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How Can Crypto Users Protect Themselves from Compromised Hardware Wallets?

A crypto user lost $6.9 million due to a compromised cold wallet from Douyin. How can investors safeguard their assets from such devastating scams?

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By Elijah Phillips

4 min read

How Can Crypto Users Protect Themselves from Compromised Hardware Wallets?

Washington, D.C., June 16, 2025— The recent $6.9 million theft from a compromised cold wallet purchased via Douyin, China’s version of TikTok, illustrates the importance of confirming the authenticity of hardware wallets. Blockchain security firm SlowMist revealed that the wallet’s private key was compromised at creation, allowing scammers to drain funds within hours. To avoid such traps, users must purchase wallets directly from official manufacturers or authorized resellers.

Reputable brands like Ledger and Trezor provide tamper-evident packaging and secure boot processes to ensure devices are untampered. Checking for official holograms, seals, and serial numbers before use is essential. Users should also initialize their wallets themselves, generating private keys in a secure, offline environment to eliminate pre-installed malware risks.

SlowMist’s investigation highlights that 99% of discounted or “factory-sealed” wallets sold on unofficial platforms are likely tampered with, emphasizing the urgency of sticking to verified channels.

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Can Secure Practices Mitigate Supply Chain Vulnerabilities?

Scammers exploit supply chains by embedding compromised private keys or malware in cold wallets before they reach consumers, as seen in the Douyin incident. To counter this, users should adopt rigorous security practices. After purchasing, verify the device’s firmware through the manufacturer’s official software before transferring funds. Avoid connecting the wallet to internet-enabled devices during setup to prevent remote access by hackers.

Additionally, users should store recovery phrases offline in secure locations, such as engraved metal plates, rather than in digital formats vulnerable to hacking. The Douyin case, where Huiwang laundered funds within hours, demonstrates the rapidity with which compromised devices can result in losses, underscoring the importance of proactive measures.

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Why Is Due Diligence on Purchase Platforms Critical?

The Douyin Shop’s e-commerce feature, which enabled the sale of the tampered wallet, highlights the risks of buying crypto hardware on social media platforms. These marketplaces often lack stringent vendor vetting, allowing scammers to list counterfeit products. Users should conduct thorough research on sellers, giving priority to those with verified credentials, and steer clear of deals that appear excessively attractive.

SlowMist’s chief information security officer, 23pds, warned against purchasing wallets advertised as “brand new” or at steep discounts, as these are common lures for victims. Opting for established crypto hardware retailers or directly from manufacturers reduces exposure to fraudulent listings. The $6.9 million loss serves as a stark reminder that platform trust cannot be assumed.

Did you know?
In April 2025, Kaspersky reported thousands of counterfeit Android smartphones sold online with preinstalled malware designed to steal crypto, highlighting the pervasive threat of tampered devices beyond cold wallets.

Education and Awareness Drive Safer Crypto Practices

Lack of awareness about wallet security fuels scams like the one reported on June 14 by SlowMist. Educational initiatives are crucial to inform users about risks associated with unofficial vendors. Resources from blockchain security firms and crypto communities can guide users on best practices, such as cross-referencing wallet purchases with manufacturer databases.

Public warnings, like those issued by SlowMist, emphasize that cold wallets are not inherently safe unless sourced correctly. Community-driven platforms and forums can amplify these messages, helping users stay vigilant against evolving scam tactics.

Technology Enhances Wallet Security

Advancements in wallet technology offer additional layers of protection. Multi-signature wallets, which require multiple private keys to authorize transactions, can prevent total loss from a single compromised key. Hardware wallets with secure elements, like those certified by Common Criteria or FIDO, provide robust defenses against tampering.

Users should also leverage blockchain analytics tools to monitor wallet addresses for suspicious activity before transferring large sums. The Douyin scam, where funds were funneled through Huiwang, demonstrates the need for real-time monitoring to detect and respond to unauthorized transactions swiftly.

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