Electrum has released version 4.8.3 to close a high-severity Bitcoin wallet flaw that the project says was exploited by malicious servers. The vulnerability could make a false outgoing transaction appear in a user’s history after the server withheld a legitimate payment. If the user then tried to accelerate the apparent payment with Bitcoin’s Replace-by-Fee function, the wallet could sign a valid replacement that paid an attacker instead. Electrum’s October 24 advisory says it received two reports, including one in which a user lost an undisclosed amount of bitcoin. The project has not identified the servers involved or published a total loss figure.

How the transaction substitution worked

Electrum is a lightweight wallet that obtains transaction history and mempool information from external Electrum servers rather than independently validating every transaction as a full Bitcoin node would. According to the project’s advisory, a hostile server could swallow a newly broadcast legitimate transaction and send the wallet a conflicting transaction that replaced the intended outputs with an attacker-controlled address. The conflicting transaction initially carried invalid signatures, but affected Electrum versions did not check those signatures before displaying the item as unconfirmed. The deception became financially dangerous when a user selected the fee-bump option: the wallet could build and sign a valid higher-fee replacement from the attacker’s version.

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Reports show the attack was used in practice

The advisory places the first private report on October 11. That user noticed a different transaction after broadcasting a payment but did not report losing funds. A second report arrived on October 18 from a user who raised the fee on the substituted transaction and lost bitcoin. Electrum said both cases used attacker addresses whose last four characters matched the intended destination, a tactic designed to defeat a quick visual check. In the reported theft, the false transaction also used a zero fee, increasing the chance that the user would view it as stuck and try to accelerate it. CoinDesk independently reported the disclosure and confirmed that at least one theft was reported.

Version 4.8.3 narrows the vulnerable path

Electrum tagged the fix on October 23, released version 4.8.3 binaries on October 24 and published the advisory the same day. The patched client verifies signatures for unconfirmed transactions that spend inputs belonging to the user’s wallet before adding them to local history. The project lists all versions earlier than 4.8.3 as affected. It also says users connected only to servers they trust, such as their own server, were not exposed to this attack. The fix does not turn Electrum into a full consensus engine: the advisory notes that the new validation is limited to wallet-owned inputs and does not recursively validate every unconfirmed incoming transaction.

What Electrum users should check

Electrum recommends upgrading to version 4.8.3 and regularly keeping the wallet current. Users who cannot update immediately should verify every destination address and amount before signing, whether they are creating a normal payment or increasing its fee. Checking more than a short address suffix matters because the reported attackers deliberately generated look-alike endings. The incident does not indicate a failure of Bitcoin’s base-layer signature rules, nor does it mean every Electrum server was malicious. The risk arose from the wallet’s treatment of server-supplied unconfirmed transaction data combined with a user signing a replacement. People who suspect they encountered the attack should preserve transaction identifiers, wallet logs and the server details available to them rather than assuming an unusual pending payment is harmless.

Sources

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