Bitcoin heist in the name of running hardware wallet company

[Smartvirus]

It is a hypothetical scenario and one that looks plausible but, its idea to note that certain systems exist to determine a wallets authenticity. GitHub is one place to study a projects pathway, how its maintained and who maintains it, including its security features, how transparent it is and if it is indeed as it’s said in its white paper. There is always a community around all these things not to mention that these wallets do go through audits by reputable firms. These are some key giveaways when considered on possible vulnerabilities, not to mention how open source the codes must be.

To stay safe you must always keep your device up to date.

Is it the device that needs updating (hardware) or the software components of it or perhaps both.
I have to draw your attention back to this following the most recent case of Cold Card wallet vulnerability where Seed Guessing allowed an attacker to have access to a large number of Bitcoin(s) before the word went out and the solution that was given was, updating to newer methods that used a different and more difficult pathway in seed generation to be relative safe, at the time.

When it comes to hardware, it’s not new that certain models do get outdated, the plugging, interface and all, hence I might see reason but, wouldn’t that be the more reason why, both would be of best choice.

[Cryptomultiplier]

I had this conversation with a foreign friend yesterday night, since he have the idea about copying codes and baking your own wallet up, and he laughed saying that's some La casa de papel shit.

I think it's just waaaay better to stick with Trezor and old crypto hardware wallet that are open source fully, few new players are coming into this space introducing new hardware wallet while Bitcoin is on its way to 1 million dollars some years in the future, don't bother telling me that this is a joke..

These moth****s can take years to plan this Bitcoin heist up and you won't see it coming, call me crazy 🤣🤣 it's just a thought.

Yes, you are absolutely right, because most of the huge bitcoin scams we have ever heard of, nobody can tell if such was an arrange plan like what you just explained above, because inasmuch as lots of profits will be made, i'm 100% sure that there are lots of people who wouldn't mind spending 2 to 5 years just to arrange a heavy and huge bitcoin heist like this, and most especially when an inflencer who they so much believes in recommend it to be better than Trezor and co. And because of this, i think it is a more reason to stick with wallets that have lasted more than 10years in the industry and still very much safe.

Old reputation rules it for me, because I can barely trust a new wallet in the system all because they promise to be legit and transparent, but we know how all that is bullshit and marketing stunt to full their basket and then disappear.

I still stay surprised at those who get scared easily and opt for newer alternatives because of few hack stories or stories of compromised wallets we hear, but that's all what is supposed to happen when something successful is in the market. Bad actors try to use it to their advantage and that's just how it is, but the issue comes down to spending it because no matter how long it takes, the law always waits for the mistake of spending the funds to be made and that's because of sophistication in new technologies meant to protect the system.

[Sunshine1525]

If it were that easy, people would have done it. This is one reason why it is always advised that people should use open source. When it's an open source wallet, whatever back door is in the wallet would be seen in the code. Also, there is no guarantee that other hackers will not see that back door and use it before the person who created the wallet. To avoid things like this, just use an open-source wallet.

Not just using an open source wallet but the one that's backed by a passphrase to improve the security just using an open source wallet isn't a better option and the recent hack has proved so. If only people would use Bitcoin for a good cause, before the OP had thought about such i believe there are people who would've had same scam idea but couldn't carry it out due to lack of resources.

Things like these give people wrong impressions about Bitcoin but then Bitcoin is for everyone even for people with intentions as this, why can't people just invest with it and be patient for future reward than stealing from others?

[ColdLava40]

These moth****s can take years to plan this Bitcoin heist up and you won't see it coming, call me crazy 🤣🤣 it's just a thought.

A heist can take as long as it needs to take place.

It's possible that the hacks we see these days have been planned out years ago but silently waiting for the right opportunity to strike. One thing I will point out is the idea that it may take alot of time to make people trust your wallet.

Not that it will be difficult but it will be worth it. But these vulnerability found in wallet may not even be there by coincidence, what if they were intentional? Like you described it's like a virus quietly waiting for the right time to strike.

[Odogwu-Blockchain]

These moth****s can take years to plan this Bitcoin heist up and you won't see it coming, call me crazy 🤣🤣 it's just a thought.

A heist can take as long as it needs to take place.

It's possible that the hacks we see these days have been planned out years ago but silently waiting for the right opportunity to strike. One thing I will point out is the idea that it may take alot of time to make people trust your wallet.

Not that it will be difficult but it will be worth it. But these vulnerability found in wallet may not even be there by coincidence, what if they were intentional? Like you described it's like a virus quietly waiting for the right time to strike.

The case of Cold card might not be far from what OP just said. In hacking and exploiting large sum of money, it takes time and financial investment to get it done, a company might come up with funds to develop a unique wallet, passes through evey crypto firms audits companies, convinces the masses and then grab huge amount of Bitcoin after many years of making customers comfortable.

