I mean of course it was. Everything in this whole ludicrous space is a scam of one kind or another. It's amazing to me that this is still even a point of discussion. It's obviously a rug pull.
That's always a possibility, and I'm sure it has happened a lot. I would suspect with the size of liquid it's more likely it was an exploit, but either way I don't think we'll ever know!
Seems that an Elements rangeproof cache bug may've gotten exploited. Fix for suspicious issue was committed just last week and attackers could've monitored the public commits and exploited the bug before it was ever pushed?
Sort of self-fulfilling prophecy if true, that's a leading theory anyhow.
fix: range proof cache bind to asset and scriptpubkey
Are you thinking of ETH? All the bitcoin classic forks are over various aspect of network rules (eg. block size or block reward), not to roll back a transaction like ETH classic.
There are always complaints on here about how Google is only paying $X for vulns. One advantage of decentralized digital money is that its bug bounties are self funding and the payout amount researcher-controlled.
I'm not sure if there is actually any evidence of this? Criminals do very well without crypto. If you look at percent of the economy that is fraudulent, it is quite large. If you look at percentage of crypto economy that is fraudulent, it is surprisingly similar
Plenty, search for cases of ransomware for example, you will find hundreds of instances where they demand payment by cryptocurrency, at least 1B per year.
I worked at blockstream back in 2017 and developed the original cryptographic range proofs which are the ancestors some of the involved code here. However, the vulnerabilities here and the whole liquid product as it exists today postdates my involvement in the company (while I was there it was under initial development but envisioned quite differently than what they eventually did), and I haven't followed any of it closely since.
But I gave this issue a quick look based on the transactions and github history.
Underlying issue was related to validation caching. Signatures and proofs are expensive to validate, to improve performance and prevent certain DOS attacks their validation is cached. It's important that the key used in the cache capture everything that goes into the validation decision (though to prevent some attacks its important not too much goes into the key, or an attacker can flood with valid proof attacked to insignificantly different transactions).
It appears to me that there was a longstanding vulnerability-- stemming back to the introduction of multiple-asset-support-- which could cause a consensus split/ddos. But on a lazy review I can't come up with any way of translating it into theft. I see how someone could make an invalid transaction that would be falsely accepted by nodes that have cache state from a constructed prior transaction, but the ways I can come up with results in the invalid transaction just burning assets--- not directly very useful. [Big asterisks on the non obviously exploitable here, I've only thought about it for a minute or two and I really know fairly little about assets support in Liquid-- but exploiting it would require being able to create a fake 'shadow' asset with the a generator that is the negation of a real asset.]
In any case: This was recently fixed, but the "fix" introduced a hash collision vulnerability: The new fields added to the hash were not delimited. Failing to include type information like lengths in hashes is a perennial problem in cryptographic protocols. This new vulnerability has a somewhat straight forward path to exploitation and prints funds out of thin air.
Based on some of the public comments about nodes rejecting the attack transaction, I'm guessing they rolled out the "fix" to the federation in advance of publishing the changes because they seem to have accepted an attack that everyone else was still rejecting.
Advanced private deployment of a 'fix' might have gave them the confidence to drop the fix on github with little fanfare as it was "already fixed", but doing so painted a target on the issue that remained. Interestingly, off the shelf open weight AI like Kimi K3 immediately identify the new vulnerability without any particularly artful prompting. Makes me wonder if "safe" AI played a role in the introduction of the new, more serious, vulnerability.
I'm going to guess that anyone who actually knows more has their hands busy dealing with the return of the funds. I'm not sure if anyone has ever taken and then returned 1/3rd of a billion dollars worth of assets before.
I'm told by someone who threw AI at it that there may be a way to exploit the initial longstanding vulnerability by counting on the fact that updates to validation cache are non-atomic: You can make an invalid transaction that primes the cache before its rejected. But that these priming transactions can't propagate in the network (because they're invalid)... so getting them to the parties that need to sign the blocks might have been impractical to exploit.
Great, blog spam comments on HN now? Where is the "Cry that no independent regulator audited their systems and that the transactions were not reversible" coming from? Neither the Twitter thread nor the HN comments even mention anything about this, just the typical argument against yourself?
You can have smart wallets with reversible transactions. Even chargeback systems where both sides agree on a neutral judge to decide who's right. It takes time to set it up in a way that's secure, low cost and has good UX, but it's definitely possible.
Of course you need to use a well designed network like Ethereum or Solana for that, not a random Bitcoin sidechain controlled by a committee of BTC miners and shady VCs. This is a problem with Liquid not DeFi.
I've seen people in real life still pushing for crypto. Believe it or not they already got burned a couple of times, but somehow they think that with the next crypto they'll be at the top of the pyramid chain and able to cash out. They don't understand crypto currencies technically, nor that they are always going to be at the bottom of the pyramid no matter how many times they are burned.
Some of these people with the moral integrity of "quick buck at everyone else's expense" maybe won't stop until they go bankrupt or severly in debt. Might be a self-selective environment at this point.
