Understanding Hardware Wallet Security Risks: Analysis of Two Common Fraud Techniques

A hardware wallet, as a physical device specifically designed for storing cryptocurrencies, is widely regarded as a reliable way to protect digital assets. These devices are equipped with secure chips and store private keys offline, ensuring that users have complete control over their encrypted assets. Since they typically operate in an offline state, hardware wallets significantly reduce the risk of cyber attacks.

Nevertheless, due to many investors' lack of understanding of hardware wallets, numerous scams targeting novice users have still occurred, resulting in asset losses stored in hardware wallets. This article will detail two common hardware wallet fraud techniques: manual fraud and device modification disguise scams.

Fraud Techniques in Manuals

This type of fraud primarily exploits ordinary investors' unfamiliarity with the usage of hardware wallets. Scammers induce victims to transfer funds to phishing addresses by replacing fake manuals. The specific operation is as follows:

1. The victim purchased a hardware wallet from unofficial channels.
2. After opening the packaging, activate the Wallet using the "initial PIN code" indicated in the manual.
3. Back up according to the "mnemonic" printed in the manual.
4. Deposit a large amount of funds into the Wallet address, ultimately leading to the theft of funds.

This situation does not involve the hardware wallet itself being compromised, but rather the fraudster activates the device in advance and obtains the address mnemonic phrase, then forges the manual for secondary packaging. Once the victim transfers cryptocurrency assets to that address, they will fall into the trap of the scammer.

Device Modification Deception Scheme

These types of scams are more complex, involving the actual modification of hardware devices. Here is a real case:

A user received a package containing a brand new hardware wallet without having placed an order, along with a letter claiming to be sent by the official source. The letter states that due to a cyber attack on the company resulting in a data breach, new devices are being sent to affected customers, and a replacement is required to ensure security.

However, the authenticity of this letter is in doubt. The user found obvious signs of tampering on the device packaging, confirming that this is a well-designed scam.

Similarly, security research teams have reported cases of counterfeit well-known brand hardware wallets. Attackers gain access to users' encrypted assets by replacing the internal firmware, thereby carrying out theft.

Prevention Advice

To effectively mitigate these risks, investors should pay attention to the following points:

1. Always purchase hardware devices from official channels and avoid using any hardware wallets obtained from unofficial sources.

2. Ensure that the purchased Wallet is in an unactivated state. If the device is found to be activated, or if the manual indicates an "initial password" or "default address," it should be immediately disabled and official support should be contacted.

3. All important operations must be completed in person, including device activation, PIN code setting, binding code generation, address creation, and backup. Never allow a third party to operate on your behalf to prevent financial risks.

By following these recommendations, investors can greatly enhance the security of using hardware wallets and better protect their digital assets.