Crypto hardware distributor CryptoBilis has recently faced a sales halt following allegations of selling modified hardware wallets embedded with spy chips. Corporate records show that the company was transferred earlier this year to a Chinese national registered as JIA MING, located in Wuchang, Heilongjiang. Around the same time, Tokyo resident Karpeles purchased a compromised Ledger device on Amazon Japan from a Chinese third-party merchant.
Hardware teardowns revealed that the modified units were secretly equipped with an LTE module, an eSIM, and an internal antenna. When an unsuspecting user initialized the device, the spy chip captured the mnemonic recovery phrase directly as it appeared on the screen and transmitted it back to the operators via cellular networks, allowing the perpetrators to remotely drain Bitcoin and Ethereum deposits.
Estimated losses have already surpassed 86 million dollars across hundreds of compromised wallets. Because many of these poisoned devices were distributed via major retail channels and may still be sitting unopened or waiting to be initialized by users, total damages could widen further.
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