Hosting company describes security scare aimed at Bitcoin accounts

Attackers intercepted password-reset emails by manipulating Chunk Host's third-party email service

On Sunday morning, Nate Daiger, one of the owners of a small Los Angeles-based hosting company Chunk Host, received an odd email on his phone.

The email came from SendGrid, a company used by Chunk Host to send its email. SendGrid specializes in ensuring an organization's legitimate emails get through and aren't mistakenly picked off by spam filters.

The email was a password reset notification. That was odd, since Daiger wasn't trying to reset his password. In fact, he barely ever logged into his SendGrid account.

But it was the first clue that something was awry at his company, which sells inexpensive virtual private hosting on fast hardware.

The precise details of the attack aren't entirely clear just yet. Daiger said in a phone interview Wednesday that he is continuing to work with SendGrid's technical team on exactly how it happened.

Daiger said the attackers might have successfully social engineered someone at SendGrid, which in turn, could have exposed Chunk Host customers to possible account takeovers.

SendGrid officials couldn't be immediately reached for comment.

Daiger said SendGrid doesn't think they were socially engineered to add the email address. But Chunk Host doesn't appear to have been attacked directly, Daiger said, and if it was compromised, the attackers wouldn't have needed to manipulate SendGrid in the first place.

"If it turns out to be some problem on our side, I'll apologize," Daiger said, who wrote about the attack on his company's blog. "But I'm pretty sure it's not."

Daiger believes the attackers managed to convince someone at SendGrid's technical support over the phone to add another email address, "," to Chunk Host's account. The legitimate address is ""

SendGrid had assured him earlier this month after another attempt to get access to Chunk Host's account that it uses strict procedures for account changes, Daiger said.

Once the new address was added, the attackers then initiated a password reset for Chunk Host's SendGrid account. The link for the password reset was copied to the attackers, enabling them to change the password and gain access.

After Daiger received the password reset notification email, the attackers had already changed his password, and the second phase of the attack was underway.

Now in control of Chunk Host's SendGrid account, they initiated password resets on two of the hosting company's customers, both of which are Bitcoin-related, Daiger said.

The password reset triggered emails to those customers -- and were also copied to the new email address they controlled.

The two customers of Chunk Host were likely none the wiser due the attackers' knowledge of a specific feature employed by SendGrid's system.

It allows an email to be sent to a blind courtesy copy address, which means the targeted victims couldn't see the password reset link had also been sent to someone else. The attackers then changed the passwords for the bitcoin-related Chunk Host accounts, Daiger said.

"It was pretty clear that somebody was intercepting our password reset emails," Daiger said. "I also didn't know it was possible with SendGrid to silently BCC all your outgoing emails elsewhere. I would have been a little more wary about using it if I had known that was a feature."

The attackers were foiled, however. Both of Chunk Host's customers used two-factor authentication, which requires the input of a one-time password to get access to their accounts.

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Tags intrusionsecurityChunk HostSendGrid

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