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The Initial Analysis of the bZx Security Incident

Code Auditing
November 6, 2021

On Nov 5th, bZX protocol was reported hacked. The attacker drained tokens in the affected smart contracts. After the initial analysis of the attack transactions, we suspect it’s due to the compromised private key of the developer.

Attack process

The process is roughly simple. The privileged function transferOwnership is invoked to transfer the ownership of affected smart contract to a new one, e.g., 0x0acc0e5faa09cb1976237c3a9af3d3d4b2f35fa5. Then the new contract owner can transfer all the tokens that have been approved to the smart contract to arbitrary addresses.

Note that, the privileged function transferOwnership can only be invoked by the current owner of the smart contract. Indeed, we find the caller of this function is 0xb7f72028d9b502dc871c444363a7ac5a52546608, which is the contract creator of the affected smart contract.

We do not know the exact reason why the contract creator transfers the ownership to other addressees. However, we suspect it’s due to the compromised (or leaked) developer private key.

Conclusion

In summary, the security of the private key of DApps is essential to the security of the application, especially for the ones that are not using DAO. We suggest that the project owner can use some new techniques such as confidential computing and MPC to secure the private key.

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The Initial Analysis of the bZx Security Incident