2020 Ledger Security Breach Haunts Users as Scammers Send Fake Hardware Wallets

Ledger’s security breach in 2020 involving 272,000 personal information led to a series of events and the latest malicious act came through fake hardware wallets to steal the user’s crypto assets.

By
Chung Yee
on
June 18, 2021
Category:
Blockchain News

The Elaborate Plan 

The breach exploited approximately 1 million email addresses. The personal information of more than 272,000 people was also identified and obtained. This occured in 2020, Ledger, one of the leading hardware wallet manufacturers in the world, suffered a data breach.  This information involved the postal address, last name, first name, and telephone number of Ledger’s customers. 

The unfortunate incident in 2020 did not go away. The latest scam by the rogue criminals surfaced again in May 2021. The malefactors sent a fake device with authentic-looking packaging complete with Ledger’s logo. The box came shrink-wrapped to give it the appearance that it was not compromised.  

Source 

A Reddit post by user u/jjrand shared photos of what they received. The user said they created their profile just to warn users of the scam. The user’s account was created on June 16. The co-founder u/btchip was quick to respond with a stickied comment. The co-founder informed the commenters that the device was fake and to be wary of scams. U/bitchip also confirmed to those in the post that Ledger was already aware of this scam. 

An accompanying letter explained that the recipient must replace the existing hardware wallet as a mechanism to secure the funds. The instructions in the package required soldering additional hardware to a Ledger Nano wallet neatly packaged in a Ledger box. The letter, written in poor English, was also falsely signed by the CEO of Ledger, Pascal Gauthier. The horrible grammar alone should be a dead giveaway as a scam. 

Source 

Seizing the unwary recipient’s fear and desperation, the scammers exploited the situation. The instructions asked users to connect to the printed circuit board that contains a fake Ledger Live application. The instructions further require the user to connect the device to the computer, open the drive and run the fake application.  The illicit application then prompts users to enter their 24-word recovery phrase. 

Source 

The Key Takeaway

While it is difficult to blame the unsuspecting victims that merely reacted in fear of exploitation, they are the victims. Ledger reiterated a reminder to its customers that the 24-word recovery phrase should never be shared under any circumstances. 

Caution should be exercised at all times when investing in crypto. There will always be novel forms of phishing activities that scammers will devise.  Information of any incident that will compromise the safety of the funds will always come through the official channels of the manufacturer. When in doubt, verify any update through the protocol’s official channels.

Before this latest exploitation attempt, Ledger’s customers were confronted with other scams. Previous phishing campaigns included SIM-swap attacks. These SIM card attacks tricked the employees of the telecommunication providers into allowing the attacker to input the victim’s phone numbers to the attacker’s device. Other less sophisticated methods, such as threats of harm via email, have been reported. 

Data Breaches 

Data breaches are serious criminal offenses because of the potential harm that they can cause. In many countries, personal data leaks are often dealt with swiftly, especially when personal information is misused. Leaked information is related to the security of assets and requires the utmost attention and protection.

Ledger has taken several steps to remedy the situation and review its current operation and data storage to prevent future hacks. The hardware wallet manufacturer has started working with blockchain analytics firm Chainanalysis to hunt the hackers with a 10 BTC bounty for information leading to the hacker’s arrest.  


Stepping Up Security Protocols

Steps can be taken to address the scams that are taking place. But before discovering the scam, there has to be an interaction between the scammer and the victim. This leaves a gaping hole for exploitation.  It is paramount that companies like Ledger maintain a strict data security protocol that will prevent sensitive data from being compromised. The storage of private and confidential information of its customers is essential to trust. Thankfully Ledger seems to be on top of the exploits.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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