Electrum 4.8.3 Cuts Off the Bitcoin Fee-Bump Heist

Bitcoin wallet Electrum released version 4.8.3 on Oct. 24 to patch a critical, high-severity flaw that malicious servers could use to manipulate pending Bitcoin transactions and redirect funds to attacker-controlled addresses. The project’s security advisory lists all versions before 4.8.3 as affected and says “some servers are performing this attack in the wild,” backed by two user reports.

The exploit targets Electrum’s trust model for unconfirmed transactions. A compromised server can suppress the real payment and inject a conflicting fake transaction displaying an attacker’s output address and zero fee, making the payment appear stuck. Because Electrum did not verify signatures on unconfirmed transactions supplied by the server, the spoof appeared legitimate in the wallet’s history. When a user fee-bumped the stalled payment, the wallet signed and broadcast a new valid transaction sending funds to the attacker, while the original payment never reached the network.

Electrum developer SomberNight said attackers can grind the fake transaction’s output address to match the last four characters of the user’s intended destination, creating an apparent match for users checking only the tail of a long Bitcoin address. User dannydeezy first reported the suspicious server behavior on October 11; the manipulated transaction did not propagate past the local server, so no funds were lost. A second user, Raju-K12, reported a confirmed loss on October 18 after fee-bumping a manipulated transaction. “This release fixes a critical security issue, so we urge all users to upgrade,” Electrum wrote in its release announcement.

The fix was tagged in the repository on October 23, with binaries published the following day. Version 4.8.3 verifies cryptographic signatures on wallet-owned inputs before adding an unconfirmed transaction to local history, preventing a server from injecting a fake transaction involving the user’s own addresses without a signature the attacker cannot forge. Incoming transactions from external senders, where no inputs belong to the wallet, are still accepted without signature verification; SomberNight acknowledged that closing the gap would require additional work. Electrum is one of the oldest Bitcoin software wallets in operation.

Reports of significant Bitcoin theft through an exploit in an older version of Electrum surfaced in August and September. According to a ZDNet investigation, more than $25 million worth of Bitcoin at today’s valuation has been stolen via the exploit, with 1980 Bitcoin ($22.9 million) stolen.