Security Alert: Crypto Wallet Coinomi Reportedly Sending Seed Phrases to Google

Francisco Memoria

Multi-asset cryptocurrency wallet Coinomi reportedly has a major security vulnerability, as it has, according to various security researchers, been sending users’ seed phrases in plain text to third-party servers.

Twitter user Warith Al Maawali, who first discovered the vulnerability, claims to have found out about it after losing large amounts of cryptocurrency after adding his recovery phrase to Coinomi. He wrote:

My passphrase was compromised and $60K-$70K worth of crypto-currency were stolen because of Coinomi wallet and how the wallet handled my passphrase.

The vulnerability itself sees the cryptocurrency wallet send users’ seed phrases as non-encrypted plain text to a Google-owned, over a spell check function. Using software that allows the monitoring and debugging of HTTP/HTTPS traffic on applications, Maawali found out about the activity.

To verify the threat, he noted on a website dedicated to the incident that all users have to do is “simply paste any random sentence with [a] spelling mistake in the textbox in Coinomi‘s “Restore Wallet” form/page.” The result, he wrote, is that the error will be underlined in red, after being sent to Google for a spell check.

On Twitter, security researcher Luke Childs published a video showing that Coinomi was indeed sending its users’ seed phrases to Google.

Maawali believes his funds were stolen by someone with access to the traffic, or by someone at Google who noticed the seed phrase. The researchers added that other Coinomi wallet users have reported seeing their funds disappear.

Coinomi’s Response

Before making the vulnerability public, Maawali claims to have reached out to Coinomi explaining the situation. Per his words, the team behind the wallet “did not reflect any responsible behavior and they kept asking me about the technical issue behind the bug because they were worried about their public image and reputation.”

Maawali claims Coinomi “kept reminding” him in a threatening way of “the legal implications” of disclosing the vulnerability. He noted they shouldn’t forget about the legal implications of his funds, now gone.

Luke Childs has notably in the past disclosed a vulnerability Coinomi had. The vulnerability transmitted its users’ transactions unencrypted to Electrum servers, without using standard security technology. At the time, the developers reacted defensively, criticizing Childs claiming he spread fear, uncertainty, and doubt (FUD).

Maawali advised those using Coinomi to secure their funds as soon as they can:

To everyone who is using or used Coinomi wallet, make sure to remove your funds from the wallet and change your passphrase by creating a new wallet using another application otherwise your funds might get stolen sooner or later

Available data shows the Coinomi wallet isn’t open-source, meaning its code isn’t available to the public. Some in the crypto community believe these wallets should be avoided, as they can contain hidden security vulnerabilities.

Civic Wallet Offers Users $1 Million Insurance Policy on Stored Crypto

Michael LaVere
  • Multi-signature wallet provider Civic is offering clients $1 million insurance coverage on stored crypto-assets.
  • Civic has partnered with Coincover which works with Lloyd's of London underwriters. 

Multi-signature, non-custodial wallet Civic is providing clients a $1 million guarantee to cover stored crypto-assets. 

Civic, a leading provider for decentralized identities in the crypto space, has become the first company to offer a non-custodial wallet with significant asset coverage. According to the policy, Civic has partnered with Coincover to offer users Federal Deposit Insurance Corporation (FDIC)-like coverage of up to $1 million for assets stored in their multi-signature wallet.

Vinny Lingham, Civic co-founder and CEO, compared the wallet’s insurance policy to that of a bank. 

He told Cointelegraph,

This is the first time that both technical and non-technical users can feel safe about their holdings. Until now, people had to keep their coins in the cold storage, but now they don’t have to worry about it as their holdings are insured up to $1,000,000 just like a bank account with the FDIC.

Lingham said a main benefit of the insurance policy would be client protection in the event that Civic goes under. 

Coincover CEO David Janczewski explained that his company is not an insurance company, and instead works with Lloyd’s of London underwriters to provide the policy. He called Coincover a “protection and security company for cryptocurrency,” rather than a direct insurance provider. 

The multi-signature wallet currently employs a three key system, distributed among the client, custodian BitGo and Civic, with the latter intending to transition its private keys to Coincover. 

Featured Image Credit: Photo via Pixabay.com