Austin Campbell, founder of Zero Knowledge Group, said the wallet drains tied to Ledger devices sold through the reseller CryptoBilis pointed to “a big misunderstanding of information security in this space.”
Campbell said on the show, Bits + Bips, recorded Oct. 12, that many tools people use to guard their own keys “rely upon a bunch of things like vendors you cannot really do diligence, or devices that you can’t easily take apart and understand, and this is where people have got themselves into trouble.”
He offered a hypothetical: a hot wallet whose private key was written down, stored in a fully encrypted password manager and never used to send a transaction. He said “nothing’s been stolen” from a wallet set up that way. Campbell added that he did not agree with the popular view that a wallet is unsafe unless it sits in cold storage.
“When you’re an individual, you have limited time and limited ability to verify,” he said, adding that individuals “should actually be over-solving for simplicity” if they want to hold their own crypto.
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What Ledger Has Said
Ledger Support confirmed on Oct. 10 that one impacted user’s device carried an unauthorized hardware implant. In an Oct. 11 update, the company wrote that “the volume of impacted devices is limited” and that every confirmed case so far involved devices sold through CryptoBilis, its reseller in Southeast Asia. Ledger has not given a loss total.
Blockchain data firm Bitquery counted $102.0 million taken from 324 wallets on six chains as of Oct. 12, up from an earlier $93.2 million count that Unchained cited in its story on Ledger’s update. Bitquery also said Tether has frozen $10.0 million linked to the theft.
Perkins Sees a Role for Intermediaries
Co-host Chris Perkins, head of Franklin Crypto, drew a different lesson. “There’s no choice. You gotta use an intermediary,” he said, adding that holding personal wealth in decentralized finance is hard for anyone who is vulnerable.
“Intermediaries should not be necessary, but they may be wanted,” Perkins said. He described crypto as being at “max security vulnerability” right now and also said, “You can’t eliminate trust, sadly.”
Both hosts called for a broader response to hacks. Campbell said “right now the incentives for hacking are all one way,” and warned that “you end up in a world where the bad actors have maximum power” when a system is fully permissionless and traditional laws are hard to enforce.
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