Furthermore, we have an obligation—not an option—to make this disclosure to help ensure the security of our clients regardless of the negative impact it may have on our business.

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.

Working to do better

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.

Our high standards for client privacy ensured that we limited the amount of data we shared with ActiveCampaign. But with these same high standards, any exposure of client data is unacceptable to us. 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.

We are deeply sorry this incident occurred as we take our client’s privacy very seriously. Our mission is to grow bitcoin adoption and to empower our clients to hold their own private keys, eliminating us or any financial institution as a single point of failure. We want to reinforce the fact that, due to our collaborative custody model, no such incidents could ever put any client funds at risk.

Ultimate Outcome

TBD

"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."

Total Amount Recovered

There do not appear to have been any funds lost in this case.

Ongoing Developments

TBD

Individual Prevention Policies

Most companies have insecurities. Any information provided to a company may be breached or abused.

Protection Of Personal Information

Obviously, anything you can do to minimize the amount of information which you provide to websites will reduce your risk.

Set up separate email addresses for each service, and avoid providing your phone number whenever possible. Any received emails or phone calls must be viewed with scrutiny, especially if unsolicited. Interact with companies only through their official websites and confirm anything with the company directly via multiple official sources, especially if it promises a significant incentive to take an action or threatens access to your funds if an action is not taken. It would be recommended to also establish a network of multiple trusted individuals who use the same services and have a strong level of security knowledge.

Never Give Access To Your Funds

In a typical cryptocurrency fraud, malicious actors try to use the available information to convince you to give them authorization to access or transfer funds. This can be accomplished via tricking you into providing a private key or seed phrase, signing a transaction that grants them permission to move funds, or installing malware on your device. In most cases, this will be accomplished via a greed or fear trigger, and you should be on extra guard when experiencing those emotions.

Private keys can be obtained through seed phrases, mnemonics, private key files, mobile synchronization screens, wallet export features, wallet backups, etc... Never ever send these to anyone else who you do not intend to allow to take all of your money. Attackers will use a wide variety of tactics to convince you like pretending to be your wallet software, pretending they work for the wallet software, or asking you to screen share. Don't fall for them.

Any time untrusted software is being run is an opportunity for abuse. It is recommended to always interact with cryptocurrency in a fully controlled environment, which is an environment where you have understanding of every piece of software running there. Using a hardware wallet, spare computer with all software wiped, and/or virtual machine with only the needed software greatly reduces your attack surface. Take the time to verify downloaded files come from the correct and expected source and match available hashes if provided. Any time you encounter a new file, always check if it can contain executable code prior to using it.

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

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.

Platforms should put in place multi-signature access control on all customer data, which requires the approval of multiple people to enable the download of data. An external security review should be conducted regularly. If information is lost in a breach, the level of damage can be minimized by educating users about potential scams and frauds that they may encounter. Platforms should be prepared to assist with victims, which could be done through an industry insurance fund.

Never take for granted the limited knowledge of users of your service and their tendency to skip past provided information. It is recommended to design a simple tutorial and quiz for new users which explains the basics of seed phrases, strong password generation, secure two-factor authentication, common fraud schemes, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space. This tutorial and quiz should ensure their understanding and be a standard part of the sign-up or download process which is difficult or impossible to skip.

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.

All points along the communication and supply chain should be inspected for vulnerabilities. Common vulnerability points may include DNS, Discord, and customer information. What steps are required to access and/or modify the component? Do any third party companies or organizations implement a proper multi-signature approach? What additional security options are available?

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

While the best solution is to reduce the amount of information collected, a combination of increased education, improved security, and a collective industry insurance fund can also prevent and mitigate the outcome of a similar data breach.

Private Identity Key Protocol

A key challenge is the increased reliance on an incredible amount of personal data by financial firms. Having this information shared as part of a normal business relationship and floating around on multiple platforms poses a severe risk to all users when it comes to identity theft, phishing attacks, and other targeted criminal activities. While various frameworks have been proposed for how platforms can safeguard this information, they all suffer from the problem of depending on individuals within the organization who can be coerced, bribed, or tricked into violating the policies. They also do not address situations in which customers divulge information to unregulated platforms, either deliberately or by being tricked via a phishing attack. Criminals only need to breach one platform, and the information is permanently exposed to the black market. As an alternative, a single digital access token could be used to validate identity, with the associated personal information stored in a single secure location. The personal information is much less likely to be breached. If the token is breached on any third party platform, the access token can be revoked and swapped with a new token, while criminals have no way of utilizing the old token.

Increased Education For Cryptocurrency Users

Create a standard tutorial and quiz for all new cryptocurrency participants, which is required to be completed once per participant. This tutorial and quiz should cover the basics of proper seed phrase protection, strong password generation, secure two-factor authentication, common fraud schemes, how to detect and guard against phishing attacks, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space.

Third Party Security Assessments

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.

Establish Industry Insurance Fund

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 regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.