New 'Dark Skippy' Vulnerability Exposes Bitcoin Seed Phrases via Malicious Firmware

A new security vulnerability called 'Dark Skippy' has been disclosed, highlighting a method by which a malicious signing device can leak secret keys. The exploit involves modifying the signing function of hardware wallets to embed a master secret seed within transaction signatures. This attack can expose the seed phrase of an airgapped hardware wallet over the mempool due to malicious firmware. Researchers emphasize the importance of using genuine firmware to prevent such attacks, as hardware wallet websites may attempt to replace firmware with malicious versions. The disclosure credits @utxoclub, @LLFOURN, and @robin_linus for their research. Hardware signing devices insert random values called 'nonces' every time they sign Bitcoin transactions.