KeepKey Hardware Wallets Have Serious Flaws: Kraken Exchange

Keepkey hardware wallets reportedly have serious flaws in as per the recent analysis by the crypto exchange Kraken. In our blockchain news, we find out more.

The crypto practitioners who use the keepkey hardware wallets to store their funds now have to re-check the security of the funds. The warning appeared on Kraken’s latest blog post where they discussed the serious flaws in all of the wallet units. The exchange’s security research department claimed that it has found a way to hack the seeds from the wallets. A seed phrase is basically a string of random words that help the owners to recover their crypto wallets. Anyone that has access to the seeds could gain access to the crypto funds stored on the wallet.

Kraken discovered that the keepkey hardware wallets have an issue related to their microcontrollers and people who have physical access to the victim’s crypto wallets, could use specialized hardware to read their encrypted data. For this to happen, the attacker has to crack the wallets’ pin code with brute force. The problem now resides in each one of the wallets in circulation and the company cannot solve the problem without replacing all of the patched devices. This means that the Keepkey team can’t do much to decrease the vulnerability of the wallet without a complete hardware redesign.

Keepkey threw away the Kraken findings saying that there’s a lack of relevance. The company shared two articles with the same issues, one related to ShapeShift which supports Keepkey was its preferred wallet onto the crypto-to-crypto exchange. The trading platform wrote back in June that Keepkey can protect the funds of the clients from the common attacks such as malware, viruses or remote hackers who steal private keys. However, the company is helpless as any other wallet when it comes to protecting the devices from physical attacks.
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ShapeShift wrote:

 “If somebody else has physical access to your device — as well as the time, skill, and tools necessary — they will always be able to command the device to do whatever they want, bypassing any digital lock that exists. Again, this is true of any hardware wallet.”

The rival of Keepkey Ledger had the same issues with malware related problems that affected its Nano S wallets back in 2018. After DocDroid reported that the attackers could harm the Ledger software by replacing the copied receiver addresses and the company noted that the issue was universal:

‘’Malware can always change what you see on your computer screen. The only solution is prevention and building a UX to make the user check on its device. The on-device verification feature has been added [six] month ago already.’’