What is a Keylogger?

Introduction

Despite the growing popularity of cryptocurrencies, scams and hacks impede widespread adoption. According to a Coindesk report, Cryptocurrency users lost nearly $2 billion to hacks in 2023 and twice as much in 2022.

Keyloggers are one of the tools used by hackers and cybercriminals to obtain sensitive information that can provide unauthorized access to your crypto wallets.

In this article, we will look at how keyloggers work, identifying their presence, and how to prevent and secure your crypto wallets from them.

What is a Keylogger? How Keyloggers Impact Cryptocurrency Security

Keyloggers can record private texts, passwords, or financial information (Source: Avast)

Keylogging is a shortened form of “keystroke logging” which refers to recording any interaction you make with a button on your keyboard. Keyloggers are designed to record every keystroke, whether a letter, number, symbol, or command, entered via a computer keyboard. These could include passwords, credit card numbers, and other confidential data.

While keyloggers are commonly associated with malicious intent, they also serve some legitimate purposes listed below:

1. Companies use keyloggers to monitor employees entrusted with sensitive company data, ensuring compliance with security protocols and preventing unauthorized access or data breaches.
2. Parents install keyloggers on their children’s devices to supervise their usage and protect them from potential threats or inappropriate content.
3. Individuals use keyloggers to detect any unauthorized activities on their devices.
4. Law enforcement agencies use keyloggers to monitor and gather evidence on criminal suspects.

Types of Keyloggers

Source: Fortinet

Generally, there are two known types of Keyloggers:

1. Hardware Keyloggers
2. Software Keyloggers

A connected hardware-based keylogger (Source: Wikipedia)

Hardware Keyloggers

Hardware keyloggers are physical devices that can be inserted between the keyboard cable and the computer’s USB or PS/2 port, built into keyboards, or any other component that is physically connected to your computer, such as cables, connectors, e.t.c, Thus, the attacker has to deploy the keylogger to execute its operation physically. Keyloggers can also be hidden cameras placed in the environment to record keystrokes visually.

Software Keyloggers

Software keyloggers are programs or malicious software installed on a computer or device. Users can install them intentionally for legitimate purposes (monitoring children’s online activities) or unknowingly by visiting compromised websites, opening spam/phishing emails, or using untrusted applications. Most cyber-attacks use software keyloggers as they do not require physical access to the device.

How Do Keyloggers Work?

For keyloggers to work, they have to be installed on the target device. Keyloggers can be installed on a target device either through physical access (in the case of hardware keyloggers) or installed by the user through malicious downloads or attachments (in the case of software keyloggers).

Once installed, the keylogger operates in the background, monitoring, and recording all keystrokes made by the user. Keyloggers use different techniques to log keystrokes, as discussed below. The captured keystrokes are stored locally in a hidden file on the compromised device or transmitted to a remote server accessible to the hacker. The hacker can then access the captured keystrokes to extract sensitive information such as passwords, seed phrases, personal messages, and other confidential data.

Common Keylogging Techniques

Keyloggers employ various techniques to capture keystrokes and compromise system security, some of which are:

RootKit Keylogging

Rootkits Keyloggers reside in the operating system’s kernel, where they can modify processes to execute their function. With this privilege, it can conceal its actions, files, and entries from detection by security software.

API (application programming interface) Keylogging

They intercept programming interfaces, and communication channels between the application and the operating system. API keyloggers can capture keystrokes as soon as they are pressed before the operating system relays them to the application.

Form Grabbing

Form-grabbing keyloggers capture sensitive information entered into online forms or websites. They do this by intercepting data before it’s submitted over the internet. For example, when you enter usernames, passwords, or bank account details on a website.

Screen Logging

Screen Loggers are designed to take periodic screenshots of the user’s screen. This allows them to capture all user activity, including typed text, regardless of the application used.

JavaScript Keylogging

JavaScript keyloggers are embedded in malicious websites or injected into legitimate websites through compromised scripts. This type of keylogging software can execute JavaScript codes to record every keystroke entered to input fields or specific text areas on a webpage.

How Keyloggers Can Compromise Cryptocurrency Security

Keyloggers pose a significant threat to cryptocurrency security due to their ability to covertly capture sensitive information, including passwords, private keys, and other credentials. Here’s how keyloggers can compromise cryptocurrency security.

Capture of Private Keys

Private keys are essential for accessing and controlling cryptocurrency holdings. Keyloggers can intercept and record private keys as users enter them, providing attackers with unauthorized access to cryptocurrency wallets.

Logging of Passwords

Many centralized exchanges require passwords and usernames for account access. Keyloggers can capture these passwords as users type them, allowing attackers to gain unauthorized entry into their trading accounts.

