What is a ‘Dark Skippy’ attack, and how to protect against it?

Key takeaways

• Dark Skippy attacks target hardware wallets and Bitcoin signing devices. The attack embeds your wallet’s master secret seed within transaction signatures, slowly extracting sensitive information over time.
• The attack involves tampering with the hardware wallet’s firmware. It can be triggered by fake devices, malicious firmware or misleading software updates.
• To protect against Dark Skippy, ensure you buy hardware wallets from reputable sources, enable multifactor authentication, monitor transactions for any unusual activity, and verify the integrity of firmware updates.
• Be aware that deterministic nonces alone may not fully shield against attacks, but advanced techniques like zero-knowledge proofs could offer future improvements in security.

When it comes to cyber threats, cybercriminals are always trying new ways to steal your information. In the past, methods included phishing emails that looked like they were from real companies but were actually fake, viruses that could damage your computer or steal your information, and ransomware that locked up your computer and demanded money to unlock it.

One of the latest tricks is called a “Dark Skippy” attack. This might sound harmless, but it can cause serious problems for cryptocurrency users. So, what exactly is this attack, and how can you protect yourself? Let’s break it down.

Dark Skippy attack explained

Dark Skippy is a method where a hacked signing device secretly leaks private keys by hiding them in transaction signatures. It targets Bitcoin hardware wallets using malicious software (harmful software designed to damage, disrupt or steal information from a computer or device). Although discussed in theory, Dark Skippy has not yet been observed in real-world attacks.

Think of it like a clever thief who slowly steals your crypto without you noticing, just like a pickpocket in a crowded market. It’s tough to spot because it works quietly in the background. 

It enters your system through a small vulnerability and can remain undetected for long periods, slowly draining your digital assets, including cryptocurrencies. And the worst part? It doesn’t raise any alarms; once your crypto is gone, it’s usually gone for good — no take-backs!

Did you know? The Dark Skippy attack gets its name from a mathematical method called Pollard’s kangaroo algorithm. This method involves two “kangaroos”— one ”tame” and one “wild”— hopping through mathematical paths until they collide, revealing the secret. 

Imagine this: You’re a cryptocurrency trader with a diverse portfolio stored across several digital wallets. One day, you notice some small, unexplainable transactions — nothing major, just a fraction of your holdings. You might think it’s just a minor technical issue or perhaps a small fee. 

But over time, these tiny transactions add up, and before you know it, a significant chunk of your assets is gone. That’s what the Dark Skippy attack does to your cryptocurrency. It slowly bleeds your assets dry rather than hitting you hard all at once, making it harder to trace or even notice until it’s too late.

Now, let’s understand how these attacks work behind the scenes. 

How the Dark Skippy attack works

Dark Skippy attacks target Bitcoin signing devices, often referred to as hardware wallets. Let’s first understand how these devices work: 

• Transaction signing: The transaction details are sent to a signing device when you initiate a Bitcoin transaction on your computer or smartphone. 
• Secure signing process: With the private key safely stored within, this device creates a digital signature without disclosing the secret to your computer or the internet. Then, the signed transaction is transmitted once more to your PC to be broadcast to the Bitcoin network.
• Preventing exposure: The signing device securely isolates and stores the private key within its hardware, guarding against threats like malware and phishing attempts that could compromise the key if stored online. 

The Dark Skippy attack targets these devices by exploiting malicious firmware to cleverly extract sensitive information, such as the master secret seed.

But it’s not like cybercriminals are going after a specific brand of wallet. Instead, they’re finding ways to steal your master secret seed.

To understand how the Dark Skippy attack works, let’s imagine you store your Bitcoin (BTC) in a hardware wallet, which is like a super secure USB stick that holds your digital money offline, making it harder for hackers to get to it.

So, how does this attack work in a worst-case scenario? Let’s find out.

Step 1: Corrupting the device

For this attack to happen, the hardware wallet would need to be tampered with. This could happen because of:

• Fake devices: Imagine buying a hardware wallet from an untrustworthy source. The device could be a fake, designed by the attacker to steal your funds as soon as you add them to the wallet.
• Malicious firmware: If a hacker manages to load malicious firmware (the software that runs on your hardware wallet) onto your device, they could control how it signs transactions. 
• Tricking the user: Sometimes, you might be tricked into installing fake updates or software that looks legitimate but isn’t. This could open the door for an attack.

Step 2: Stealing your Bitcoin or any other cryptocurrency you hold

The Dark Skippy attack could quietly steal your Bitcoin or other assets you hold if your hardware wallet has been compromised. Here’s how funds get stolen:

• Weak signatures: Typically, your device generates a secure signature for a Bitcoin transaction using a random number known as a nonce. But, a compromised device can substitute a weak, predictable number. This weak number is actually a small piece of confidential information (the seed of your wallet) that should never be revealed. 
• Incremental theft takes place: Each time you use your wallet, it creates a unique digital signature to approve the transaction. Imagine this signature is made up of many small pieces. If your device is compromised, it might use a tiny piece of your wallet’s secret information to create each signature (and the secret seed is secretly embedded in this signature data). If someone took one digit of your PIN every time you used your debit card, they could piece together the entire PIN and steal your money over time.
• Silently watching and waiting to attack: The attacker silently watches the Bitcoin network, like checking the traffic on the road. They especially look for transactions with weak signatures. 
• Cracking the code: Once the attacker finds enough weak signatures, they can piece together the secret information from your wallet and potentially unlock your entire digital wallet.
• Stealing the funds: With the secret information in hand, the attacker can now access your wallet and take all of your BTC without you knowing until it’s too late to take action.

