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The quick version: - The bridge was controlled by a 5 of 9 validator set (ie. 5 of the 9 nodes needed to agree to withdrawals and deposits between Ethereum and

The quick version: - The bridge was controlled by a 5 of 9 validator set (ie. 5 of the 9 nodes needed to agree to withdrawals and deposits between Ethereum and Ronin) - 4 of these nodes were run by Sky Mavis themselves (a bad idea), those were compromised because their internal infra was compromised in some traditional social engineering attack (ie. not blockchain related, just a normal cloud infra compromise) - 1 of the nodes was run by the community-operated Axie DAO. However, that node had whitelisted Sky Mavis' cloud infrastructure a while back to allow them to run transactions through Axie DAO's node in order to use Axie DAO treasury funds to pay gas on user's behalf (to help with onboarding into Ronin). This was discontinued, but they forgot to remove the whitelist (another critical mistake), so the hackers were able to use that Axie DAO node for the final 5th verification needed to steal bridge funds (because they had compromised the whitelisted Sky Mavis cloud infra). TLDR: A traditional cloud infra compromise via unspecified social engineering attack, compounded by an insufficiently decentralized validator set allowing the bridge funds to be "withdrawn" to hacker's wallets by forging fake signatures. This is why decentralization is important in blockchain infra, and they learned the hardest way possible. Hope that helps!

dboreham 5y ago
To honest I don't see how this can be anything other than an inside job. No reasonable person would expect someone to have setup the arrangement where a key controlling a kind of faucet would also be a validator key. That's insane and obviously a very bad idea. So whoever pulled off the attack must have known that a very unusual and very stupid arrangement had been created. Ergo they must have been an insider.
- carlosdp 5y ago
  I don't think it was an inside job, it's actually pretty hard to wash $600m+ of blockchain funds already (it's highly traceable). Doing it as an insider would be truly insane. The whitelisting wasn't a secret. Axie DAO is an open community, so it's easy to have known the whitelist existed and was left in. It was a very bad idea, but what can I say, people get cocky and make mistakes. The only difference in crypto is that it has a built-in bug bounty of losing stored funds like this, so you have to take security incredibly seriously, and they didn't.
  - finnh 5y ago
    > Doing it as an insider would be truly insane Why? The concerns (how to steal the money, how to launder/tumble it) seem orthogonal. Random question: is there a statute of limitations on this type of theft? If so, insiders would be highly incented to steal 600M today and then wait X years before using that one-time, anonymous wallet.
    - carlosdp 5y ago
      Because any investigative firm would first look at the very small set of insiders first, and it's harder than one would think to truly hide their tracks, especially since this was a traditional infra attack and not just an on-chain smart contract hack. The fact that the FBI was able to recover the Colonial Pipeline hack funds from the hacker Bitcoin wallet, something that should have been theoretically almost impossible, basically told me that if you steal enough money for the feds to get interested, you better be in a country where they can't get to you.
    - SkyMarshal 5y ago
      It's definitely possible it could have been an insider, but I think it probably wasn't this time. In this case, Occam's Razor suggests an outside job. Reasoning: First, as carlosdp points out, insiders are the first suspect, everyone knows that now, and the FBI has advanced methods of finding them and recovering the funds. There's more deterence factor now. Second, hacking cloud infrastructure for industrial secrets and the like is so common these days, there are tons of black hat hackers and groups around the world that specialize in that. Third, the hack was simple once it was realized that the 5th of 9 signing keys was compromised by the whitelist. Combine that bit of information with #2 and it's essentially a guarantee that someone will make an attempt at it. Fourth, due to war in Ukraine, the world is in an elevated state of cyber warfare now. On top of the usual criminal hackers just looking to steal money, Russian and their allied hackers are seeking ways of stealing money to break sanctions, and/or disrupt financial systems in the West. All this just increases the odds the attack came from outside the org.
  - mhitza 5y ago
    600+mil is a lot. But realistically how hard is it to bridge it over to Monero/Zcash/other privacy preserving coins, then slowly funnelling them back in to ethereum for an exchange? Unless all swap contracts are updated to somehow keep track of any funds associated with the hackers original address, washing up those funds it's just a matter of time, no?

dboreham 5y ago

To honest I don't see how this can be anything other than an inside job. No reasonable person would expect someone to have setup the arrangement where a key controlling a kind of faucet would also be a validator key. That's insane and obviously a very bad idea. So whoever pulled off the attack must have known that a very unusual and very stupid arrangement had been created. Ergo they must have been an insider.

carlosdp 5y ago
I don't think it was an inside job, it's actually pretty hard to wash $600m+ of blockchain funds already (it's highly traceable). Doing it as an insider would be truly insane. The whitelisting wasn't a secret. Axie DAO is an open community, so it's easy to have known the whitelist existed and was left in. It was a very bad idea, but what can I say, people get cocky and make mistakes. The only difference in crypto is that it has a built-in bug bounty of losing stored funds like this, so you have to take security incredibly seriously, and they didn't.
- finnh 5y ago
  > Doing it as an insider would be truly insane Why? The concerns (how to steal the money, how to launder/tumble it) seem orthogonal. Random question: is there a statute of limitations on this type of theft? If so, insiders would be highly incented to steal 600M today and then wait X years before using that one-time, anonymous wallet.
  - carlosdp 5y ago
    Because any investigative firm would first look at the very small set of insiders first, and it's harder than one would think to truly hide their tracks, especially since this was a traditional infra attack and not just an on-chain smart contract hack. The fact that the FBI was able to recover the Colonial Pipeline hack funds from the hacker Bitcoin wallet, something that should have been theoretically almost impossible, basically told me that if you steal enough money for the feds to get interested, you better be in a country where they can't get to you.
  - SkyMarshal 5y ago
    It's definitely possible it could have been an insider, but I think it probably wasn't this time. In this case, Occam's Razor suggests an outside job. Reasoning: First, as carlosdp points out, insiders are the first suspect, everyone knows that now, and the FBI has advanced methods of finding them and recovering the funds. There's more deterence factor now. Second, hacking cloud infrastructure for industrial secrets and the like is so common these days, there are tons of black hat hackers and groups around the world that specialize in that. Third, the hack was simple once it was realized that the 5th of 9 signing keys was compromised by the whitelist. Combine that bit of information with #2 and it's essentially a guarantee that someone will make an attempt at it. Fourth, due to war in Ukraine, the world is in an elevated state of cyber warfare now. On top of the usual criminal hackers just looking to steal money, Russian and their allied hackers are seeking ways of stealing money to break sanctions, and/or disrupt financial systems in the West. All this just increases the odds the attack came from outside the org.
- mhitza 5y ago
  600+mil is a lot. But realistically how hard is it to bridge it over to Monero/Zcash/other privacy preserving coins, then slowly funnelling them back in to ethereum for an exchange? Unless all swap contracts are updated to somehow keep track of any funds associated with the hackers original address, washing up those funds it's just a matter of time, no?