I have had my own share of binary option scam, I lost over $22k, and i was still told to send more money to unlock my account. After discovering it was scam I told my friend about it and he was able to refer me this recovery agent. I reached out to them on recoverydarek@gmail.com and they helped me get my money back.
64 comments
[ 0.24 ms ] story [ 21.6 ms ] threadhttps://mempool.space/tx/91271efcbb5ab29abfc38ae635f0644e3ba... "Please contact security@blockstream.com"
https://mempool.space/tx/bd81219691eb1e22475c5985d847fa888c3... from Blockstream, unknown PGP message
https://mempool.space/tx/3a3eac4a26395b8c2563aaf1eb8b1b77798... from attackers, "sending most back to bc1qdlld6antmv4xug242ed83q7k4rqw50cwfns38szx4qu2f4jwaxxsuhwxxr, is that ok"
https://mempool.space/tx/8a444eed65c4584f138e08ee138f61490ef... from Blockstream, PGP-signed "Yes, thank you."
https://mempool.space/tx/83825b2135dd0abac12c9dfe17f29ab81b3... from attackers, "Please fix the bug first. The chain is under risk at latest commit right now. Make sure every node is patched. Then we will transfer the money back safely after confirming the fix. The detail is as follows (encrypted using https://blockstream.com/pgp.txt)." with unknown PGP-encrypted payload
As of writing, no response from Blockstream, and funds are still controlled by the attackers.
Sort of self-fulfilling prophecy if true, that's a leading theory anyhow.
fix: range proof cache bind to asset and scriptpubkey
https://github.com/ElementsProject/elements/commit/c26d719c2...
> Fixes a number of small issues picked up during LLM scans
The mechanism reminds me of this classic AWS request signature forgery bug from 2008: https://news.ycombinator.com/item?id=401876
More than enough to buy yourself a pardon if you get caught.
The coin fanboys will argue that the bankers and government were criminals as well.
But I gave this issue a quick look based on the transactions and github history.
Underlying issue was related to validation caching. Signatures and proofs are expensive to validate, to improve performance and prevent certain DOS attacks their validation is cached. It's important that the key used in the cache capture everything that goes into the validation decision (though to prevent some attacks its important not too much goes into the key, or an attacker can flood with valid proof attacked to insignificantly different transactions).
It appears to me that there was a longstanding vulnerability-- stemming back to the introduction of multiple-asset-support-- which could cause a consensus split/ddos. But on a lazy review I can't come up with any way of translating it into theft. I see how someone could make an invalid transaction that would be falsely accepted by nodes that have cache state from a constructed prior transaction, but the ways I can come up with results in the invalid transaction just burning assets--- not directly very useful. [Big asterisks on the non obviously exploitable here, I've only thought about it for a minute or two and I really know fairly little about assets support in Liquid-- but exploiting it would require being able to create a fake 'shadow' asset with the a generator that is the negation of a real asset.]
In any case: This was recently fixed, but the "fix" introduced a hash collision vulnerability: The new fields added to the hash were not delimited. Failing to include type information like lengths in hashes is a perennial problem in cryptographic protocols. This new vulnerability has a somewhat straight forward path to exploitation and prints funds out of thin air.
Based on some of the public comments about nodes rejecting the attack transaction, I'm guessing they rolled out the "fix" to the federation in advance of publishing the changes because they seem to have accepted an attack that everyone else was still rejecting.
Advanced private deployment of a 'fix' might have gave them the confidence to drop the fix on github with little fanfare as it was "already fixed", but doing so painted a target on the issue that remained. Interestingly, off the shelf open weight AI like Kimi K3 immediately identify the new vulnerability without any particularly artful prompting. Makes me wonder if "safe" AI played a role in the introduction of the new, more serious, vulnerability.
Interestingly, it looks like the funds are being returned: https://mempool.space/tx/3a3eac4a26395b8c2563aaf1eb8b1b77798...
I'm going to guess that anyone who actually knows more has their hands busy dealing with the return of the funds. I'm not sure if anyone has ever taken and then returned 1/3rd of a billion dollars worth of assets before.
This shortens the exploit window
- Give your money to shenanigans who pretend to know what they're doing
- [...]
- Cry that no independent regulator audited their systems and that the transactions were not reversible.
But I see how polarized you are about the topic.
Of course you need to use a well designed network like Ethereum or Solana for that, not a random Bitcoin sidechain controlled by a committee of BTC miners and shady VCs. This is a problem with Liquid not DeFi.
But do both parties need to agree to the reversal? Then that's really trivial... and not prone to work against fraudsters.
I suspect that a legally-mandated transaction reversal supposes that an authority has got power over the system -- which is against DeFi philosophy.
Get rid of it.
How many forks and psyops until people realize?
And given the world will never run out of fools, you're actually saying cryptocurrencies will continue working forever?
All you have left is being butthurt. Small bandage for you is if someones assets are stolen.
Some of these people with the moral integrity of "quick buck at everyone else's expense" maybe won't stop until they go bankrupt or severly in debt. Might be a self-selective environment at this point.
People need to call them for what they are.