Crypto Investor Faces Loss of $6.9 M

A crypto investor has allegedly lost almost $7 million after purchasing a discounted cold wallet through Douyin, the Chinese counterpart of TikTok, which turned out to be compromised.

According to the blockchain security company SlowMist, the “private key was compromised during its creation” and the user’s funds were quickly “drained within hours” from the insecure cold wallet.

While finding a bargain on a cold wallet might seem like a smart way to cut expenses, SlowMist warned that cold wallets labeled as “factory sealed” or “discounted” are often tampered with, and the lower price is a tactic to attract victims.

Funds were “washed away” in just a few hours.

An X user known as Hella, who previously worked with Jihan Wu, the co-founder of the Bitcoin mining equipment company Bitmain, mentioned that the crypto investor (victim) was a close friend who called late at night, leaving her with a sense of dread.

Hella described the wallet as “a meticulously crafted hot trap,” and noted that the stolen cryptocurrency was “laundered through Huiwang within hours,” based on a Google translation of the post made on Saturday to X.

Huiwang, which is also referred to as the Huione Group, is a Cambodian conglomerate involved in various illicit businesses, including the payment service platform Huione Pay PLC, the cryptocurrency exchange Huione Crypto, and the darknet marketplace Haowang Guarantee.

Hella advised that when purchasing a cold wallet, it’s essential to select a trustworthy source, as most available online are counterfeit.

Stolen funds can’t be recovered

Although SlowMist succeeded in tracing the stolen assets, Hella remarked that there was “little chance of retrieving” them from the thieves.

SlowMist’s chief information security officer, known as 23pds on X, stated in a post translated by Google that this situation serves as a crucial reminder not to “risk your entire fortune on a wallet that’s just a few hundred dollars cheaper,” since in the end, it’s not “saving money, it’s endangering your life.”

23pds noted that preventing these kinds of scams can be more challenging since the devices are sent by third-party vendors, and those who are responsible for shipping or packing the items often do not realize they are part of a scam operation.