Bugs for Bucks: Making Money and Making the Web Safer with Bug Bounties

| November 17, 2023

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Bug Bounty Program

Bug bounties have revolutionized cybersecurity by providing a mutually beneficial platform for organizations and ethical hackers. Here, we will explore the dynamic world of bug bounties, where individuals have the opportunity to earn substantial rewards while helping organizations identify and rectify software vulnerabilities. We will dive into the benefits of bug bounty programs, their increasing popularity and demand of the bug bounty program across various sectors, and the challenges involved.

Bug bounties have revolutionized cybersecurity by providing a mutually beneficial platform for organizations and ethical hackers. Here, we will explore the dynamic world of bug bounties, where individuals have the opportunity to earn substantial rewards while helping organizations identify and rectify software vulnerabilities. We will dive into the benefits of bug bounty programs, their increasing popularity and demand of the bug bounty program across various sectors, and the challenges involved.

Key Takeaways:

Bug bounty programs provide financial rewards to cyber-security experts and testers for successfully auditing, discovering, and reporting a bug.

What is a Bug Bounty Program?

A vulnerability rewards program (VRP), commonly referred to as a bug bounty program, is designed to incentivize cyber-security experts who discover and report software bugs. Many organizations frequently employ these programs as part of their vulnerability management strategy. The demand of the bug bounty program is on an upward trajectory because it serves as a valuable supplement to internal code audits and penetration tests. By engaging in crowdsourcing initiatives, organizations encourage the broader community to contribute to identifying and resolving vulnerabilities, thus enhancing their overall security posture.

Who employs bug bounty programs?

Bug bounties have become an integral component of the security programs implemented by numerous prominent organizations. Notable companies like Android, Apple, Digital Ocean, and Goldman Sachs have embraced bug bounty initiatives. You can also explore other programs some leading bug bounties providers offer, such as Bugcrowd and HackerOne.

Why do companies employ bug bounty programs?

Demand for the bug bounty program is exploding because it empowers companies to leverage a diverse community of skilled hackers to identify hidden vulnerabilities within their code base. This strategic approach grants them access to a larger pool of hackers and testers than traditional one-on-one engagements. Consequently, the likelihood of discovering and promptly addressing bugs before malicious actors can exploit them is significantly increased. Moreover, implementing a bug bounty program can yield positive outcomes for a company’s public image. As bug bounties have become increasingly prevalent, having such a program signifies to the public and regulatory bodies that an organization maintains a mature and robust security program. This growing trend indicates that bug bounty programs are gradually being recognized as an industry standard, with more and more organizations considering them a worthwhile investment for ensuring the security and integrity of their systems and software. As a result, this will exponentially boost the demand for the bug bounty program across industries.

Benefits of bug bounties

Bug bounty programs have gained significant popularity across both public and private sectors due to the benefits they offer to organizations undergoing testing.

Identifying and fixing blind spots:

Regardless of the meticulous documentation of software requirements, specifications, and engineering, as well as the quality of design and coding, defects are bound to emerge within a product. These bugs can range from minor nuisances to significant concerns, managing to infiltrate despite best efforts. One contributing factor to the introduction of bugs is institutional blindness. While internal testers provide a fresh perspective compared to developers, they, too, can be influenced by established patterns of behaviour and preconceived notions about the product. As a result, they may focus their testing efforts on specific paths or areas, particularly if automation is underutilized or time allocated for testing is limited. On the other hand, bounty testers are not subject to the same institutional preferences. While they may possess their tendencies, they are motivated by the objective of uncovering defects. Their assessments are not hindered by concerns about disrupting the status quo or avoiding uncomfortable findings. This impartiality and drive to identify vulnerabilities make bug bounty testers well-suited to detect bugs internal teams may have overlooked. It ultimately enhances the overall quality and resilience of the product.

Continuous software evaluation and testing:

A bug bounty program can be implemented to support a product if it is in a testable state. Whether the product is actively used by customers, ready to undergo testing as a minimum viable product, or even in the prototype stage, a bug bounty program can effectively uncover critical vulnerabilities throughout its lifecycle. Bug bounties offer an evergreen and adaptable approach. Unlike internal testing teams, a constant pool of diverse and qualified testers is available to identify defects within a product. This reliability makes bug bounties a dependable strategy that consistently yields valuable results. As a result, organizations can incorporate bug bounties into their product planning and documentation, recognizing their significant contribution to enhancing overall product security. Another reason that led to the rise in demand for the bug bounty program is flexibility. It allows organizations to run them continuously, aligning with the approach adopted by many companies. This continuous engagement ensures ongoing testing and prompt identification of vulnerabilities, thereby reinforcing the effectiveness of bug bounty programs in maintaining the security and stability of a product.

