- High-Value Loss: An investor lost $6.9M after using a tampered cold wallet bought via Douyin.
- Tampered at Source: Wallet had pre-compromised keys, making funds instantly accessible to scammers.
- Wider Trend: Rising scams involve malware-infected devices and counterfeit hardware across Asia.
After unknowingly buying a compromised cold wallet on Douyin, the Chinese counterpart of TikTok, a crypto investor lost a staggering amount of about $6.9 million, with SlowMist, a blockchain security company, providing the statement. It also highlights the growing concern regarding counterfeit hardware wallets being pushed through online unauthorized platforms.
The compromised wallet, advertised as factory-sealed and offered at a discounted price, was allegedly tampered with before purchase. SlowMist reported that the private key associated with the wallet had already been compromised during its creation. As a result, the victim’s entire crypto portfolio was drained within hours of activation.
Counterfeit cold wallets, especially those advertised on social commerce platforms such as Douyin, have become very much a bait for the scammers. These wallets look legitimate, but in reality, they either come loaded with malware or have exposed private keys, making them completely unsafe for any digital asset storage.
SlowMist’s Chief Information Security Officer, known as 23pds on X (formerly Twitter), emphasized the risks: “You’re not saving money it’s throwing your life away.” He added that buying a wallet from an unreliable source is essentially gambling one’s entire fortune.
The victim, reportedly a friend of Hella an X user who previously worked under Jihan Wu, co-founder of Bitcoin mining giant Bitmain called in distress after realizing the loss. Hella described the compromised wallet as a “carefully designed hot trap.”
Funds Washed Away via Cambodian Syndicate
Hella claimed the stolen funds were quickly laundered through Huiwang, also known as the Huione Group. This Cambodian-based conglomerate is notorious for operating a web of illicit businesses, including crypto exchange Huione Crypto, darknet marketplace Haowang Guarantee, and payment platform Huione Pay PLC.
Once the funds were stolen, they were “washed away” in a matter of hours, making recovery virtually impossible. Although SlowMist successfully traced the funds, the company stated that there’s “little hope” of retrieval, given the speed and sophistication of the laundering network.
Rise in Device-Based Crypto Theft
This is not the first one. Kaspersky, SlowMist, and many other cybersecurity companies have time and again cautioned people against buying their digital wallets or crypto-related hardware from third-party or unvetted vendors.
In an alarming incident on May 19, a Chinese printer manufacturer was found to have been distributing crypto-stealing malware through its official printer drivers, making away with loot totalling $953,000-plus in Bitcoins.
Kaspersky also discovered thousands of counterfeit Android phones sold online pre-loaded with malware designed to capture sensitive user information and crypto credentials.
The case is a sobering reminder for investors: when it comes to protecting crypto assets, cuts can be catastrophic. Security experts strongly recommend purchasing cold wallets only from trusted and official sources, avoiding third-party sellers and “too good to be true” discounts.
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