Electrum before 4.8.3 fails to verify signatures of wallet-owned inputs in unconfirmed mempool transactions, allowing malicious servers to replace a just-broadcast transaction with a conflicting one. Attackers can swallow the user's transaction and display an invalid zero-fee copy paying an attacker address, tricking users into RBF fee-bumping and signing it.

Affected: PyPI: electrum

### Summary

The main Electrum server the client connects to is trusted with mempool ("unconfirmed") transactions. This is documented [design](https://electrum.readthedocs.io/en/latest/faq.html#does-electrum-trust-servers). [0]

However now someone figured out a way to practically exploit it: - when the client broadcasts a new tx1, a malicious server can swallow it, - and update the client's history with a conflicting (invalid) tx2 that replaces the outputs with the attacker's output address. - Tx2 has invalid signatures, but this is not checked (due to light client design). - The wallet will display tx2 as an unconfirmed transaction - tx1 will not be displayed. - If the client then manually RBF fee-bumps tx2, the client will sign it with a higher fee, and hence pay the attacker.

### Fixes

Commit 90fe30822 contains the fix [1], included in version 4.8.3. The client now verifies the signatures of `wallet.is_mine` inputs for mempool txs (before adding them to its local history).

Users should upgrade (and regularly do so in any case). As a workaround, without upgrading, when signing any transaction, for bumping the fee or not, they should verify the output addresses and amounts are as expected.

Clients that connect to servers they trust (e.g. run their own) are not affected.

### Remarks

- some servers are performing this attack in the wild - electrum received two user-reports of this. user1 noticed after broadcasting tx1 the wallet history contained a different tx. user2…