Author: SlowMist Technology
Recently, a victim contacted the SlowMist security team, claiming that they purchased a tampered cold wallet on TikTok, resulting in the theft of approximately 50 million yuan in crypto assets. This article focuses on a tool that is generally trusted but has many misunderstandings in use - hardware wallet.
(https://x.com/SlowMist_Team/status/1933799086106538101)
Hardware wallets have always been considered a reliable tool for protecting crypto assets due to offline private key storage. However, as the value of crypto assets continues to rise, attacks on hardware wallets have also been continuously upgraded: from counterfeit hardware wallets, fake firmware updates/verification, phishing websites, to carefully designed social engineering traps, many users fall into traps unknowingly and end up having their assets completely looted. Devices that seem secure actually hide backdoors; emails that appear official are actually from attackers.
This article will focus on the three major stages of hardware wallet purchase, use, and storage, sorting out common risks, analyzing typical scams with real cases, and providing practical protection recommendations to help users effectively protect the security of their crypto assets.
01
Risks in the Purchasing Stage
There are mainly two types of scams in the purchasing stage:
Fake Wallet: The device looks normal, but the firmware has been tampered with, and once used, the private key may be leaked silently;
Genuine Wallet + Malicious Guidance: Attackers exploit users' lack of security knowledge by selling devices that are "already initialized" through unofficial channels, or guide users to download fake companion apps, and then complete the harvest through phishing or social engineering.
Let's look at a typical case:
A user purchased a hardware wallet from an e-commerce platform and found that the instruction manual looked like a scratch card when opening the package. The attacker had pre-activated the device, obtained the seed phrase, then repackaged the hardware wallet with a fake instruction manual and sold it through unofficial channels. Once the user scans the QR code to activate and transfers assets to the wallet address according to the instructions, the funds are immediately transferred away, falling into the standard stolen coin process of a fake wallet.
These scams target users who are first exposed to hardware wallets. Due to lack of background knowledge, users do not realize that "pre-set seed phrase" itself is a serious security anomaly.
https://www.reddit.com/r/ledgerwallet/comments/w0jrcg/is_this_a_legit_productbought_from_amazon_came/
Besides the "activation + repackaging" routine, there is a more covert and advanced attack method: firmware-level tampering.
The firmware inside the device is implanted with a backdoor while appearing completely normal. For users, such attacks are almost undetectable, as firmware verification and disassembly verification are costly and not skills everyone possesses.
Once users store assets in such a device, the hidden backdoor is quietly triggered: attackers can remotely extract private keys, sign transactions, and transfer assets to their own addresses. The entire process is silent, and by the time users realize it, it is often too late.
https://x.com/kaspersky/status/1658087396481613824
Therefore, users must purchase hardware wallets through brand official websites or official authorized channels, avoiding non-regular platforms for convenience or cheapness. Especially second-hand devices or new products of unknown origin may have been tampered with or initialized.
02
Attack Points During Use
Phishing Traps in Signature Authorization
Although hardware wallets can isolate private keys, they cannot eliminate phishing attacks from "blind signing". Blind signing is like signing a blank check - users confirm a signature request or hash data that is difficult to recognize without clearly knowing the transaction content. This means that even under the protection of a hardware wallet, users may unknowingly authorize a transfer to a strange address or execute a smart contract with malicious logic.
Blind signing attacks often induce users to sign through cleverly disguised phishing pages. In the past few years, hackers have stolen a large number of user assets through such methods. As DeFi, Non-Fungible Token, and other smart contract scenarios continue to expand, signature operations become increasingly complex. The solution is to choose a hardware wallet that supports "what you see is what you sign", ensuring that transaction information can be clearly displayed and confirmed item by item on the device screen.
https://www.ledger.com/zh-hans/academy/%E4%B8%BB%E9%A2%98/ledgersolutions-zh-hans/10-years-of-ledger-secure-self-custody-for-all
Phishing from "Official" Sources
Attackers are also good at fraud by riding on momentum, especially by waving the "official" banner. For example, in April 2022, some users of the well-known hardware wallet Trezor received phishing emails from the trezor[.]us domain, while the actual Trezor official domain is trezor[.]io, and the phishing email also spread domains like suite[.]trẹzor[.]com.
The "ẹ" looks like a normal English letter, but it is actually Punycode. The real identity of trẹzor is: xn—trzor-o51b.
