Hardware Wallet Security: Understanding Two Common Fraud Methods

The secure storage of cryptocurrencies has always been a key focus for investors. Hardware wallets, as specially designed physical devices, protect users' digital assets by storing private keys offline, and are regarded as a relatively secure storage method. However, even hardware wallets are not completely flawless, especially in cases where users lack relevant knowledge.

This article will explore two common fraud schemes targeting hardware wallet users: instruction manual fraud and device modification disguise. Understanding these risks can help investors better protect their digital assets.

Instruction Manual Fraud: Exploiting User Ignorance

This type of fraud primarily targets newcomers who are unfamiliar with how to use hardware wallets. The scammers replace the genuine manual with a fake version, luring victims to transfer funds to a predetermined phishing address.

The specific steps are as follows:

1. The victim purchased a hardware wallet from unofficial channels.
2. After opening the package, activate the device using the "initial PIN code" from the fake instruction manual.
3. Backup instructions printed with "mnemonic phrase"
4. Transfer funds to the provided Wallet address
5. The funds were ultimately transferred away by the scammer.

This type of fraud is not achieved through hacking hardware, but rather the scammers activate the device in advance and obtain the address and mnemonic phrase, then forge the manual and repackage it for sale. Once users transfer funds, they fall into the scammers' trap.

A well-known hardware wallet brand once warned users that some devices sold through unofficial channels are activated devices that have tampered with the user manual, with the intention of misleading users into depositing funds into addresses controlled by scammers.

Device Modification Disguise: Impersonating Official Actions

This method is more covert, as the scammers disguise themselves as the official hardware wallet, sending users modified devices.

A typical case is: a user receives a package that was never ordered, containing what appears to be a brand new hardware wallet and a letter. The letter states that due to a cyber attack on the company, user data was compromised, and therefore a new device is being sent to affected users to ensure security.

However, this is entirely a well-planned scam. The CEO of a certain hardware wallet company has explicitly stated that even in the event of a data breach, the company would not compensate in this manner. Victim users further discovered that the device packaging showed obvious signs of tampering.

Security researchers have also discovered another case where attackers gained control over users' encrypted assets by replacing the internal firmware of the device.

Precautionary Recommendations

To avoid becoming a victim of fraud, users should:

1. Always purchase hardware wallets from official channels to avoid using second-hand or unknown source devices.

2. Ensure that the purchased device is in an unactivated state. If the device is found to be activated or the manual provides "initial password" or "default address", usage should be immediately stopped and the official should be contacted.

3. All important operations must be completed in person, including device activation, PIN code setting, address generation, and mnemonic phrase backup, etc. Never allow a third party to operate on your behalf to avoid security risks.

By understanding these fraud techniques and taking appropriate preventive measures, investors can better protect the security of their digital assets. Hardware wallets are still a relatively secure storage method, but user vigilance and correct usage are equally important.