A crypto investor has reportedly lost $6.9 million worth of digital assets after purchasing a discounted cold wallet via Douyin, the Chinese counterpart of TikTok. According to blockchain security firm SlowMist, the wallet had been compromised from the outset, with its private key exposed at the time of creation. Within hours of transferring funds into the wallet, the user’s entire balance was drained.
The cold wallet, advertised as “factory sealed” and available at a cut price, was purchased through Douyin Shop, a popular e-commerce feature allowing third-party sellers to market various goods. However, experts warn that such wallets are increasingly used in sophisticated scams targeting unsuspecting crypto holders.
A Carefully Designed Scam
The case came to light after an X user known as Hella, reportedly a former team member under Jihan Wu, co-founder of crypto giant Bitmain revealed that the victim was a close friend. Hella described the wallet as “a carefully designed hot trap,” and noted that the stolen crypto was laundered through Huiwang, a shadowy Cambodian conglomerate known for operating illicit crypto-related businesses.
According to Hella, the funds disappeared within a few hours after the transfer. Huiwang’s operations include payment service platform Huione Pay, Huione Crypto exchange, and the darknet marketplace Haowang Guarantee, all of which have been linked to fraudulent activities.
Warnings from Security Experts
SlowMist’s chief information security officer, known by the X handle 23pds, issued a stern warning: “Don’t gamble your entire fortune on a wallet that’s a few hundred bucks cheaper.” The CISO stressed that these counterfeit cold wallets may appear genuine, even factory-sealed, but are often preloaded with malware or programmed to leak private keys.
Such scams are difficult to trace and even harder to prevent. Many of these wallets are shipped by third-party vendors who are unaware they are part of a larger criminal network. Once the funds are stolen and laundered, the chances of recovery are slim to none.
SlowMist did manage to track the stolen assets, but confirmed that recovery is extremely unlikely due to the speed and complexity of the laundering process.
Rising Trend in Hardware-Based Crypto Theft
This case is not isolated. In May, a Chinese printer manufacturer was accused of spreading crypto-stealing malware bundled with official device drivers, resulting in nearly $1 million in losses. Similarly, in April, cybersecurity firm Kaspersky reported thousands of fake Android smartphones preloaded with malware designed to steal cryptocurrencies and sensitive user data.
These incidents underline a growing trend of hardware-based threats in the crypto space. With cold wallets traditionally seen as one of the safest methods of storage, their exploitation by cybercriminals is particularly alarming.
How to Stay Safe: Buy from Trusted Sources
Experts unanimously advise purchasing hardware wallets only from authorised and verified sources, preferably directly from the manufacturer. Bargain deals found on platforms like Douyin, Amazon resellers, or peer-to-peer marketplaces are increasingly likely to be scams.
Additionally, users should verify the authenticity of their wallet through tools provided by reputable brands like Ledger, Trezor, and SafePal, and avoid setting up wallets using third-party apps or pre-written seed phrases.
As 23pds rightly concluded, “This isn’t saving money, it’s throwing your life away.” In the world of crypto, security must always come before savings.