It does happen, who knows so many DeFi platforms operated the same way, so many hacked incidents in the space nowadays and who knows if it's the owner acting behind the scenes. Who knows.

[boyptc]

That actually worked for cold card. 

I get the whole point and someone might be able to pull this stunt again in the next coming years. Even with the reputable hardware wallets that we've got right now, people are starting to think twice and have some doubts.

But thanks to those people who has the concern for the community and has always checked which one is an open source and even us, we have to do it by ourselves.

Although right now it's still about sticking to the ones which has the reputation makes us no longer feel safe but, we're staying and relies on trust.

[BABY SHOES]

Create a hardware company with a ponzi scheme, it will attract the attention of many people let alone the incentive to recruit many people will be high. Lol

The pyramid case that was planned for years brought in billions of dollars. [1] https://www.justice.gov/usao-sdny/pr/co-founder-multi-billion-dollar-cryptocurrency-pyramid-scheme-onecoin-pleads-guilty

Hey... do not imitate this way.

I think it's just waaaay better to stick with Trezor and old crypto hardware wallet that are open source fully, few new players are coming into this space introducing new hardware wallet while Bitcoin is on its way to 1 million dollars some years in the future, don't bother telling me that this is a joke..

It's the most trusted wallet today.
Maybe new people want a new model on the hardware they have, still the function is the most important in terms of security.

These moth****s can take years to plan this Bitcoin heist up and you won't see it coming, call me crazy 🤣🤣 it's just a thought.

Robbery is also nothing instant, it takes time. Lol 

[TastyChillySauce00]

Okay let's say you built a hardware wallet by investing millions or billions of dollars for everyone but the thing is just because you built and advertised a hardware wallet doesn't mean everyone will start using your hardware wallet. People trust something like a wallet the most when someone trustworthy reviews it. You built your hardware wallet and as soon as someone tests it properly they will understand that there is some kind of problem with it and then everyone will start avoiding it and all your investment will be wasted.

I'm not saying it's not possible it is definitely possible but the chance of it being successful is very low and the investment risk is very high.

I think he can do it the expensive way, subsidizing the hardware wallet and giveaway some for free at crypto event, when brand awareness raised, out of thousand people who ignored the hardware wallet there will be one who is buying it and if the code is closed source, it's hard to know whether the company actually uploaded your seed phrase because we can't easily verify the software.

Just look at ledger, closed source software, Ledger Recover that backup your wallet to the cloud, yet still selling millions of units. I'm not saying ledger is doing bad thing against their customer, but it proves that people still buy closed source hardware wallet and they're not even subsidizing it or selling at half the price of competitor.

[Outhue]

Then one day I just pull the rug on them all, putting the blame on some North Korea hackers or glitches in the system, like tell me how this isn't even possible?

It might sound like it's that easy. Like you just need to set everything up and then let people use it, and then you immediately do a rug pull. Let’s say you actually pull that off, but how do you launder all that Bitcoin? Right now, it’s really hard to convert the stolen Bitcoin into cash without creating a trail that can be traced back to you. Especially with the tighter supervision from blockchain security firms and investigators who constantly monitor your activity, it makes it really hard to move because even one small mistake can get you traced.

It's not going to be that easy, just like you said, unless the master planner already has everything figured out and I think that's the main point of this OP, it's all about planning it out, people would go any extent this days to achieve their goals and it's why I believe that this writeup is very possible.

By the way, I've never heard about hackers getting caught after a specific crypto wallet company faced similar problem, or have you? It's only the exchange hacks that got tracked and all, none of them are caught till today, because the wallet companies don't take responsibility and pay all affected users back, ColdCard was the latest right now, slowing going into 2027 now and we will never hear anything about it again, all those Bitcoin are gone for good.

[gracreavix]

There's something worth pointing out. Just because it's self custody or open source doesn't mean it's immune to attacks. I do like to keep an open mind and say anything can happen. And therefore spread my tentacles around. There's no way five hardware wallets will get hacked at a go. Even with self custody, you are still some information has to be protected by the company. Just that with self custody you are choosing who to trust with that information about yourself.

[jahead]

If it were that easy, people would have done it. This is one reason why it is always advised that people should use open source. When it's an open source wallet, whatever back door is in the wallet would be seen in the code. Also, there is no guarantee that other hackers will not see that back door and use it before the person who created the wallet. To avoid things like this, just use an open-source wallet.

Ofc is open source the best for spotting intentional backdoors, but its really not a silver bullet against bad code.   Open source prevents hidden backdoors, but ppls coding errors still happen. Today, attackers use KI tools to scan open repositories 24/7 for a single unpatched flaw. Plus, smaller DIY projects rarely get real code audits, meaning bugs slip through unnoticed. If the random number generator is poorly written, your seed phrase isnt truly random and can be brute-forced (KI ist helping really often btw) despite the open code. Open source is essential, but it doesnt make a wallet immune to bugs or KI-assisted exploit hunting.  

