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Electrum patched Bitcoin fee-bump flaw after reported theft

Electrum says malicious servers exploited versions before 4.8.3, redirecting fee-bump payments; one user reported losing bitcoin before the Oct. 24 patch.

Crypto Bulletin Newsroom 2 min read

Electrum patched Bitcoin fee-bump flaw after reported theft

Electrum patched a high-severity Bitcoin wallet flaw on Oct. 24 after a user reported losing funds when raising a transaction fee, according to the project’s security advisory. The advisory says malicious servers were carrying out the attack and versions earlier than 4.8.3 were affected.

How could a server redirect a fee increase?

A malicious Electrum server could withhold a newly broadcast payment and show the wallet a conflicting transaction with the attacker’s address as the destination, the advisory says. The substituted transaction had invalid signatures that the wallet did not check before displaying it as unconfirmed.

If a user chose Replace-by-Fee to speed up that payment, Electrum could sign a valid replacement with a higher fee, sending the bitcoin to the attacker. The advisory says one reported fake transaction had no fee, apparently to encourage the user to raise it.

How many users reported losses?

Electrum’s developers received two reports, dated Oct. 11 and Oct. 18. The second user said they lost money after bumping the fee; the advisory does not give the amount or identify the servers involved.

Both reports said the attacker’s destination address shared its final four characters with the intended address. CoinDesk’s report on the vulnerability also says the first user used a multisignature wallet with two Trezor devices and did not report a loss.

What does Electrum 4.8.3 change?

Version 4.8.3 checks signatures on unconfirmed transactions spending coins from the user’s own wallet before adding them to local history, according to the advisory. Electrum says users should upgrade; those who cannot should verify addresses and amounts before signing any transaction.

The advisory says users connected to servers they trust, such as servers they run themselves, were not affected by this attack. It also says the fix checks wallet-owned inputs, not every unconfirmed transaction.

Sources