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Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

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Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#1
I'm really devastated. My nephew just called me and told me all his cryptocurrency is gone -- valued over $40,000. He has spent years earning it and resisting pulling it out, hoping he could eventually use it to pay for his college education.

Here are the facts:

- He has a Ledger Nano S wallet.

- That wallet had 4.77 LTC, 4.48 ETH, and 0.73 BTC.

- The Ledger generated a passphrase containing 24 words. He didn't add the 25th optional word.

- He recorded that passphrase on a piece of paper and hid it.

- No one had or has access to that paper. This is an absolute certainty.

- That passphrase (those words) were NEVER entered anywhere.

- On February 24th at 5:45 AM Eastern Time, the BTC was stolen.

- On the same day, at 6:46 AM and 6:48 AM, the ETH and LTC, respectively, were stolen.

- He also has a Trust Wallet.

- He had $1500 worth of NPXS and $1000 worth of TRX in that wallet.

- On February 24th at 6:48 AM and 6:55 AM both of those were stolen.

- The passphrase for the Trust Wallet is saved as a screenshot on his iPhone.

- His iPhone has not left his possession.

- His iPhone has a 6-digit passcode.

I have the recipient addresses. It looks like the thief has stolen crypto from others as well.

Note: Both wallets were hacked on the same day at around the same time. Both had separate passphrases.

Can someone please shed some light on what can be done, if anything? How were both wallets compromised at the same time?! If nothing can be done to retrieve the crytpo, what can be done to prevent this from happening in the future.

Edited to add:

Here's the BTC transaction: https://www.blockchain.com/btc/tx/4b05e788a4338d330f3d8a19c87c520e78db28c356c1e6bc1fd4d7e186c91892

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#3
I want to make it clear that the Ledger passphrase, on paper, and hidden, was not ever accessed. And, even if it was, which it wasn't, his Trust Wallet on his iPhone was also compromised.

How can someone guess both passphrases, from separate wallets, in separate locations with different words? It's literally impossible.

Whatever technology is used to generate the passphrases in each of those wallets must be compromised.

Nothing else can explain it.

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#4
Simplest explanation is the most likely.

Both wallets were accessed at the same time, indicating seed words for both wallets were exposed.

Regardless of what your nephew remembers, or believes about how he handled his seeds, someone got access to that data.

One culprit could be cloud hosting like iCloud, google docs, dropbox, etc.

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#5

Simplest explanation is the most likely. Both wallets were accessed at the same time, indicating seed words for both wallets were exposed. Regardless of what your nephew remembers, or believes about how he handled his seeds, someone got access to that data. One culprit could be cloud hosting like iCloud, google docs, dropbox, etc.

I cannot stress this enough. The seed words on paper were never exposed.

iCloud could explain his Trust Wallet, but not his Ledger wallet (with the seed words on paper, hidden and literally not seeing the light of day for years).

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#6
If one pass phrase was stored as a screenshot on his iPhone (which is automatically stored on iCloud without much encryption), I have little faith about the certainty of his paper words having never been accessed.

Anyways, either someone had access to his hardware wallet and had a copy of that paper at the time of the theft, either wallets are insecure.

If wallets were that insecure, more complains and warnings would be found online, and the wallet company would probably loose all its customers. So I say it’s unlikely.

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#8
post #7

> - The passphrase for the Trust Wallet is saved as a screenshot on his iPhone. Could the photos have been uploaded to iCloud and compromised from there? Or accessed from another device?

The photo for his Trust Wallet? Maybe.

But that doesn't explain his Ledger wallet! I'll keep saying it...those seed words were on paper, hidden from all sight, without anyone knowing they exist...for years.

Then, on February 24th, both wallets get cleaned out at around the same time. Why sit on the seed words for years?

Re: Tell HN: Crypto Wallets Trust Wallet and Ledger appear to be compromised

#9
post #6

If one pass phrase was stored as a screenshot on his iPhone (which is automatically stored on iCloud without much encryption), I have little faith about the certainty of his paper words having never been accessed. Anyways, either someone had access to his hardware wallet and had a copy of that paper at the time of the theft, either wallets are insecure. If wallets were that insecure, more complains and warnings would…

That's partly why I'm posting this here. There must be something else going on. The paper with the seed words WAS NOT accessed.
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