A new attack vector called Dark Skippy poses a serious threat to the security of Bitcoin hardware wallets by allowing compromised signers to leak their master seed phrase. This attack involves embedding portions of the seed phrase into transaction signatures, requiring only two transactions for completion. Unlike previous assumptions, this streamlined approach means that a single use of a compromised device can lead to a complete security breach. The attack relies on using malicious firmware that alters the standard signing process, using deterministic, low-entropy nonces derived from the master seed. Once a device is compromised, the firmware embeds secret data within public transaction signatures, utilizing the blockchain as a covert channel to leak sensitive information. Mitigations such as implementing 'anti-exfil' protocols in signing devices are recommended to prevent unauthorized data leakage. Users are advised to ensure their devices run genuine firmware and are sourced from reputable vendors to minimize the risk of compromise. Read more AI-generated news on: https://app.chaingpt.org/news