A cryptocurrency investor suffered a loss of 4.35 BTC after purchasing a compromised hardware wallet that had been secretly pre-initialized by scammers. The fraudulent device contained a seed phrase generated and controlled by malicious actors prior to delivery.
Blockchain security firm SlowMist emphasized that the incident underscores critical supply chain vulnerabilities. The firm urges consumers to exclusively purchase hardware wallets through official manufacturers or authorized retailers to ensure device integrity.
Key indicators of tampering include devices arriving with pre-configured PIN codes, foreign recovery phrases packaged with the product, or activation screens bypassing standard setup procedures. Security professionals stress that users must manually initialize new hardware wallets themselves, generating and securing the seed phrase in an offline environment.
Self-initialization eliminates third-party access to recovery credentials – a fundamental safeguard against asset theft. Hardware wallets remain essential tools for crypto asset protection by maintaining private keys offline, but proper setup protocols are paramount for effective long-term security.