Cold Wallet Disaster? The Lesson of Losing $50 Million in a Single Night
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Cold Wallet Disaster? The Lesson of Losing $50 Million in a Single Night
Fake cold wallets harm users—learn these tips to protect your assets!
Navigating Web3 tides with focused insightsAuthor: SuperEx
Translation: Baicai Blockchain
The cryptocurrency world is once again in turmoil. A news story titled "Investor Buys Cold Wallet, Loses Entire Portfolio Overnight" has sparked widespread discussion online.
What happened:
A crypto investor purchased a so-called "cold wallet" through a short-video platform and then transferred approximately 50 million JPY (about $690,000 USD) worth of digital assets into it. Soon after, all assets were completely stolen by hackers overnight.
Confirmed by blockchain security firms, this is not fiction—it’s a real incident. The likely culprit? The wallet the investor bought was a third-party device that had already been tampered with and preloaded with backdoors before delivery.
Today, using this real-world case as a starting point, we explore a critical question: Is a cold wallet truly the safest way to store crypto assets? How can ordinary users protect their holdings? And what pitfalls must be absolutely avoided?
Tragedy: Why Was the Cold Wallet Hacked?
Many people’s first reaction upon reading this news: "How could someone with 50 million JPY in assets not understand basic security?" But the reality is, in the crypto space, users whose wealth grows faster than their technical knowledge are extremely common. As the saying goes: "Wealth increases faster than security awareness."
Maybe you bought some Bitcoin back in 2013 when it was only worth a few thousand RMB. Now its value has increased hundreds or even thousands of times. Your portfolio has exploded—but your security habits haven’t kept pace.
So, in pursuit of "greater security," you buy a hardware wallet. But you don't verify the source. Instead, you place an order via a random link from a live stream, short-video app, or e-commerce site—without ever confirming whether it came from an official channel.
And the result? Your assets vanish.
Because what you bought wasn’t a cold wallet—it was a device preinstalled with backdoors. Attackers already had access to your recovery phrase. When you deposited your funds, you essentially handed them over voluntarily.
Cold Wallet ≠ Absolute Security
Cold wallets have risks too!
Hearing the term "cold wallet," many immediately think "completely secure." But the truth is: cold wallets can be genuine or fake, vary in levels of "coldness," and require correct operational practices to be effective.
1. What Is a Cold Wallet?
Broadly speaking, a cold wallet stores private keys or recovery phrases in a fully offline, internet-isolated environment.
Common forms include:
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Paper wallet: The coldest method—writing private keys on paper and locking them in a safe, completely offline.
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Hardware wallet: A USB-like device that stores private keys and connects via USB or Bluetooth, emphasizing physical isolation.
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Air-gapped devices: Advanced users may use offline Linux systems to generate and sign transactions.
What Constitutes a Fake Cold Wallet?
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Hardware wallets purchased from unofficial sources
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Wallets requiring internet connectivity (e.g., certain Web3 multisig wallets)
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Wallets that automatically sync blockchain data via mobile apps during use
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Recovery phrases generated in an online environment
2. Why Are Hardware Wallets Still Risky?
"Aren’t hardware wallets offline? They have encrypted chips and store private keys locally—aren’t they safe?"
The problem lies here:
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Connection = Exposure: Once connected via USB or Bluetooth, it's no longer "cold"
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Firmware tampering risk: Attackers may have pre-modified firmware, rendering your "secure" device fully exposed
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Undetectable by appearance: Even if the packaging looks brand new, you cannot confirm whether the firmware has been altered
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User errors: Taking screenshots of recovery phrases, typing them into computers, or emailing them to yourself—all fatal mistakes
Therefore, the key isn't just using a hardware wallet—but how you use it. Only wallets purchased from official channels, self-initialized, and with recovery phrases generated entirely offline can be considered "relatively secure."
What kind of wallet is truly secure? Just follow these principles:
No matter which wallet you use, remember these rules:
1. Purchase Only From Official Channels
Whether Ledger, Trezor, Keystone, or other brands, buy exclusively from official websites or authorized dealers. No matter how convincing a livestream may seem, never take the risk.
2. Recovery Phrases / Private Keys Exist Only on Paper—Never Go Online
No screenshots, no copy-pasting, no photos. Storing recovery phrases in notes, cloud storage, or emails is equivalent to handing them directly to hackers. The safest method? Write them down by hand and store them in a home safe.
3. Keep Your Phone and Computer Clean—Avoid Suspicious Wallet Apps
Many fake wallet apps look identical to legitimate ones but secretly steal private keys in the background after installation. Before installing any wallet app, always verify the official website, developer identity, and app store ratings.
4. Use Multi-Signature or Multi-Device Verification
Don’t store all your assets in one wallet. Implement tiered storage: keep large amounts offline, small amounts in hot wallets on your phone.
5. Understand the Platform’s Risk Control System When Using Exchange Wallets
Even centralized wallets vary greatly in security. Some platforms have robust risk controls and withdrawal limits, while others allow backend staff to move user funds freely.
Choose wallets with transparent security frameworks and strong user reputations.
Choosing Secure and Transparent Platform Wallets
Look Beyond Features—Examine Security Architecture
For many users, centralized exchange wallets offer convenience and ease of use—but come with risks, as you're entrusting your assets to a third party. Therefore, look beyond features and focus on the risk management framework.
Here are some recommended platform wallets known for strong security records and high user trust:
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BN: The world’s largest trading platform, featuring leading reserve asset management and the SAFU insurance fund, with strict separation between hot and cold storage.
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OK: Strong technical capabilities, supports MPC wallets, and provides publicly verifiable proof-of-reserves.
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Bitget: Known for copy trading and derivatives, with robust wallet isolation and layered encryption technology.
Conclusion: Security Awareness Is Your First Line of Defense in Crypto
Hardware wallets aren’t magic bullets. Cold wallets aren’t invulnerable.
Real protection comes from your own awareness, habits, and respect for risk.
Final recommendations:
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Buy wallets only from official websites
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Recovery phrases must never touch the internet—paper is best
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Enable multi-layer verification—don’t rely on a single device
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Don’t blindly distrust platforms, but also don’t blindly trust them
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Integrate security awareness into your financial strategy—not as an afterthought
The crypto world never lacks stories of overnight riches.
But those who preserve wealth and survive long-term are always the vigilant ones.
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