[Cricktor]

A quick evil blueprint for the new hardware wallet:
Use a secure element chip with TRNG (good for marketing!) but it should have the option for an own firmware on it which you, the evil hardware wallet manufacturer, can control. Ledger has experience with that, I mean the "control the firmware part", haha.

You implement a PRNG in the firmware which uses a predictable, only known to you of course, seed value for random numbers to generate (based on e.g. the serial no. of the device, a random value 0..1023, some time granularity counting monotonically up from some known epoch; all of this is fairly low entropy, limited value space, known to the evil guy; your evil firmware (which is not exposed, you pretend the secure element uses its native firmware) hashes the weak entropy with SHA256 to make it look very random. All this secure element firmware code is, of course like with Ledger, hint, hint, not public. I think, the majority of users, won't question it. Ledger customer dummies definitely don't question it, lol.

(OK, some complications: your accomplices have to hold water-tied OR better you avoid accomplices at all, but that's going to be difficult, because you can't run this alone, likely.)

If security researchers tamper with your hardware and modified secure element, if hopefully resets to its native firmware to avoid suspicion of those pesky researchers.

All this ensures that the evil guy only knows that the randomness of the secure element of the hardware wallet is rigged. The outside world doesn't see this in the open-source firmware code of the hardware wallet's microcontroller. Everything looks super safe and sound. Your device is cool and competitively affordable, you crush the competition, sales skyrocket.

The evil manufacturer has all the time to precompute and store rigged entropy seeds for a later rug-pull. Or maybe you only drain a few wallets per year and blame the customer who screwed up their security and somehow exposed their mnemonic recovery words because they took digital pictures, those idiots. And if they say, they didn't take pictures, we all know they lied, because everybody takes pictures of every shit with their mobile.

Well, there are a few kinks here and there, but fairly easy to pull off with a sufficient amount of criminal energy.


Another way could be exfiltration of secrets via a nonce covert channel (see https://bitbox.swiss/bitbox02/threat-model/), but that isn't as fool-proof as above rigged secure element firmware. It also has the disadvantage of likely being visible in the device's microcontroller firmware code which should be open-source, of course. We don't want to step down to the low level of Ledger, do we?

OK, OK, there will be cry-babies who ask and want to be able to generate their own entropy, e.g. with dice rolls. Pesky security conscious outsiders! We give them what they want, but make the UI for it a pain in the ass to use. Douchebags!

  If your irony and sarcasm detectors are flawed or defective, it's not my fault!  


If that sounds any near the Coldcard debacle, well, maybe change the mushrooms you consume? Wait, those devices weren't any affordable, rather overpriced. Damned!

[theguywhoisnice]

Yeah, I understand your thinking. It's good stuff to think about.

All of "ledger guys" just trust Ledger. And another closed-source hardware wallets.

But won't it be easy to find who stole Bitcoins afterwards?

If you want to get trust as hardware wallet company you gotta introduce yourself, give full name. And if someone stoles Bitcoins from someone's wallet it's going to be on you. And investigators will look at you first, I guess still you dont trust close-source hardware wallets. But it will be "easy" to find one who stole Satoshis

Thats not as easy as you think...

[Hyphen(-)]

I can be wrong and I am open to learning anytime, any day.
What if a back door is built on the hardware wallet chip itself?

Few hardware wallets are not even completely open source, if you know what I am getting at.

You are right mate, everything is possible, and as you say, some hardware wallets are actually not completely open-source, because the case of COLDCARD reveals that it is not a complete open-source wallet, and this is another reason to have knowledge about the wallet itself before starting to trust them with your Bitcoin.

Beginners are supposed to be very vigilant and avoid going to use wallets based on hype and maybe social media recommendations, they should use the old wallets that have been into existence for long and still being in use with good record and less scam records to avoid losing money.

[Floxynice]

There's something worth pointing out. Just because it's self custody or open source doesn't mean it's immune to attacks. I do like to keep an open mind and say anything can happen. And therefore spread my tentacles around. There's no way five hardware wallets will get hacked at a go. Even with self custody, you are still some information has to be protected by the company. Just that with self custody you are choosing who to trust with that information about yourself.

There are quite a lot of things to be concerned about when investing in Bitcoin. People concern themselves with issues about security, backups, inheritance planning, sharing information with loved ones, choice of wallet, and many other issues. If they continue this way, they will live their lives in fear.

I am not saying that they should be careless with matters that involve the safety of their bitcoins, but being too extreme with these worries can kill the fun enjoyed in investing in Bitcoin. Sometimes, there are some things that we cannot control no matter how careful we are.

The best, just as you recommended, is for people to spread their risks. They should simply split their bitcoins into multiple wallets to prevent the loss of everything at once. Doing this does not give room for anyone to be careless about taking responsibility for those bitcoins in multiple wallet addresses, but just a way to protect oneself against future heartbreaks.