Simulating real-world threat scenarios.

One of the primary hurdles encountered in penetration testing and vulnerability assessments is achieving high realism in the exercises. Organizations must identify and address vulnerabilities most susceptible to exploitation by potential attackers. Nonetheless, several factors can diminish the authenticity of these assessments. Bug bounty programs tackle this challenge by compensating bug hunters to replicate the behaviours of actual cyber criminals. These individuals possess comparable knowledge about the target organization and have access to its systems. Consequently, the vulnerability assessments conducted by bug bounty hunters are inherently more realistic compared to traditionally structured engagements. By simulating real-world attack scenarios, bug bounty programs offer organizations a valuable opportunity to gauge their true security posture and effectively prioritize vulnerability remediation efforts.

Downsides of Bug Bounties

In conjunction with above-mentioned upsides, bug bounty programs also have a few downsides that every individual and company must consider prior to opting for one. Irrelevant and unhelpful alerts/ bug submissions: Bug bounty programs often draw a substantial volume of submissions, including reports of varying quality standards. As a result, orgaizations must be prepared to manage the high influx of both helpful and unhelpful alerts, along with the likelihood of receiving numerous reports that may be irrelevant compared to the valuable ones.

Shorter Time frame problem

For companies seeking urgent bug detection in their applications or websites within a specific time frame, relying solely on a bug bounty program may not be the most prudent choice. The reason is that bug bounties do not guarantee the timing or certainty of receiving bug reports.

Varying Tester’s methodology of testing.

In bug bounty programs, engaging skilled and qualified professionals is possible, particularly if you are willing to invest in top-tier talent. However, as internal teams may be limited by their blind spots and perspectives, bug bounty hunters can also face similar limitations. While an ideal scenario involves a diverse group of testers who can cover a wide range of potential defects and vulnerabilities, there is no guarantee that they will approach product testing the same way as actual customers. This includes considering various devices, preferred usage scenarios, and high-value locations. Moreover, the process of testing to uncover defects and exploratory testing of a product can differ significantly. Bug bounty hunters primarily focus on identifying high-value issues, while internal testers may concentrate on specific products or features and explore them to observe the outcomes. These perspectives can vary, and both may diverge from the customer’s viewpoint, whose main objective is to use the product according to their specific needs. Therefore, it is crucial to acknowledge the variations in perspectives and testing approaches between bug bounty hunters, internal testers, and end customers. Organizations should strive for a balanced and comprehensive testing approach that incorporates multiple viewpoints to ensure a more thorough evaluation of the product and a better alignment with customers’ diverse needs and experiences.

Low-value bug issue.

When presented with the choice between earning $100 or $500, it is natural for individuals, including bounty hunters, to opt for the higher amount. Similarly, high-severity defects in bug bounty programs often result in larger payouts, which may seem beneficial. However, if a significant portion of bounty hunters solely focus on critical vulnerabilities, they might overlook smaller-value defects that can collectively impact the overall user experience. To address this challenge, organizations can adopt creative payout structures. For instance, they could bonus the bounty hunter who discovers the highest quantity of approved defects. Nevertheless, it’s important to recognize that specifying dollar values and bonuses for issues will inevitably influence the mindset of bounty hunters, even if it occurs unconsciously. Therefore, organizations should carefully consider the potential effects of their payout structures on the motivations and behaviors of bounty hunters participating in their programs.

Conclusion

In conclusion, bug bounties have emerged as a powerful mechanism to enhance cybersecurity while providing opportunities for individuals to earn rewards. By incentivizing skilled hackers to uncover vulnerabilities, bug bounty programs enable organizations to tap into a vast pool of talent, often difficult to access otherwise. These programs not only bolster the security posture of companies but also contribute to the broader goal of making the web safer. However, bug bounties require careful management to handle the influx of submissions, prioritize vulnerabilities, and strike a balance between high-severity defects and smaller-value issues. With the right approach and effective collaboration, bug bounties offer a win-win situation, fostering a secure digital landscape while empowering the cybersecurity community.

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More on Crypto

As we continue constructing a fully regulated digital asset custody platform, ensuring secure storage for both crypto and fiat assets remains a critical priority. 

To facilitate the last checkpoint of enabling institutions to convert their digital asset treasury into fiat currency, we’re expanding beyond pure wallet infrastructure and integrating seamless fiat off-ramp capabilities for our partners.

