TL;DR#

On May 31, 2024, the DMM exchange was exploited, which resulted in a loss of assets worth 4502.9 BTC, amounting to 48.2 billion yen or approximately $304,529,100.

Introduction to DMM#

DMM is a Japanese cryptocurrency exchange.

Vulnerability Assessment#

The root cause of the exploit is unknown at the moment.

Incident Analysis#

We attempt to analyze the attack transaction executed by the exploiter. There can be two possible reasons for the attack vector to be successful.

Private Key Compromise or Signature Service Exploitation: Since the transactions were directly transferred without compromising the system, it is possible that the attack involved the compromise of private keys or an exploitation of DMM's signature services. The attacker used direct asset transfers to receive the stolen funds.

Address Spoofing Attack: The compromised address of DMM wallet operators (3P8M….nUYD), which uses a multi-signature wallet, has a history of sending funds to a DMM management address labeled 1B6rJ6ZKfZmkqMyBGe5KR27oWkEbQdNM7P. The attacker's address (1B6rJRfjTXwEy36SCs5zofGMmdv2kdZw7P) mimics this commonly used address in its starting and ending characters. This suggests the exchange wallet controller might have been tricked by an address-spoofing attack.

The attacker likely deceived the wallet operators into transferring assets to what appeared to be legitimate addresses by altering the transaction flow. The individual during the address verification process checked only the first five and last two digits of the receiver's address before initiating transfers. Consequently, funds were sent to an unintended address.

The stolen funds have since been distributed to these ten different bitcoin addresses in batches of 500 BTC:

bc1qx6jpnnfjrfcx9ehhdmj7qqyzpyd8pek00trrq7: 500 BTC worth $33,789,740
bc1qrtltlc7zjzj3knde2tqjt7tl2p5l2keh4l2uka: 500 BTC worth $33,789,740
bc1qr4vnu4f4tl3gwfxt6a5hgt6vuusgsd0j2cnz74: 500 BTC worth $33,789,740
bc1qgcv2j80009apvjekph40wagwutfu6l3gcm2fw0: 500 BTC worth $33,789,740
bc1qegcazuxnp5wxxxamdqvjv345fpve6656vpjln4: 500 BTC worth $33,789,740
bc1q7p3atj3v95k4pd7qxnnqlhjwu843ty2hqn9gy0: 500 BTC worth $33,789,740
bc1q3ur23g02rq5w0x6y8vek3xradjgs080nzksfje: 500 BTC worth $33,789,740
bc1q2u9m2eqy8glvrjeqr5sceqngpad6dnxrtyxlf3: 500 BTC worth $33,789,740
bc1q2tu4dxyvnaquar96mj99yqjanfzgg3fv4gzytd: 500 BTC worth $33,789,740
bc1q7pdecv2raf3x84unxlv9ghtpjfpwlam6dx27xd: 2.89245200 BTC worth $195,470

Aftermath#

The team acknowledged the occurrence of the exploit and stated that they would be reimbursing all of the stolen assets. At the moment, all spot purchases have been temporarily restricted, and customers willing to withdraw yen might face delays with their transaction processing.

Solution#

In response to the recent exploit, DMM should undertake a comprehensive overhaul of their security measures to safeguard their platform and prevent future incidents. They should start by bolstering their multi-signature protocols by increasing the number of required signatures for high-value transactions, adding an extra layer of security to make unauthorized transactions more challenging. Additionally, DMM needs to distribute signers across different geographical locations to mitigate the risk of localized attacks and ensure no single point of failure can compromise their security framework.

DMM should also focus on advanced key management. They need to implement the use of Hardware Security Modules (HSMs) to securely store and manage private keys, which significantly reduces the risk of key compromise. In conjunction with this, they should institute regular key rotation to minimize the risk of long-term key exposure, ensuring that keys do not remain in use for extended periods.

Enhancements to address verification processes are another critical area of DMM's security improvements. They should enforce full address verification instead of the previous system of partial checks to prevent address spoofing attacks. Additionally, they need to employ AI-powered address monitoring to flag unusual address patterns and transactions, leveraging machine learning to detect and respond to potential threats in real time.

Employee training and awareness should also be key components of their new security strategy. They need to conduct regular security training sessions for all employees to ensure they are updated on the latest threats and security practices. Continuous phishing awareness campaigns should be run to educate employees on recognizing and avoiding phishing attempts, thereby reducing the risk of social engineering attacks.

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Reference Source BlockSec