Terrastation Luna Wrong Address Send Party_Combination_49

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Terra Luna

Party_Combination_49 reports that they were transferring their 408 Luna from one Terra Station wallet to another. Checking the blockchain from another computer, they found that their funds had actually been sent to an unrecognized wallet and were lost.

The Reality

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• 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

Party_Combination_49 reports that they made a transfer of Luna and UST from one wallet to another. They had a serious issue with their computer where they could not log in. After this, they found that their UST had been sent to a different wallet address.

Key Event Timeline - Terrastation Luna Wrong Address Send Party_Combination_49

Date	Event	Description
December 17th, 2021 5:24:32 AM MST	Reddit Comment	Party_Combination_49 posts a comment about the issue on Reddit on another thread by a different user reporting a loss of funds.
December 17th, 2021 5:30:10 AM MST	Reddit Post Made	Party_Combination_49 makes a thread about the issue on Reddit. They reportedly encountered an issue with their Terra Station wallets where they transferred Luna and UST from one wallet (wallet 1) to another (wallet 2). However, after a PC reset, they discovered that wallet 2 was empty, and the transaction history showed that the address they sent Luna to was not theirs.

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 has been estimated at $27,000 USD.

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

Immediate Reactions

Comment Created On Reddit

The first mention of the incident was in a comment responding to another user's loss.

i hope that you managed to get back your tokens.

I had similuar situation. I had Terrastation installed on my desktop PC and i have created two wallets. Then i transferred 408 Luna & some UST from my personal "wallet 1" to my personal "wallet 2". I copied the "target" adress directly out of the wallet 2 and pasted it to "wallet 1".

Then i logged off the PC. Next day my PC was not accessible anymore (the login option was deactivated - i had to reset my whole PC).

In parallel i installed Terrastation on another Laptop and i recovered my 2 wallets.

Then i saw that "wallet 2" was empty and i checked the transaction history - i saw that the adress i have sent the Luna to does not belong to me! I have no clue where this adress came from and i assume that it was a kind of "hack".

Do you know, who can support with this topic? I am totally fucked up.......

Thread Created On Reddit

Party_Combination_49 ultimately posted again about what happened in their own thread.

"i am facing following situation:

I had Terrastation installed on my desktop PC and i have created two wallets.

Then i transferred 408 Luna & some UST from my personal "wallet 1" to my personal "wallet 2". I copied the "target" adress directly out of the wallet 2 and pasted it to "wallet 1".

Then i logged off the PC. Next day my PC was not accessible anymore (the login option was deactivated - i had to reset my whole PC).

In parallel i installed Terrastation on another Laptop and i recovered my 2 wallets.

Then i saw that "wallet 2" was empty and i checked the transaction history ==> i saw that the adress i have sent the Luna to does not belong to me! I have no clue where this adress came from and i assume that it was a kind of "hack".

Do you know, who can support with this topic?"

Community Reactions

The community reactions were mixed, with some offering advice and empathy while others try to understand the details of the incident. One user asks if the OP recovered the same two wallets and suggests checking the transaction history for the "scam" wallet. They also inquire about any possibility of mistyped seeds. Another user expresses surprise that the OP logged off the PC before verifying that the funds transferred successfully. Some users express sympathy for the OP's unfortunate situation. There's a user expressing concern about the deactivation of the login option on the PC.

Several users provide advice on verifying recipient addresses by checking the first and last characters or using a test transfer with minimal value as a precaution against potential errors or malware. Some users suggest that the incident might be due to malware on the user's computer, possibly replacing the clipboard address with a hacker's address. One user recommends investing in enterprise-grade anti-virus software to protect against common malware. A user mentions the possibility of a phishing scam and asks if the OP recently input their seed phrase on Terra Station. Several users clarify that the OP likely wasn't hacked but may have fallen victim to malware or an error, as the transaction was initiated by the user themselves.

More information Is Needed to see if the transactions have a trace . Remember scammers will contact you so be safe and stay alert . Best to write it off and learn from this incident . Don’t let it discourage

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

TBD

Individual Prevention Policies

The primary problem was that Party_Combination_49 was interacting with the Terra blockchain using a hot wallet on a potentially insecure computer. In addition, it is not clear that they validated that the address had been copied correctly when sending their funds from one wallet to another.

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...

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.

Every approval on Web3 is an opportunity to lose all of the funds present in your wallet. Take the time to review the transaction in full. Fully check over the balance, permissions, and entire address which you are interacting with. Do not trust that your clipboard or any website front-end is guaranteed to provide an accurate address or transaction status. Always perform a test transaction prior to the first high-value transaction in any session.

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

Platform Prevention Policies

Greater education is needed for users in the cryptocurrency space to avoid the insecure storage of cryptocurrency assets. While the amount of relief provided is discretionary, an industry insurance fund could assist affected users to minimize the impact from an exploit.

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.

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

Greater education is needed for users in the cryptocurrency space to avoid the insecure storage of cryptocurrency assets. While the amount of relief provided is discretionary, an industry insurance fund could assist affected users to minimize the impact from an exploit.

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.

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.