The High Cost Of A Discounted Cold Wallet

Hella received a call in the middle of the night that gave her the chills. Over the phone, Hella's friend sobbingly told her how she had bought a cold wallet for a discounted price through the Chinese social media app Douyin.

Hella's friend genuinely thought she had gotten a steal given how the cold wallet was heavily discounted and was listed as factory sealed.

But she later learned the deal was too good to be true as the "cold wallet" was actually tampered with, and the discounted price was a fish hook to trick victims to drop their guards.

Hella later shared that the supposed "cold wallet" was actually a " carefully designed hot trap" and the money inside the wallet was drained through the Huiwang app just hours after the purchase.

In the end, Hella's friend incurred a loss of $7 million from the scam. Huiwang, also known as Huione Group, is a Cambodian conglomerate that operates a network of illicit businesses, which includes payments service platform Huione Pay PLC.

Funds Can Never Be Recovered

Blockchain security firm SlowMist managed to track the stolen funds down, but said there was little hope of recovering the lost funds from the thieves.

SlowMist's chief information security officer wrote in a post on X, warning users to not gamble their entire fortune on a wallet that's a few hundred bucks cheaper because that would be akin to throwing their whole life away.

The security expert also noted that these scams are particularly challenging to prevent because the devices are often shipped by third parties who may be unaware they are part of a criminal operation.

This incident comes amid a surge in crypto-related thefts and scams. In Q1 2025 alone, over $2 billion was lost to crypto hacks, with $1.63 billion attributed to access control flaws.

On May 19, a Chinese printer manufacturer was accused of distributing crypto-stealing malware through its official drivers, resulting in the theft of more than $953,000 in Bitcoin.

Cybersecurity firm Kaspersky also reported in April that thousands of counterfeit Android smartphones sold online contained preinstalled malware designed to steal crypto and other sensitive data.

These developments underscore the critical importance of vigilance and caution when purchasing devices or software for crypto storage and transactions.