CoinStats Wallet Security Analysis and Response
Incident Overview
On June 22, 2024, at approximately 18:00 UTC, CoinStats security monitoring systems flagged anomalous outbound transactions originating from our non-custodial CoinStats Wallet service. Immediate containment measures included a full platform shutdown, coordination with our third-party wallet service provider, and an emergency incident response activation. By 23:00 UTC, we had identified and publicly shared a list of 1,590 affected wallets.
Incident Details
Detailed forensic analysis uncovered a multi-stage intrusion exploiting misconfigurations across both our infrastructure and that of a third-party wallet-as-a-service provider. The attacker gained unauthorized access to:
- HashiCorp Vault: The Vault instance securing 2FA PINs and API credentials was compromised via a chained vulnerability in a legacy plugin, allowing retrieval of encrypted CIT (Customer Identity Tokens).
- Third-Party API Keys: Stolen service-account keys granted elevated privileges to user wallet metadata endpoints.
Once inside, the attacker exfiltrated private keys for exactly 1,590 wallets, leading to an estimated $2.2 million in cryptocurrency theft. Chain analysis firms have since traced movement of 65% of these funds through Tornado Cash and cross-chain bridges, suggesting involvement of a sophisticated, likely nation-state-affiliated actor—consistent with TTPs (tactics, techniques, and procedures) attributed to the Lazarus Group.
Immediate Remediation Actions
- Engagement of Leading Security Experts: We retained the Security Alliance (_SEAL_) along with independent researchers such as ZachXBT and Tay (Head of Security at MetaMask) to assist with blockchain asset tracing and harden post-incident defenses.
- Law Enforcement Coordination: The incident was reported to the FBI’s Cyber Division and relevant Europol units. We are actively collaborating on cross-border evidence collection.
- Infrastructure Rebuild: All production environments were rebuilt from scratch on new AWS accounts. We implemented granular IAM roles, AWS Nitro enclaves for secrets management, and rotated all service credentials.
- Comprehensive Audits: An independent security audit by a top-tier firm is underway, covering network segmentation, SIEM rulesets, WAF configurations, and continuous penetration testing.
Technical Architecture Enhancements
To prevent future incidents, CoinStats has redesigned its wallet infrastructure:
- Hardware Security Modules (HSMs): All private keys and 2FA secrets are now stored in FIPS 140-2 Level 3 certified HSMs, eliminating reliance on software-based keystores.
- Zero Trust Segmentation: We adopted a zero-trust network model, enforcing mutual TLS and mTLS-based micro-segmentation between services.
- Immutable Infrastructure: Deployments now leverage Infrastructure as Code (IaC) with Terraform, ensuring that any unexpected drift triggers automated rollback.
- Advanced Monitoring: Integration of EDR (Endpoint Detection and Response) agents and SIEM correlation rules for real-time alerting on anomalous API calls and configuration changes.
Compliance and Regulatory Impact
In light of this breach, CoinStats is working closely with financial regulators to ensure compliance with the EU’s Markets in Crypto-Assets Regulation (MiCA) and U.S. SEC guidance on digital asset custody. We have voluntarily submitted our incident report to the UK’s Financial Conduct Authority (FCA) under their operational resilience requirements. Additionally, we are drafting a Data Protection Impact Assessment (DPIA) to evaluate potential GDPR implications.
Industry Best Practices & Recommendations
Drawing on insights from this event and expert interviews, we advise all crypto-wallet providers and institutional custodians to:
- Implement multi-party computation (MPC) or threshold signatures to distribute key control.
- Conduct biannual red-team exercises and continuous bug bounty programs.
- Adopt chaos engineering to validate incident response playbooks under simulated attack scenarios.
Next Steps for Users
While there is no evidence of user PII (personally identifiable information) exfiltration, we recommend:
- Updating CoinStats account passwords to comply with our new complexity policy (minimum 12 characters, including special symbols).
- Enabling 2FA using a hardware security key (U2F/FIDO2) or TOTP authenticator apps.
- Remaining vigilant for phishing emails; verify sender domains and avoid unsolicited links.
Users impacted by the breach should submit the incident form by August 15, 2024, 00:00 UTC for support eligibility. Fields may vary based on loss estimates.
Conclusion
CoinStats is committed to full transparency and ongoing security improvements. We will publish quarterly security reports and notify users of any further developments. Our priority remains safeguarding user assets and restoring confidence in our platform.