Ledger Faulty Secure Element Phishing

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Ledger

Multiple Ledger users reported receiving a phishing email which attempted to convince them that their Ledger device might not be secure. It specifically provided a reasonably plausible hypothesis that the Secure Element might be defective in generating the random numbers, something which could possibly happen with sophisticated tampering in the supply chain, but has not yet been observed as a practical and economic attack vector.

In reality, users who downloaded the application would be then prompted to enter their seed phrase. The seed phrase would be transmitted to the hacker through Telegram. Hence, it was rather easy to shut down the Telegram channels where the information was to be transmitted and unlikely that anyone actually lost funds. Another limitation here is that the email addresses used by the scammers were believed to be from slack groups, so there is only a minimal overlap with actual Ledger users. No reports of actual loss appear to have come up in this case.

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

About Ledger

"Based in France, Ledger is the largest cryptocurrency hardware wallet company." "Ledger is a hardware cryptocurrency wallet that is used to store, manage, and sell cryptocurrency. The funds held in these wallets are secured using a 24-word recovery phrase and an optional secret passphrase that only the owner knows."

"Ledger offers two products, the Nano S and Nano X, that can store the digital keys used to secure crypto wallets. The devices can be used with a variety of cryptocurrencies, are compatible with numerous apps, and are supposed to offer a safe way to manage crypto without compromising too much on convenience. Ledger says on its website that it has sold 1.5 million products to customers in 165 countries to date."

"A new phishing attempt is being sent by email to our customers, from an unknown party impersonating Ledger. Please do NOT open the attached executable file!"

"To clarify the situation - it appears that the targeted email addresses were taken from a set of Crypto-related-Slack-channels. Our community is helping us collecting additional information on the matter." "As OP said " The email address was used for Slack which has nothing to do with anything I did to buy this ledger wallet." - they're just scammers fishing around with likely some database listing leaked e-mail addresses related to crypto sites." "Unfortunately it was trivial to query all e-mail addresses for users in a Slack group at some point. Guess some lists were made for that kind of purpose."

"This email is far more convincing than the average crypto scam email. The email comes from “supportledger.com” and it has full SPF/DKIM verification for that domain, meaning most email services won’t throw it into your junk/spam folder. If you browse to that website, it redirects to the official Ledger support website (which makes no mention of such a vulnerability under announcements, how strange). The domain however is not owned or part of Ledger at all and thus fully authenticating the domain to send emails is not difficult."

"In the email, users are notified of how their wallet – either the Nano S or Nano X – contains a critical vulnerability that needs to be addressed. The website makes mention of a secure RNG chip vulnerability, that can only be resolved through a software-based check of the device."

"Today I received an email that appears as though it’s from Ledger. The header claims “IMPORTANT: Ledger Nano S and Ledger Nano X SECURE RNG CHIP CRITICAL VULNERABILITY”. This however, is not true."

"Inside Ledger hardware wallet, we use a Secure Element chip to generated and store the private keys for your crypto assets. Unfortunately, some chips, a limited number, were found to be defective by the external company commissioned by Ledger for the production. The problem identified concerns the lack of a correct source of entropy for use by the random number generator may lead the the generation of predictable sequences of numbers and therefore of private keys by malicious users. Ledger is actively working on the problem to replace all defective devices. Please check now if your device is defective with the Ledger SE tool. We apologize for the inconvenience."

"The email claims that a small batch of Ledgers have a compromised secure enclave chip and that you can download a tool to check if your Ledger was from this bad batch. Unfortunately, this tool is malware and it seems as though the purpose is to try and get your wallet’s seed." "For novice users without much technical knowledge, that may appear to be a plausible explanation." "Something that is actually probably possible to some extent, certainly somewhat believable."

"In the real world, however, it is a blatant scam designed to make users lose their cryptocurrency balances." "When you run the tool, it asks you to input your 24 word phrase to check your Ledger chip. Anyone trained well enough should have extreme alarm bells ringing at this point."

"Looks like one of the dropped executables in this phishing campaign - "Ledger SE.exe" uses the telegram bots listed in this code snippet as C2. Possible to takedown these telegram bots? @telegram @Ledger." "Likely a compiled AutoIT Script communicates to api.telegram.com - probably sends your 24 words to them through telegram. [D]ownloads a updates.rar file, and extracts it with downloaded rar.exe to %APPDATA%\Ledger\ to launch a passphrase stealer. [M]akes POST request with usernames: gksn7bot & jmnl17bot (likely to telegram)."

"And it probably sends the 24 words off to a remote address the moment return is pressed. It's sad to say that some will probably fall for this regardless of how many times they read in official Ledger documentation that the 24 words must be entered on the device and not the computer."

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 - Ledger Faulty Secure Element Phishing

Date	Event	Description
October 25th, 2019 3:07:00 PM MDT	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

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

The total amount lost is unknown.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

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

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

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?

General Prevention Policies

Always double check news of vulnerabilities against the official websites of the product or service. Never download an application in an email or enter the seed phrase anywhere except the Ledger hardware wallet.

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.