Harmony Horizon Bridge Private Key Exploit

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Harmony's Horizon Bridge

The Horizon bridge is a cross-chain feature developed by Harmony to enable the transfer of assets between Harmony's network and other blockchains such as Ethereum, Binance Chain, and Bitcoin. Users can migrate assets from Ethereum or Binance Smart Chain to Harmony using the bridge, and the redeemed assets can be exchanged back at any time. In June 2022, the Horizon Ethereum Bridge suffered a malicious attack, resulting in the compromise of 11 transactions and the theft of approximately $100 million. The attack exposed vulnerabilities in the bridge's multisig wallet security, allowing the attackers to access and decrypt private keys. The incident highlights the ongoing challenges in securing cross-chain bridges and the need for robust security measures in the blockchain industry.

This is a global/international case not involving a specific country.

About Horizon Bridge

"The Horizon bridge is a cross-chain feature developed by Harmony to facilitate the transfer of assets between Harmony’s network and other blockchains such as Ethereum, Binance Chain and Bitcoin. The bridge aims to provide users with the benefits of both the layer-1 network’s security and the layer-2 network’s efficiency."

"The Bridge is used to migrate assets from one chain to another. If you have assets on Ethereum or Binance Smart Chain, you can use the bridge to move them to Harmony blockchain and get corresponding assets on Harmony. LayerZero also allows redemption of the exchanged assets back at any time."

"By dividing its blockchain into four parallel networks called shards, Harmony reduces latency and improves overall efficiency. The Horizon bridge is an essential component of this innovative solution, enabling users to move assets across chains without compromising security or decentralization."

"On Thursday, June 23, 2022, the Harmony Protocol team was notified of a malicious attack on our proprietary Horizon Ethereum Bridge. At 5:30 AM PST, multiple transactions occurred that compromised the bridge with 11 transactions that extracted tokens stored in the bridge. The estimated value at the time of the attack was approximately $100 million USD."

"A recent DeFi attack that happened in June 2022 involves a young startup Harmony, the owners of a Horizon bridge that enabled frictionless asset transfers from the Ethereum network to BSC. An attack at Horizon was similar to the earlier hacks of the Ronin Network bridge and Wormhole. The details of the hack are still unknown, but the problem seems to relate to the “private key compromise,” as the bridge’s owners reported no critical errors in the smart contract code. Experts point out the weakness of the “multisig” wallet that uses only two signatures to enable the transaction."

"In late June, attackers linked to North Korean hacker group Lazarus exploited a vulnerability in Harmony's Horizon Bridge to steal over $100 million." "Horizon Bridge $100M hack."

"On the day of the exploit, the attackers compromised two of the five multi-signature (multisig) addresses securing the bridge. The multisig wallet required just two signatures to initiate transactions, which potentially made it more vulnerable to attacks. The exact attack vector remains unknown, although some speculate that the private keys of the compromised addresses were stored as plaintext in hot wallets.

According to Harmony’s incident response team, the private keys had been stored and encrypted by Harmony, using both a passphrase and a key management service for double encryption. Additionally, no single machine had access to multiple unencrypted keys. However, the attacker managed to access and decrypt several of these keys, allowing them to gain access to the servers running these hot wallets to control the necessary addresses to pass any desired transactions."

"It’s been just a few months since the massive Ronin Network bridge hack triggered by multiple private key thefts. The Horizon Bridge hack follows a similar pattern where two private keys were compromised and used to steal $100M worth of tokens. While the investigation is ongoing the target, attack vectors, and subsequent laundering smell a lot like North Korea. The sad part was that the Horizon’s threat model clearly failed when it assumed that 2 keys could never be compromised at the same time."

"The hackers stole a total of about US$103.7 million worth of Ethereum and multiple tokens in 12 transactions. The scale of this theft highlights the potential risks associated with securing digital assets on blockchain platforms and serves as a reminder of the importance of robust security measures."

"The attackers first consolidated the stolen funds into a primary consolidation address (0x0d0431..ded00). They then split the ERC-20 tokens and sent them to 2 new addresses, which converted these amounts to Ethereum. The attackers then sent 72,770.4 Ethereum back to the Exploiter’s main address from these 2 new addresses.

Next, the attackers sent the Ethereum to 5 new addresses in 5 transactions between June 27 and July 1, 2022. The summary of these transactions is as follows."

A notice has been added disclaiming liability.

"The LayerZero-Harmony Bridge Interface (“Interface”) is an interface that facilitates use of a third-party cross-chain communication system (“Bridge”) that is designed to enable users to send messages between certain blockchains to enable the exchange of crypto assets between such blockchains. Your use of the Interface and the Bridge is entirely at your own risk.

The Interface and the Bridge are available on an “as is” basis without warranties of any kind, either express or implied, including, but not limited to, warranties of merchantability, title, fitness for a particular purpose and non-infringement.

You assume all risks associated with using the Interface and the Bridge, and digital assets and decentralized systems generally, including but not limited to, that: (a) digital assets are highly volatile; (b) using digital assets is inherently risky due to both features of such assets and the potential unauthorized acts of third parties; (c) you may not have ready access to assets; and (d) you may lose some or all of your tokens or other assets. You agree that you will have no recourse against anyone else for any losses due to the use of the Interface or the Bridge. For example, these losses may arise from or relate to: (i) incorrect information; (ii) software or network failures; (iii) corrupted cryptocurrency wallet files; (iv) unauthorized access; (v) errors, mistakes, or inaccuracies; or (vi) third-party activities.

The Interface and the Bridge do not collect any personal data, and your interaction with the Interface and the Bridge will solely be through your public digital wallet address. Any personal or other data that you may make available in connection with the Bridge may not be private or secure."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• 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:

• 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

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").
• 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

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.

Key Event Timeline - Harmony Horizon Bridge Private Key Exploit

Date	Event	Description
June 23rd, 2022 6:02:48 AM MDT	Exploit Transaction	One exploit transaction.
June 28th, 2022 10:57:00 PM MDT	Blockthreat Tweet	The Horizon Bridge attack is referenced in a tweet from blockchain analytics firm BlockThreat.
July 1st, 2022 2:28:12 AM MDT	Included In Top 17 List	The Horizon Bridge attack is included in a list of the top 17 smart contract attacks published by 4irelabs.

Technical Details

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

$107.3M USD - 85,851 ETH?

The total amount lost has been estimated at $107,300,000 USD.

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?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

The total amount recovered is unknown.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Individual Prevention Policies

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

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.

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.

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