Stealing Seed Phrases

Non-custodial crypto wallets use seed phrases, also known as recovery phrases or mnemonic phrases, as a backup mechanism to recover a wallet or generate private keys. Keyloggers can intercept seed phrases as users enter them, enabling attackers to steal cryptocurrency funds or compromise wallet security.

Monitoring Clipboard Activity

Some keyloggers can monitor clipboard activity, allowing them to capture copied cryptocurrency addresses. Attackers can then replace copied addresses with their own, leading to the interception of funds during transactions.

Securing Your Cryptocurrency Against Keyloggers

Employing robust security measures can help safeguard your digital assets. The following measures could protect you even if you unknowingly have a keylogger on your device.

Storing Your Assets on Hardware Wallets

Wallets such as Trezor or Ledger store your cryptocurrency offline, making them inaccessible to keyloggers or malware on your device.

Enable Two-Factor Authentication (2FA)

Two-factor authentication requires two separate forms of identification to grant access to your account. With 2FA, even if a keylogger captures your password, it would be difficult to bypass the second form of verification, which could most likely be an OTP (one-time password) sent to your mobile device or a biometric scan. Gate.io offers 2FA for all user accounts.

Set Up a Firewall

Firewalls can monitor outbound traffic from your device, allowing you to detect and block any suspicious connections or data transmissions initiated by the keylogger. By blocking outgoing connections to unknown or unauthorized destinations, you can prevent the keylogger from sending captured data to remote servers controlled by attackers.

Protecting Your Device From Keylogger Attacks

Prevention of a keylogger attack is always safer than attempting to eradicate it from your device. Here’s how you can protect your device from coming in contact with Keyloggers.

• Regularly scan your computer for malware and keyloggers using security software to detect and remove any threats before they can compromise your cryptocurrency security.
• Keep your operating system and antivirus software up to date with the latest security patches to protect against known vulnerabilities exploited by malware and keyloggers.
• Verify that emails are from legitimate sources; look for misspellings of email addresses, exaggerated rewards, and bogus requests. Most crypto exchanges won’t ask for your personal information regarding your account, especially by mail/call.
• Avoid downloading software or opening email attachments from unknown or untrusted sources, as they may contain malware or keyloggers.
• Before entering sensitive information on a website, check that it has a digital certificate to validate its security.
• Protect your CPU from hardware keyloggers by monitoring and restricting access to devices holding sensitive information, e.g., closed-circuit video surveillance (CCTV) and access control.

Detecting Keyloggers on Your Device

Keyloggers can be very elusive; here is how you can detect keyloggers in your system:

Routine Checks

Check the ports on your CPU for hardware keyloggers if you’re using a desktop computer.

Inspect Running Programs with Task Manager (Windows) or Activity Monitor (Mac)

The Task Manager/Activity Monitor shows currently running applications and processes, closing suspicious processes can help stop keyloggers from capturing keystrokes, although keyloggers embedded in the operating system can conceal their activities. It is advisable to install an anti-keylogger

Use an Anti-Keylogger

Anti-keyloggers are specialized software programs designed to detect and remove keyloggers from a computer system. They maintain a database of signatures or patterns associated with known keyloggers and scan the system for matches.

Install an Antivirus Software

Antivirus software offers automated detection and removal of malware, including keyloggers. If a keylogger is detected, the antivirus program should promptly remove it. In the absence of antivirus software, you can do the following;

• Uninstall suspicious programs from your device.
• Clear temporary files to delete data related to the keylogger.
• Reset and restore the device from a backup. This process will remove any malicious software and restore your device to its previous state, as saved in the backup. Ensure you choose a backup that predates any suspicious activity to be certain you are not restoring the malware.

Notable Keylogging Incidents

From individuals to organizations, Every device is susceptible to keyloggers. This section highlights popular keylogging attacks.

LastPass Breach

In 2022, LastPass, a password management service, was a victim of a breach that led to a loss of client data after an employee’s computer was infected with keylogging malware from third-party software that captured the master password for the employee’s password vault at LastPass.

Cyren’s Discovery

In 2017, Cyren Security, a cyber security company, discovered a keylogging attack initiated by fake bank transfer emails that targeted passwords of Bitcoin wallets from PC users. Cyren discovered that the spam messages were sent from bots in the United States and Singapore, and used the branding of major banks. These messages contained an executable file that installed a keylogger and scraped information from web browsers, and other types of applications that could store personal information.

Conclusion

The cryptocurrency space remains a prime target for malicious actors to exploit because of its financial gains. Thus, crypto users must adopt a proactive stance in protecting their assets against keylogger attacks. By adopting safety measures such as using hardware wallets, enabling two-factor authentication, and staying vigilant, users can significantly reduce the likelihood of falling victim to hacks.

Remember, prevention is the best form of security as the extent of damage done by malware cannot be easily determined, and no corrective action is perfect. Treat any suspicious processes on your device as dangerous and follow the appropriate safety measures.