Scams Linked to Ledger Loss Reports, Not Device Tampering, Expert Says

Security expert Taylor Monahan has stated that recent reports of financial losses associated with Ledger hardware wallets are primarily the result of panic-driven scams rather than any tampering of the devices themselves. Speaking on the Unchained podcast, Monahan explained that scammers exploited a genuine supply-chain issue involving a limited number of Ledger devices to launch a phishing campaign targeting anxious users.

The panic originated from a supply-chain incident where certain Ledger devices sold through an authorized reseller, CryptoBilis, were found to contain unauthorized hardware implants. These implants could capture users' recovery phrases during device setup without altering the device's Secure Element, which protects private keys. Ledger confirmed that all verified cases of lost funds were linked to purchases from this specific reseller, and the estimated losses range between $70 million and $100 million, with on-chain figures suggesting a tighter range of $86 million to $93 million.

Monahan emphasized that the real threat came from social engineering tactics employed by scammers, who directed users to fraudulent websites where they unwittingly entered their 24-word recovery phrases. This highlights the importance of purchasing hardware wallets from reputable sources and being cautious about sharing sensitive information, especially in response to alarming news. Ledger has reiterated that it will never ask users for their recovery phrases and has advised those who purchased affected devices not to activate them.

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Source: KLEA News