Attackers will also leverage real security incidents to increase the success rate of deception. In 2020, Ledger experienced a data breach where about 1 million user email addresses were leaked, including a subset of 9,500 customers with names, mailing addresses, phone numbers, and product purchase information. After obtaining this information, attackers impersonated Ledger's security and compliance department, sending phishing emails to users claiming that the wallet needs to be upgraded or security verified. The email would guide users to scan a QR code and jump to a phishing website.
(https://x.com/mikebelshe/status/1925953356519842245)
(https://www.reddit.com/r/ledgerwallet/comments/1l50yjy/new_scam_targeting_ledger_users/)
Additionally, some users received express packages where the device's outer packaging was even shrink-wrapped. The package contained a fake Ledger Nano X wallet and a forged letter with an official letterhead, claiming this was to respond to the previous data breach and replace a "more secure new device" for users.
(https://www.reddit.com/r/ledgerwallet/comments/o154gz/package_from_ledger_is_this_legit/)
In fact, these "new devices" were tampered Ledger wallets with an additional USB drive soldered on the internal circuit board to implant malicious programs. The fake instructions would guide users to connect the device to a computer, run the automatically popped-up application, and enter the original wallet's 24 seed phrases for "migration" or "recovery" as prompted. Once the seed phrase is entered, the data will be sent to the attacker, and funds will be immediately stolen.
Man-in-the-Middle Attack
Imagine sending a letter to a friend, and a malicious postal worker intercepts it on the way, secretly altering the content before sealing it back. The friend receives the letter without knowing, believing it to be your original words. This is the essence of a man-in-the-middle attack. While hardware wallets can isolate private keys, transactions still require communication through wallet apps on mobile or computer, as well as "communication channels" like USB, Bluetooth, or QR codes. These transmission links are like "invisible postal workers", and if any link is controlled, attackers can silently modify the recipient's address or forge signature information.
The OneKey team previously reported a man-in-the-middle attack vulnerability to Trezor and MetaMask: When MetaMask connects to a Trezor device, it immediately reads the device's internal ETH public key and calculates addresses on the software side based on different derivation paths. This process lacks any hardware confirmation or prompt, leaving room for a man-in-the-middle attack.
If local malware controls Trezor Bridge, it's equivalent to a "bad postal worker" in the communication link, allowing attackers to intercept and modify all communication data with the hardware wallet, causing the software interface to display information inconsistent with the hardware's actual status. If the software verification process has vulnerabilities or users do not carefully confirm hardware information, the man-in-the-middle attack may succeed.
https://zhangzhao.name/
03
Storage and Backup
https://x.com/montyreport/status/1877102173357580680
Finally, storage and backup are equally important. Never store or transmit seed phrases on any networked device or platform, including memos, photo albums, bookmarks, transfer assistants, emails, cloud notes, etc. Moreover, asset security requires protection not only from hacker attacks but also from accidental disasters. While paper backups are relatively safe, improper storage may risk fire or water damage, making asset recovery difficult.
Therefore, it is recommended to handwrite seed phrases on physical paper and store them in multiple secure locations. For high-value assets, consider using fireproof and waterproof metal plates. Additionally, regularly check the storage environment of seed phrases to ensure their safety and usability.
04
Summary
Hardware wallets, as important tools for asset protection, have security limitations dependent on user behavior. Many scams do not directly breach devices but instead disguise themselves as "helping you be more secure" to entice users to voluntarily surrender asset control. Based on the risk scenarios mentioned in this article, we summarize the following recommendations:
Purchase hardware wallets through official channels: Devices bought from non-official channels risk tampering.
Ensure the device is in an unactivated state: Officially sold hardware wallets should be brand new and unactivated. If the device appears already activated upon startup, or the manual suggests "initial password" or "default address" anomalies, immediately stop use and provide feedback to the official channel.
Critical operations should be performed personally: Except for device activation, setting PIN codes, generating binding codes, creating addresses, and backing up seed phrases should all be done by the user personally. Any step performed by a third party carries risks. Under normal circumstances, when first using a hardware wallet, users should create a wallet at least three consecutive times, record the generated seed phrases and corresponding addresses, ensuring each result is unique.
Article link: https://www.hellobtc.com/kp/du/06/5905.html
Source: https://mp.weixin.qq.com/s/epl0W0NGl4fEa0LCY3x16w
