How Can Crypto Users Protect Themselves from Compromised Hardware Wallets?

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.

SlowMist, a blockchain security firm, revealed that scammers compromised the wallet's private key at creation, enabling them to drain funds within hours. To avoid such traps, users must purchase wallets directly from official manufacturers or authorized resellers.

Reputable brands such as Ledger and Trezor offer tamper-evident packaging and secure boot processes to guarantee that devices remain 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.

ALSO READ | Vietnam Dismantles $400 Million Crypto Scam Operating Fake Exchange

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, emphasizing the need to take proactive measures.

ALSO READ | Coinbase One Card Set to Launch in Fall 2025 with Exciting Features

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, prioritize 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 clear indication that one cannot assume platform trust.

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.

Huiwang's involvement in the Douyin scam highlights the importance of real-time monitoring for prompt detection and response to unauthorized transactions.