October 31st, 2016
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: firstname.lastname@example.org
For a variety of reasons, it is sometimes necessary to refund bitcoin transactions: For example, a customer cancelling their order; accidentally sending in the wrong number of bitcoins; or even sending in the correct number of bitcoins, but not within the requisite time window, resulting in their value being lower than necessary. Consequently, Stripe allows for bitcoin transactions to be refunded — with the caveat that, for obvious reasons, Stripe refunds the same value of bitcoins, not the same number of bitcoins. (This is analogous to currency exchange issues with credit cards — if you use a Canadian dollar credit card to buy something in US dollars and then get a refund later, the equal USD amount will typically not translate to an equal number of CAD refunded to your credit card.)
The vulnerability lay in the exchange rate handling. As I mentioned above, Stripe guarantees an exchange rate for 10 minutes; if the requisite number of bitcoins arrive within that window, the exchange rate is locked in. So far so good; but what Stripe did not intend was that the exchange rate was locked in permanently — and applied to any future bitcoins sent to the same address.
This made a very simple attack possible:
Pay for something using bitcoin.
Wait until the price of bitcoin drops.
Send more bitcoins to the address used for the initial payment.
Ask for a refund of the excess bitcoin.
Because the exchange rate used in step 3 was the one fixed at step 1, this allowed for bitcoins to be multiplied by the difference in exchange rates; if step 1 took place on July 2nd and steps 3/4 on August 2nd, for example, an arbitrary number of bitcoins could be increased by 30% in a matter of minutes. Moreover, the attacker does not need an account with Stripe; they merely need to find a merchant which uses Stripe for bitcoin payments and is willing to click “refund payment” (or even better, is set up to automatically refund bitcoin overpayments).