[L-06] IRS: keep a recovery target's identity until the tokens arrive

[ozgunozerk]

Fixes #923

Fixes audit finding L-06: Recovered Investor Balance Can Be Misdirected To A Reassigned Target

Account recovery takes two calls: recover_identity(A, B) on the registry, then recover_balance(A, B) on each linked token. In between, the tokens are still on A, and B could be removed and registered to another investor, who would then receive A's tokens.

The registry now keeps B's identity in place until A's tokens have moved:

• recover_identity(A, B) also records a reverse link, RecoveredFrom(B) -> A.
• remove_identity(B) panics with AccountHasBalance while A still holds a balance in any linked token, so B cannot be registered to another investor before the tokens arrive.
• recover_identity(B, C) panics the same way. Otherwise recover_balance(A, B) would fail once B loses its identity, and recover_balance(A, C) fails the target check, leaving A's tokens stuck.
• Once A is empty, the link is deleted when B is removed or recovered onward.

The token side and the IdentityVerifier trait are unchanged. This differs from the auditor's suggestion (store the identity next to the pointer, check it in recover_balance), which would detect the reassignment only after it happened: A's tokens would then be stuck, and forced transfers out of A would still resolve the sender through RecoveredTo(A) = B to the wrong investor in the max balance module.

The IRS error range (320-329) is full, so the new rejection reuses AccountHasBalance with an updated doc. The registry docs claiming that a recovery target can never be reused are corrected to what the code enforces, and the module docs explain the two-call recovery.

PR Checklist

• Tests
• Documentation

Summary by CodeRabbit

• Identity Recovery
  • Recovery targets can no longer have their identity removed or be recovered again while the previous wallet still holds a balance in a linked token. These actions become available once the balance is cleared.
  • Identity recovery links are updated as accounts move through recovery, allowing a cleared account to be released or used in a subsequent recovery.

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Walkthrough

The identity registry now stores a reverse link from a recovery recipient to its prior account. Removal and further recovery check that account’s balances across linked tokens. Tests cover blocked operations while balances remain and successful operations after balances are cleared or moved.

Changes

Recovery destination balance guards

Layer / File(s)	Summary
Reverse recovery link and balance checks packages/tokens/src/rwa/identity_verification/identity_registry_storage/mod.rs, packages/tokens/src/rwa/identity_verification/identity_registry_storage/storage.rs	The registry documents and stores a RecoveredFrom link. Balance-check helpers inspect linked tokens before clearing the link.
Removal and onward-recovery guards packages/tokens/src/rwa/identity_verification/identity_registry_storage/mod.rs, packages/tokens/src/rwa/identity_verification/identity_registry_storage/storage.rs	remove_identity and recover_identity check balances at a prior recovery source. Successful recovery records a reverse link for the new account.
Removal and onward-recovery tests packages/tokens/src/rwa/identity_verification/identity_registry_storage/test.rs	Tests verify that removal and further recovery fail while the prior account holds tokens, and succeed after balances are cleared or moved.

Priority: ➖ Normal

Estimated code review effort: 3 (Moderate) | ~20 minutes

Change: Bug fix · Severity of issue fixed: Medium

Merge Risk: 🟡 Moderate · up to a832f

A delayed balance recovery could lose the protection that keeps its destination assigned to the same investor. Keep that protection effective until the tokens move before merging.

🚥 Pre-merge checks | ✅ 5

✅ Passed checks (5 passed)

Check name	Status	Explanation
Title check	✅ Passed	The title clearly identifies the recovery-target change and its purpose: keeping the target’s identity until tokens arrive.
Description check	✅ Passed	The description identifies the issue, explains the two-call recovery flow and the fix, and completes the Tests and Documentation checklist items.
Linked Issues check	✅ Passed	Issue #923 requires blocking reassignment of a recovery target and blocking onward recovery while the old wallet still holds linked-token balances. The change adds `RecoveredFrom(new_account) -> old_a…
Out of Scope Changes check	✅ Passed	The reported changes are limited to recovery storage and checks, tests for the recovery restrictions, and related error and registry documentation. These changes support issue #923. No unrelated chang…
Docstring Coverage	✅ Passed	Docstring coverage is 80.00% which is sufficient. The required threshold is 80.00%. Docstring coverage is scoped to functions touched by this diff. Analyzed 10 functions across 3 files.

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---

_{A rabbit traced the wallet’s trail,
And checked each token, without fail.
When balances stayed behind,
The next move had to wait in line.
Once tokens crossed the stream,
The link could change as planned in the scheme.
The rabbit nibbled, pleased with the clean-up.}

_{Comment @coderabbitai help to get the list of available commands.}

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Codecov Report

✅ All modified and coverable lines are covered by tests.

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Actionable comments posted: 1

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Inline comments:
Review comments at
@packages/tokens/src/rwa/identity_verification/identity_registry_storage/storage.rs:
- Around line 639-644: Update the `RecoveredFrom` link written in
`recover_identity` so it remains valid for the full pending recovery, renewing
it as needed while `old_account` still has tokens. Ensure
`stored_identity(new_account)` renewal also preserves this guard until recovery
completes.

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📒 Files selected for processing (3)

• packages/tokens/src/rwa/identity_verification/identity_registry_storage/mod.rs
• packages/tokens/src/rwa/identity_verification/identity_registry_storage/storage.rs
• packages/tokens/src/rwa/identity_verification/identity_registry_storage/test.rs

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[brozorec]

• packages/tokens/src/rwa/identity_verification/identity_registry_storage/storage.rs:535 — remove_identity now checks every linked token twice for any account that was once a recovery target. RecoveredFrom is never deleted after the old account is emptied, so this applies for the life of the wallet. The balance(old_account) call adds one footprint key per token. MAX_TOKENS is sized for 100 tokens that each run their own Wasm. In that case the call needs about 406 footprint keys, and the limit is 400. Such a wallet then cannot be removed until tokens are unbound. Measured with 100 test-contract tokens: removing a recovery target touches 305 keys and removing a plain account touches 205. Neither count includes the 101 Wasm code entries. The note at storage.rs:502 says the cap still fits. Lower MAX_TOKENS so that four keys per bound token plus the registry's own entries fit within 400. Update its sizing rationale in token_binder/mod.rs and the note here.
• packages/tokens/src/rwa/identity_verification/identity_registry_storage/mod.rs:502 — the trait doc of remove_identity ends mid-sentence with a semicolon, and the pointer to the library function's documentation is gone. Finish the sentence and add "refer to its documentation." back.