Twitter dude lost access to his bitcoin using his weird(?) setup

[Cricktor]

<snip>

Exactly, this. The Mnemonic Words are not what is there in the beginning. OK, what I call "Seed" is the random entropy that comes in first place. See also following flow chart...

[dkbit98]

I think it is still a BIP39 passphrase. If you have already created an Electrum wallet paired to a hardware wallet which has a BIP39 passphrase, and then try to open that Electrum wallet file with the hardware wallet attached but with a different passphrase enabled, then you get this error. You can reproduce this on Ledger and Trezor devices too. It's just Electrum's error message of saying whatever wallet is open on the hardware wallet does not match the Electrum wallet file, and therefore it cannot be decrypted.

Or it could be that some of the wallet files related on his computer somehow got corrupted and that is why it is showing this error.
It could happen when doing transfers to USB drives and vice versa, and maybe he used multiple wallet files and mixed them up.
We can't know what really happens until Vlad explain himself what happened, but he did not mention anything about this issue in last few days  judging by his twitter account.
Simple solution would be to try using hardware wallet with same passphrase in native, for Trezor that would be Trezor Suite, there wont' be any error if different passphrase was used.

[o_e_l_e_o]

Simple solution would be to try using hardware wallet with same passphrase in native, for Trezor that would be Trezor Suite, there wont' be any error if different passphrase was used.

Looks like he already tried this, unlocking the hardware wallet with the "correct" passphrase and using that to create a brand new Electrum wallet: https://nitter.it/TheVladCostea/status/1553245488748630016#m. As expected, it showed zero balance.

Again, this is all in keeping with him using the wrong BIP39 passphrase. Unlocking the wallet with what he thinks is the right passphrase but isn't will result in an error trying to decrypt the existing Electrum wallet file (which he experienced from his first post), and will result in any new Electrum wallet file generating different addresses with zero balance (which is what he has done here).

He has simply forgotten his passphrase or is is making a mistake when entering it (wrong case, forgetting a symbol, something like that). He probably needs to look in to brute forcing it with btcrecover.

[witcher_sense]

He has simply forgotten his passphrase or is is making a mistake when entering it (wrong case, forgetting a symbol, something like that).

While my gut feelings also tell me that he might have simply forgotten his passphrase or have never actually known it (because of lack of proper backup testing), we still cannot afford to rule out the possibility that there may have been an issue with the software itself. He used the same software (Electrum wallet) both to decrypt an old wallet and create a new one, and in both cases, he achieved nothing. If he had tried some other wallet, we would have had more information, particularly whether or not he experiences the same error when using wallets from other software providers.

I found an old thread where one of the users successfully replicated an error message by connecting a knowingly working and updated to the latest firmware hardware device to Electrum wallet, which turned out to be using an outdated version of the hardware wallet's plugin. Having had updated the plugin to the latest version, he managed to get everything working.

Maybe this situation is similar and something like...

Code:

python3 -m pip install bitbox02

...will do the trick.

[Pmalek]

The issue this lad is having is all the proof we need that much more attention are needed for proper seed/passphrase testing and backup. When people get a hardware wallet, they might start relaxing and being overconfident that nothing could possibly go wrong. But you should never be in a hurry to fund an address before you are 100% sure of its recovery.

1. Check, double check, and triple check the seed.
2. Do the same with the passphrase.
3. Recover your wallet from seed and enter your passphrase to see if it recovers a wallet with the same addresses.
4. Deposit a few satoshis to your wallet and try spending them before moving the rest of your portfolio to the wallet.
5. Don't try to reinvent the wheel and use tested and recommended methods of generating and storing your private information. 

[dkbit98]

He has simply forgotten his passphrase or is is making a mistake when entering it (wrong case, forgetting a symbol, something like that). He probably needs to look in to brute forcing it with btcrecover.

Even using a space could create problems.
He is saying that coins are still there and nothing moved, so he is obviously making some mistake with passphrase.
I didn't know that Electrum wallet is displaying error message like that, but this could be better than opening wallet with zero balance  
His mistake was that he didn't wrote and made backup for passphrase he used, and he is trusting in worst possible storage device - his brain and memory.
Brain could be one of the most private secure place to store some information, but it is most unreliable at the same time, just ask Alzheimer's patients and older people.

5. Don't try to reinvent the wheel and use tested and recommended methods of generating and storing your private information.

6. Write down and backup your passphrase, not just your seed words.

[Cricktor]

Even using a space could create problems.
He is saying that coins are still there and nothing moved, so he is obviously making some mistake with passphrase.

Spaces can cause issues, I checked that with https://iancoleman.io/bip39/ script. Leading or trailing spaces or multiple consecutive spaces in optional additional mnemonic passphrase all yield distinct wallets and keys.

Electrum behaves the same with BIP39 mnemonic seed words and with "dangerous" spaces spits out a warning:

Warning: You have multiple consecutive whitespaces or leading/trailing whitespaces in your passphrase. This is discouraged. Due to a bug, old versions of Electrum will NOT be creating the same wallet as newer versions or other software.

BUT Electrum with Electrum mnemonic seed behaves differently: the optional additional mnemonic passphrase is sanitized and leading or trailing spaces are removed, multiple consecutive spaces between other characters are replaced by a single space.
I guess that's documented somewhere...

I didn't know that Electrum wallet is displaying error message like that, but this could be better than opening wallet with zero balance 

It must display an error message because the hardware wallet device can't properly provide the correct secret to unencrypt the wallet. Being quiet and opening the wrong wallet would clearly be the wrong action in such a setup.

6. Write down and backup your passphrase, not just your seed words.

And better not store it together with the mnemonic seed words as then the optional mnemonic passphrase makes not much sense (to me), you gain no additional security for your wallet if stored together.