Subsequently confirmed by Electrum itself, the attack consists of creating a fake version of the wallet that fools users into providing password information.
“The hacker setup a whole bunch of malicious servers,” Reddit user u/normal_rc explained:
“If someone’s Electrum Wallet connected to one of those servers, and tried to send a BTC transaction, they would see an official-looking message telling them to update their Electrum Wallet, along with a scam URL.”
Affected users report trying and failing to log in to their wallets after providing their two-factor authentication code — something Electrum does not in fact request during login. The hackers then empty the wallet balance.
“[W]hen I logged on it immediately asked me for my 2 factor code which I thought was a little strange as well as Electrum usually only asks for that when you attempt to send,” one victim continued in another Reddit post, adding:
“I kept trying to send and kept getting an error code ‘max fee exceeded no more than 50 sat/B [satoshis per byte]’ I then restored my wallet on a separate pc and found that my balance had been transferred out in full[.]”
According to u/normal_rc, several addresses are feeding into one main holding address, which currently contains 243 BTC.
Electrum posted about the incident on Twitter today, stating “[t]here is an ongoing phishing attack against Electrum users” and implored users to check the validity of the resource they were logging into.
“Our official website is https://electrum.org[.] Do not download Electrum from any other source,” the tweet continued.
Wallet hacks are less frequent than those afflicting online exchanges, several of which — most notoriously Japan’s Coincheck — have lost users hundreds of millions of dollars in 2018.