Identifying the Dark Skippy attack

If you are worried that you might be a target of a Dark Skippy attack, watch these signs to protect yourself:

• Unexplained small transactions: You noticed a tiny amount of cryptocurrency disappeared from your wallet, but you didn’t authorize those transactions. This is a primary red flag.
• Delayed transaction confirmation times: If your transactions are taking longer than usual to confirm, it might indicate something is amiss.
• Device acting oddly: If you find your hardware wallet freezing your assets or repeatedly running into technical issues, this could mean that your wallet is compromised.
• Unexpected updates: If your hardware wallet prompts you for unexpected updates, this might indicate that someone wants to steal your funds.

Did You Know? The Dark Skippy attack was first uncovered by Robin Linus during a discussion on X, where the concept quickly caught the attention of the cybersecurity community.  

Dark Skippy vs. double-spending vs. Sybil vs. brute force attacks

Dark Skippy, double-spending, Sybil and brute force attacks each pose unique risks. Dark Skippy targets hardware wallets, quietly stealing private keys by embedding them in transaction signatures through malicious firmware. 

Double-spending involves spending the same cryptocurrency multiple times by exploiting timing issues. Sybil attacks flood networks with fake identities to manipulate outcomes. Brute force attacks involve trying every possible combination to guess passwords or keys. 

Consequences of the Dark Skippy attack

A Dark Skippy attack could hit hard if effective security measures are not in place. Let’s understand the potential impacts of a successful Dark Skippy Attack on individuals and organizations:

• Losing funds: Imagine waking up to find your crypto slowly disappearing from your wallet — that’s what a successful Dark Skippy attack will do. For individuals, this means losing money directly. For businesses dealing with crypto, it can mean huge financial losses.
• Recovery cost: You might need to pay for expert help to determine what happened, handle legal issues and cover any losses, but this is an expensive process.
• Trust issues: You trust hardware wallets because they provide the highest levels of security, right? A Dark Skippy attack could hit the wallet provider’s reputation, which can drive away customers and damage the brand.
• Service interruptions: After an attack, a business might need to shut down services temporarily to fix things. This means you can’t buy or sell crypto, and your funds are locked. 
• Higher security costs: To prevent future attacks, you’ll likely need to invest in better security measures, which can be expensive and time-consuming.

So, how do you protect yourself? Let’s uncover the answers in the next section.

How to protect against a Dark Skippy attack

Protecting yourself from a Dark Skippy attack in the world of cryptocurrency involves a few key practices. Here’s how to keep your assets safe:

• Buy from trusted sources: Ensure you purchase your hardware wallet directly from the manufacturer or a reputable dealer. Avoid second-hand devices or those from unknown sources, as they might be compromised. 
• Add extra security: Use multifactor authentication on your accounts and devices. This adds an extra layer of protection, making it harder for attackers to access your crypto even if they have your password.
• Check for irregularities: Keep a close eye on your cryptocurrency transactions. Look out for any small or unusual withdrawals that you didn’t authorize. This can help you spot potential issues early.
• Verify firmware signatures: Some advanced hardware wallets offer the option to verify the firmware signatures. This means checking that the firmware is genuine and hasn’t been altered. If your device supports this feature, use it.
• Protect your devices physically: Keep your hardware wallet in a safe place. Don’t leave it unattended or let others access it, as physical tampering could compromise its security.
• Create complex passphrases: If you use a passphrase along with your hardware wallet, make sure it’s strong and unique. While it might not fully protect you from Dark Skippy, a strong passphrase can make it more difficult for attackers.
• Educate yourself: Keep up-to-date with the latest security news and best practices. Knowing about new threats and how to handle them can help you stay one step ahead of potential attacks.

Did You Know? Adding an extra BIP-39 passphrase word might not offer much extra protection against the Dark Skippy attack. The attack can still extract the raw seed bytes of your master private key, even with the passphrase applied. While a passphrase might make the attack a bit more challenging by requiring more signatures, it doesn’t provide strong protection on its own. In some cases, the attack could also target and steal the passphrase itself.

Does the use of deterministic nonces in a hardware wallet protect against a Dark Skippy attack?

So, you’ve checked that your hardware wallet uses deterministic nonces (as per RFC 6979- a technical document that outlines a standard method for generating deterministic nonces in cryptographic signatures). This means it uses a fixed method to generate the random numbers (nonces) needed for signing transactions. You might think this makes your wallet secure from attacks like Dark Skippy, but there’s a catch.

Deterministic nonces are not a complete shield against attacks because a clever attacker could still trick your device in specific ways, including:

• Selective exfiltration: An attacker may configure your device to only take advantage of your seed phrase after a predetermined number of transactions or when a transaction reaches a predetermined threshold. Therefore, the question is not only about whether the nonces are deterministic but also about potential device behavior.
• Condition-based theft: Your device may only steal information about transactions on the main Bitcoin network, not a test network. This implies that even if your nonces are deterministic, the attacker may still be able to take advantage of your wallet if they know how to trigger the theft in a particular way.

Did You Know? Even a “stateless” signing device, which doesn’t store seed words, isn’t safe from a Dark Skippy attack. A compromised device can still secretly embed your seed in transaction signatures. Never share your signing device, especially if its firmware can be easily tampered with.

But can these attacks be prevented at all? Yes, advanced techniques such as zero-knowledge proofs (e.g., Purify from MuSig-DN) represent a promising future solution. These techniques would act as a significant barrier against such attacks by enabling your device to demonstrate that it created nonces correctly without disclosing your private keys. 

While current defenses, such as using trusted sources for hardware wallets, regular firmware checks and strong passwords, are crucial, incorporating advanced techniques could significantly enhance security. Plus, staying informed about the latest developments and adopting innovative protections will help keep your digital assets safe from evolving threats.

Written by Onkar Singh