Ledger Investigation: User Data Leaks and Wallet Hacks Revealed

A scandal involving the French firm Ledger has given rise to an investigation. The catalyst was a series of wallet hacks that have cost users in excess of $86 million and the discovery of a spy module on the device capable of intercepting seed phrases, much to the consternation of the crypto community.

Massive Losses and Start of the Ledger Investigation

Reports from users of compromised hardware wallets put cumulative losses at over $86 million, setting in motion a wide-ranging inquiry into how Ledger manufactures its products and the security measures it implements. The magnitude of what has been lost is enough to put industry experts and the user base on edge, with demands for answers as to whether popular crypto storage can be trusted.

Spy Module Discovery and Manufacturer Oversight

The Incrypted podcast in its most recent episode details how the hacks have prompted official scrutiny and a round of audits from the community, leaving Ledger to contend with the need to be more transparent and win back confidence.

One development in the case was the identification by Mark Karpeles, ex-Mt. Gox chief, of a 2×2 mm spy module in the Nano X. It had been wired to the display’s data lines and would use its own cellular modem to transmit intercepted seed phrases to the hackers. Yet seven months prior to the thefts, Joe Grand, a hardware hacker, had warned Ledger developers about such backdoors; Incrypted notes that the company did nothing about it and the exploit was not discovered until the damage was done.

Ledger’s Response and Community Security Tips

To stem the crisis, Ledger has introduced the Ledger Atom, an Android device starting at $849 that is part isolated smartphone, part hardware wallet, aimed at better asset protection. Some are not convinced, given the price tag and the recent security issues.

For those wanting to be on the safe side while the Ledger matter is being investigated, ZachXBT of Onchain fame suggests on Incrypted the cold storage option of an old smartphone with no internet access. The podcast has also released a guide to turning these into offline vaults with AirGap technology.