We’re thrilled to announce our partnership with Encryptus, licensed and compliant off-ramp solutions tailored for institutional clients. This collaboration elevates Liminal’s service offerings by empowering our partners to convert their digital asset treasuries into fiat currencies efficiently.

Integrating A Seamless Off-Ramp Solution

The digital asset ecosystem historically faced friction points when transitioning between fiat and cryptocurrencies. Off-ramp solutions address this pain point by enabling efficient and streamlined conversion between asset classes, minimising value loss and simplifying compliance processes.

Here’s how off-ramp changes the game:

  • Reduced Friction: Frictionless conversion minimises delays and operational complexities associated with traditional fiat-crypto exchange methods.
  • Enhanced Efficiency: Streamlined workflows expedite asset conversion, increasing speed and cost-effectiveness for institutional and individual users.
  • Optimised Value Preservation: Advanced off-ramp solutions prioritise minimising price slippage and value loss during conversion, protecting user portfolios.
  • Simplified Compliance: Integrated compliance features navigate regulatory complexities, ensuring adherence to relevant financial regulations.

With our partnership with Encryptus, we have embedded their institutional-grade APIs, connecting their off-ramp solution within Liminal’s wallet and custody platform. 

This integration simplifies our clients’ liquidation requirements while keeping their assets secure and more:

  • Effortless Digital Asset to Fiat Conversion: Our partners will be able to access treasury management and facilitate business payments in 54 countries and individual payments in an extensive network of 80+ countries.
  • Streamlined Compliance and Regulation: Our partners will be able to leverage Encryptus’s rigorous licensing and compliance framework, ensuring adherence to stringent financial regulations.
  • Enhanced Platform Value: We will be able to expand the functionality of the Liminal custody solution, attracting institutional users seeking comprehensive digital asset management capabilities.

Moving Towards A Robust Off-Ramp Partnership With Encryptus

The partnership between Liminal and Encryptus earmarks a significant step forward in secure digital asset custody, representing a shared commitment to pushing compliant practices while supplying institutions with easy access to convert their digital assets to fiat. 

For Encryptus, the opportunity to integrate with Liminal’s established platform presents a chance to reach a wider audience and scale their innovative off-ramp solutions to new heights. By streamlining fiat conversion within Liminal’s secure custody infrastructure, Encryptus gains access to a trusted network of institutional users seeking seamless and compliant treasury management.

For Liminal, this collaboration reinforces our dedication to partnering with companies that demonstrably prioritise clear governance and robust policy frameworks. By aligning with Encryptus’s stringent compliance standards, we reaffirm our commitment to building a secure and sustainable future for digital assets, where trust and regulatory certainty go hand-in-hand.

January 22, 2024

Hello world, it’s that time of the month when we share the biggest security breaches in the world of Web3 through our Security and Regulatory Newsletter. 

Liminal believes in optimizing security and custody practices globally across the Web3 industry. Through our Newsletter, we highlight security, regulations, and compliance incidents that have happened in the past month and how one can follow better Security practices to safeguard their digital assets. 

We will also highlight regulatory changes that might have happened globally, which were significant to the overall ecosystem.

Dive in and get a detailed analysis of everything security and regulation in the domain of web3 with Liminal’s Monthly Security and Regulatory Newsletter.

Web3 Security Compromises in January

Abracadabra exploited for almost $6.5 million, Magic Internet Money stablecoin depegs

The Magic Internet Money ($MIM) stablecoin has lost its dollar peg again, dipping all the way below $0.77 in a flash crash before returning to around $0.95.

The depeg appears to be related to an exploit of the Abracadabra lending protocol, which allows people to borrow $MIM. An attacker exploited an apparent flaw in the platform’s smart contracts to drain around $6.5 million.

Goledo Finance hacked for $1.7 million

Goledo Finance, an Aave-based lending protocol, was exploited through a flash loan attack. The attacker stole assets estimated by CertiK to be around $1.7 million.

Goledo Finance contacted the attacker to offer a 10% “bounty” for the return of the remaining assets. In a message on January 29, the attacker wrote: “I hacked Goledo and want to negotiate.”

Socket service and its Bungee bridge suffer $3.3 million theft

The Socket cross-chain infrastructure protocol was hacked for around $3.3 million in an attack that exploited its Bungee bridge. The thieves were able to exploit a bug that allowed them to take assets from those who had approved a portion of the system called SocketGateway.

