CoolWallet’s Enhanced Security: Stop Hacks Before They Happen

The Bybit Hack: A Wake-Up Call

The shocking Bybit hack of February 2025 saw attackers drain $1.5 billion in Ethereum, exposing critical vulnerabilities in multisig wallets. Attackers exploited vulnerabilities in the exchange's multisig wallet process, manipulating transaction details without detection. This incident highlights the critical need for better transaction verification systems.

To address this growing concern, CoolWallet is introducing a new feature aimed at providing users with an added layer of security when confirming transactions. This enhancement will help users detect discrepancies in transaction details before signing them, offering improved protection against similar exploits.

CoolWallet's Solution: Enhanced Transaction Confirmation

CoolWallet is launching a transaction confirmation simulation feature for CoolWallet Pro, CoolWallet S, and CoolWallet HOT users. This tool provides a clear and comprehensive preview of full on-chain asset changes before transaction approval, allowing users to:

✔ Full visibility into on-chain asset movements before approval

✔ Detection of discrepancies between expected and actual transactions

✔ Real-time simulation for identifying suspicious activity

If anything appears off—such as missing or altered amounts—users will have the opportunity to spot these discrepancies before finalizing the transaction.

Before this upgrade, CoolWallet’s transaction preview only displayed basic details like the transfer amount, address, and fees. With this enhancement, CoolWallet will now simulate the transaction execution beforehand, ensuring the outcome aligns with the user’s expectations and significantly reducing the risk of signing a compromised transaction.

How It Works: Protection Through Transparency

The Bybit hack succeeded when attackers deceived three signers of the exchange’s multisig wallet into signing a malicious transaction. The transaction appeared legitimate in the UI of a multisig wallet but contained altered data when sent to the hardware wallet for signing. This manipulation resulted in an unauthorized upgrade of the multisig wallet’s implementation contract to a malicious one. As a result, the attackers were able to drain approximately 401,346 ETH (around $1.46 billion) from Bybit’s cold wallet. The incident highlights the critical importance of verifying transaction data directly on hardware wallets before signing.

CoolWallet's feature counters this risk by displaying a clear overview of transaction impacts before signing. Users can thus find unauthorized changes, missing funds, or unexpected behaviors—critical warning signs of potential fraud.

The Bybit Scenario: What Could Have Been

Bybit originally expected to transfer 30,000 ETH from its multisig wallet. However, in reality, the transaction did not transfer ETH from the multisig wallet but instead replaced the implementation contract of the multisig wallet with a malicious contract.

If Bybit employees had access to CoolWallet’s enhanced transaction preview, the outcome might have been very different. Before signing, they would have noticed that their expected 30,000 ETH transfer did not reflect any actual asset movement. This red flag could have alerted them to the malicious nature of the transaction, potentially preventing the catastrophic loss.

How CoolWallet Protection Works:

1. Transaction Initiation: The user initiates a multisig transaction (e.g., sending 0.00001 ETH), with the CoolWallet serving as one of the signers for the multisig wallet.

2. Enhanced Verification: CoolWallet displays a detailed preview of the asset movements related to the transaction.

   • • Clicking on “Detailed Transaction Preview” allows the user to check asset changes for other addresses involved in the transaction.

     • The preview displays that the Multisig Wallet is sending 0.00001 ETH to the target wallet.

3. Anomaly Detection: Absence of expected transfers or presence of unexpected contract interactions triggers warnings

This visibility would have flagged the suspicious activity before signing, giving Bybit employees the chance to abort the transaction. While not foolproof against all attacks, this verification layer significantly improves security by making transaction outcomes transparent before approval.

Smart Scan: Another Layer of Protection

CoolWallet's Smart Scan feature, powered by their partnership with Blockaid, provides an additional security layer that complements the transaction preview functionality. This real-time protection system:

• Scans transactions instantly to detect potential threats like phishing attacks and malicious smart contracts

• Analyzes risk levels and flags suspicious interactions before approval

• Seamlessly integrates with DeFi protocols and Web3 applications to secure all blockchain interactions

Smart Scan's AI-driven security approach works synergistically with the enhanced transaction preview, creating a dual defense system against increasingly sophisticated attacks.

Moving Forward: A Step Towards Greater Security, But Not a Silver Bullet

The combined strength of CoolWallet's new transaction preview and Smart Scan technologies provides crucial additional layers of protection, but they are not guaranteed solutions against all types of attacks. Users must continue to exercise caution, stay informed about security threats, and adopt best practices such as multi-factor authentication and hardware wallets for sensitive assets. By updating their security tools and staying vigilant, users can further strengthen their defenses against evolving crypto threats.

Security in the crypto world is an ongoing battle, with hackers continuously evolving their tactics. The multi-layered security approach gives users the tools they need to protect themselves against even the most sophisticated attacks. CoolWallet's innovations demonstrate how thoughtful security design can make cryptocurrency safer without sacrificing usability.