Approaching Effective Crypto Wallet Security Evaluation

Unlike traditional payment systems, the cryptocurrency landscape lacks industry-recognized security certification programs. In this post, we look at how to approach hardware wallet security evaluation, using the Keysight Device Security Lab’s assessment of the Tangem Wallet as an example.

Why hardware wallets need independent evaluation

Hardware wallets are not a new concept, but their adoption has grown rapidly alongside the cryptocurrency ecosystem. As adoption grows, so does their appeal to attackers, and so does the need for independent scrutiny.

Hardware wallets are generally considered the safer option for storing and managing significant amounts of cryptocurrency. They are not immune to vulnerabilities, though. A single exploitable weakness can put an entire product line at risk. An independent security assessment helps manufacturers identify and mitigate these weaknesses before attackers find them.

Card and mobile payment systems are governed by established security standards. Cryptocurrency has no equivalent. Hardware wallets fall under the broader category of IT and IoT devices, so one might expect them to follow IoT security requirements or borrow best practices from the payment industry. These frameworks are a useful starting point, but they don’t address the unique characteristics of a hardware wallet. The most important requirement is to evaluate the device from an attacker’s point of view, which reveals the weak spots an adversary is most likely to target.

Evaluating the Tangem Wallet

Tangem engaged the Keysight Device Security Lab to perform an independent security assessment of the Tangem Wallet. The main goal was to identify potential vulnerabilities and logic-related security issues. The Tangem Wallet, the size of a standard bank card, enables users to buy, swap, store, transfer, and manage cryptocurrencies via an NFC interface. During the evaluation, the lab reviewed the wallet’s source code and design and tested all features and commands accessible through the NFC interface.

To assess the wallet thoroughly, the lab defined several key assumptions about the most relevant attack scenarios. The most important assumption is that attackers are highly skilled experts with in-depth knowledge of vulnerable points and security countermeasures. A compromised crypto wallet can yield a high reward, which justifies an attacker’s significant investment in expertise and equipment. Understanding the tactics and techniques attackers use gives valuable insight into a system’s potential weak points and helps us focus on the most critical exploits.

The threat model

The threat model is central to any crypto wallet evaluation because it defines the primary attack scenarios. The Tangem Wallet assessment considered the following:

An attacker steals the device and tries to extract the assets stored on it.
An attacker gains brief access to the wallet, for example when it is left unattended in a public place. The attacker tries either to extract the assets on the spot or to modify the wallet so the assets can be extracted later.
An attacker gains access to the wallet before it reaches the end user (a supply chain attack) and modifies the device to access its assets later.
An attacker with access to Original Equipment Manufacturer (OEM) resources, including source code and documentation, installs a backdoor before mass production, aiming to access the wallet’s assets once it is in the customer’s hands.

Supply chain attacks are not theoretical. In widely reported incidents, criminals have mailed tampered hardware wallets to existing users of a well-known brand, using a fake “security incident” as a pretext for replacing their devices. In another case, an individual lost their life savings after buying a hardware wallet from a reseller who had tampered with it.

Results

The Keysight Device Security Lab’s evaluation of the Tangem Wallet found no significant flaws that would put customer assets in immediate danger.

If you’d like to discuss a security evaluation of your own crypto wallet, contact our team at [email protected].

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