A little over 700 victims were affected, and the highest loss from a single wallet was around $657,000. 121 wallets lost assets priced at more than $10,000.

On January 23, the protocol announced they had recovered 1,032 ETH (~$2.23 million) of the stolen funds.

Web3 Regulatory Practices for January

The EU Imposes Stricter Due Diligence Rules for Crypto Firms

On Jan. 17, the European Council and the Parliament came to a provisional agreement on parts of the Anti-Money Laundering Regulation (AMLR) that now extends to the crypto sector.

Under the new rules, cryptocurrency firms will be required to run due diligence on their customers involving a transaction amounting to €1,000 ($1,090) or more. 

However, the agreement isn’t final yet as it has to be first officially adopted by the Council and Parliament before the rules can be applied.

So, after the EU passed its landmark MiCA regulation last year, which clarified rules about cryptocurrencies, regulators are now targeting the space with tighter controls. 

While these regulations bolster security and trust in the crypto market, potentially attracting more cautious investors and combating financial crimes, they also present challenges. 

The US State of Virginia Introduces Digital Assets Mining Rights

Recently, the Virginia State Senate introduced Bill No. 339, which outlines regulations for the transactions and mining of digital assets and their treatment under tax laws. 

The legislation exempts individuals and businesses engaged in crypto mining activities from obtaining money transmitter licenses. Additionally, it protects miners from any discrimination. 

Issuers and sellers of crypto are also exempted from securities registration requirements if certain conditions are met. Moreover, those offering mining or staking services are not to be classified as “financial investment” but must file a notice to qualify for the exemption.

The bill further incentivizes crypto’s use for everyday transactions by offering tax benefits. Under this, up to $200 per transaction can be excluded from an individual’s net capital gains or gains derived from using crypto to purchase goods or services, starting from Jan. 1, 2024.

Key Takeaways:

  • Hackers continue to exploit vulnerabilities in DeFi protocols and cross-chain bridges, highlighting the need for robust security measures.
  • Regulatory frameworks are evolving rapidly, with stricter AML rules and supportive legislation for emerging technologies like crypto mining.
  • Staying informed about these developments is crucial for navigating the digital assets market safely and responsibly.

Stay #LiminalSecure

These events highlight the constant evolution of Web3 security and regulation. You can confidently navigate this dynamic landscape by staying informed and prioritizing security best practices. 

At Liminal, we’re committed to empowering institutions to unlock the full potential of digital assets without compromising security or compliance norms with our robust custody and wallet infrastructure solutions. Join us on this journey towards a safer, more accessible future for digital assets.

January 15, 2024

Buckle up as we’re about to take a trip down memory lane. 

The year 2023 was a wild ride that showed signs of a plummeting market, groundbreaking innovation and regulatory hurdles. 

Contrastingly, in the same year, we saw no market-shattering crashes. Financial institutions extending an olive branch, key jurisdictions unlocking the doors to blockchain technology. 

Simultaneously, at Liminal, we experienced significant breakthroughs, re-engineering our positioning and becoming a pioneer in digital asset security with bank-grade custody. 

We took major strides this year, right from building comprehensive products to becoming a qualified custodian, from revamping our brand design to expanding our offices in newer locations, from partnering with hyper-local communities to onboarding a diverse set of clients,  we did it all. 

So, let us take you through everything we accomplished in 2023 and what the future holds.  

Liminal Became A Qualified Custodian

One of the prominent moves we made this year was to change our positioning as a regulated custodian from being a wallet infrastructure platform. 

We got two licenses in key jurisdictions to operate as a regulated custodian. 

The first one came from Hong Kong, where we acquired the TCSP license issued by the SFC, which oversees and regulates financial activities to ensure compliance with legal and regulatory obligations. 

Our next license came in the MENA region, where we got In-Principle Approval for the FSP license granted by the FSRA, a governing body in ADGM, to establish a progressive financial services environment. 

Both these licenses paved the way for Liminal to push its wallet infrastructure and offer bank-grade custody to institutions looking to operate in these particular regions. 

Liminal Introduced A Suite of Products & Features

Continuing our building spree, we launched new products and integrations to broaden the existing infrastructure and added more parameters of security, scalability and sustainability. 

Staking-as-a-Service

Liminal launched staking for institutions to eliminate the risks involved in running staking nodes and the vulnerabilities in hot wallet transfer. 

Hence, we introduced an industry-first mechanism of cold wallet staking to ease staking for institutions and secure assets explicitly.  

Whitelabel Solution

Accelerating the go-to-market time for organisations looking to build a secure and customisable application, Liminal launched its whitelabel solutions

Targeted to help organisations meet security standards, manage assets with maximum control, and add their custom branding to give it a personal touch. Our whitelabel solution is a first-in-class custodian-developed solution for institutional grade custody.

Smart Consolidation

We are building not just secure custody but also automation-based features to eliminate manual errors, increase the throughput of transactions and scale institutional wallets. 

Taking this ahead, we launched the Smart Consolidation feature to automatically calculate all the active addresses and consolidate them into a single address. With this level of automation, managing multiple addresses becomes uber easy for wallet teams. 

Travel Rule 

To limit the use of cryptocurrencies for activities like money laundering and terror financing by regulatory bodies, travel rule was mandated for institutions to follow. 

Continuing the latest compliance integration policy, Liminal partnered with Notabene to introduce Travel Rule, enabling institutions to manage counter-party risk and extend the process of due diligence right from the Vaults dashboard.   

Liminal Accured List Of Security Certifications

Following our ISO certification for data privacy and risk management, we added two new security certifications to fortify our systems and build trust for our clients. 

Liminal Achieves Crypto’s Highest Security Mark: CCSS Level-3 Certified

Cryptocurrency security lacked a gold standard, creating a vulnerable ecosystem. Enter the CryptoCurrency Security Standard (CCSS), setting the bar for auditing and certifying custodian infrastructure and establishing levels of trust and confidence for investors. 

Liminal became only the second wallet infra platform and the first regulated custodian to be accredited with Level-3 certification, deeming wallets, transfer environments, workflows and engines safe and secure. 

Liminal Reciueved SOC 2 Type II Certification

To tackle threats in institutional-grade security, organisations’ SOC has been identified as the primitive compliance standard for service organisations to handle customer data.

Liminal successfully attained SOC 2 Type II certification, validating its setup of security controls & compliance processes to be industry standard. 

Liminal Level Up

Liminal unveiled its most significant platform upgrade ever, revolutionising the future design standard of a qualified custodian. This level-up activity included revamping our website and product UI, giving a completely new look and feel to not “Liminal” but “Liminal Custody”. 

The Liminal level-up activity was a strategic step and the biggest one for us this year to create an intuitive, inviting and tailored experience for our clients. 

Liminal Reached New Borders

We spread out our operations this year, reaching new borders and onboarding a new wave of institutions across gaming, DeFi, HNI wealth, treasuries, and exchanges! From Indonesia and Africa to India, UAE, and Korea, we are setting up custody operations worldwide. 

This isn’t just a roster of clients; it’s a network ready to spark connections, collaborations, and shared success to further the definition of secure assets. 

Liminal Collaborated With Law Enforcement Agencies

The best and the proudest moment of Liminal for this year was when we collaborated with CBI & Himachal Prashesh police department to aid them in seizing digital assets. 

This partnership put us on the map, as we became the first point of contact for LEAs in India, and we standardised the process of secure seizure of digital assets. Leveraging our expertise, we enabled a safe space for officers to learn the basics of custody, contributing to a safer digital landscape.

Team Liminal Grew Bigger

Building such a massive infrastructure, prioritising security and compliance over everything else, we had to grow the team to build at pace and expand at an even higher level. Not only did we grow in team numbers, but we also elongated our footprint to new destinations. 

Team Liminal went from 32 to 70 with 5 new offices in Mumbai, Ahmedabad, Hong Kong, Singapore and ADGM, setting up our custody operations steadfastly. 

What’s To Look Out For In 2024

We are excited to announce that our commitment to integrating the most secure digital asset wallets with a cutting-edge custody platform is swiftly becoming a reality. 

The upcoming year, 2024, will serve as a testament to this transformative journey. Moving beyond self-custody, we are constructing a comprehensive infrastructure encompassing both custodial and non-custodial wallets. Exciting products are set to launch starting from the first week of January, some of which are: 

  • Official Custody Platform Launch
  • Liminal’s Off-Exchange Settlement Hub
  • Secure Custody of Real-World ‘Tokenised’ Asset

The Web3 space has evolved explicitly this year, pushing the narrative of secure digital asset custody and security, introducing new regulations and compliance standards, licensing VASP providers and standardising the use of custodians as a trusted third party. 

At Liminal, we took major strides this year, from building comprehensive products to becoming a regulated custodian, from revamping our brand design to building the full infrastructure of custodial and non-custodial wallets.

January 5, 2024

Find Out How You Can Benefit From A Fully Self-Custodial Wallet Architecture