Written by: Web3 Farmer Frank

Imagine you're a patient holder, having weathered the prolonged bear market, finally withdrawing your hard-earned BTC from a CEX exchange into your newly purchased hardware wallet, feeling the peace of mind that your assets are firmly in your hands.

Two hours later, you open the app and find your wallet is completely empty.

This isn't a hypothetical, but a real-life incident that just happened: an investor purchased a hardware wallet on JD.com and deposited their 4.35 BTC. Little did they know, the device had already been pre-initialized by scammers, generating a mnemonic phrase, and containing a fake instruction manual, directing the user to follow a deceptive process to connect to the mobile app.

In other words, the moment the user activates the wallet, it already belongs to the hackers.

Unfortunately, this isn't an isolated incident. Recently, there have been numerous cases of people purchasing hardware wallets on e-commerce platforms like TikTok, JD.com, and Amazon, resulting in scams and even the loss of all their assets. A closer look at these recent security incidents reveals a sophisticated "hunting chain" quietly forming around the hardware wallet sales process.

1. The "Second-Hand" Gray Market Preying on Newbies

Hardware wallets, as devices that generate private keys in a completely offline environment, theoretically offer near-perfect security for daily use, as long as the seed phrase is properly backed up. This is also the common wisdom most Web3 users are exposed to.

However, the real risks often lie not in the device itself, but in the purchase and activation process.

Long-term marketing hype has led many investors to form a simple equation: "Hardware wallet = absolute security." This psychological stigma leads many to overlook several key prerequisites after receiving the device:

Whether the device packaging is intact and the seal is intact; whether the seed phrase must be generated by the user; and whether the activation information is verified as "first use"... As a result, many users rush to transfer assets into the hardware wallet upon receiving it, unknowingly giving scammers an opportunity to exploit.

Literally, "intermediary services" is broad enough. Hardware wallets, as tools for storing private keys, theoretically fall into a gray area where they are prohibited from sale. Therefore, platforms like Taobao, JD.com, and Pinduoduo have historically not supported searches for any "cryptocurrency-related" keywords.

However, this is completely different.

As of July 29th, I conducted direct keyword searches on Taobao, JD.com, Pinduoduo, and Douyin for five hardware wallet products: Ledger, Trezor, SafePal, OneKey, and imKey (imToken). The results showed fairly smooth buying and selling channels.

Douyin is the most comprehensive platform, with stores selling Ledger, Trezor, SafePal, OneKey, and imKey.

JD.com is the second most popular platform, where hardware wallets for Ledger, Trezor, SafePal, and OneKey can be found. The imKey store is likely to have been removed due to the security incident.

Taobao is relatively strict, with only one store selling imKey. Xiaohongshu lacks a direct store search, but secondhand private sales and purchasing agents are everywhere.

Undoubtedly, with the exception of a very small number of resellers, most of the above stores are small retailers operating through unofficial channels. They lack brand authorization and cannot guarantee the security of the device's circulation.

Objectively speaking, hardware wallet distributors exist globally, including brands like SafePal, OneKey, and imKey, which are popular in the Chinese-speaking world. Their sales systems are largely similar:

• Official Direct Purchase: Orders for various hardware wallet models can be placed on the official website;
• E-commerce Channels: Domestically, these channels typically use WeChat stores like Youzan, while overseas, they rely on official platforms like Amazon;
• Regional Distributors: Authorized distributors in various countries/regions provide users with localized purchasing channels and can verify authenticity on the official website. For example, SafePal offers a global distributor search page on its official website;

However, in the domestic e-commerce ecosystem, the vast majority of users still purchase through unofficial, unverifiable channels, creating a natural breeding ground for the "pre-installed mnemonic phrase trap" used by the gray market.

Many of these devices may be second-hand or third-hand, or even counterfeit. It's impossible to rule out the possibility that some devices are unsealed, initialized, and pre-installed with mnemonics during resale. Once the user activates the device, their funds will naturally flow directly into the scammer's wallet.

So, beyond the sales end, can users self-verify and protect the hardware devices they purchase to ensure all associated risks are eliminated?

II. User-side Vulnerabilities and the "Self-Verification" Mechanism

To put it bluntly, the reason these hardware wallet scams are so successful isn't because the devices themselves have technical flaws, but rather because the entire distribution and usage process exposes multiple exploitable vulnerabilities.

From the perspective of the domestic e-commerce and agent distribution chain, the main risks are concentrated in two areas:

• Used or Multi-handed Devices: Gray market operators will unpack and initialize used devices or those in circulation, pre-setting mnemonics or accounts. Once a user directly uses the device, their assets are transferred to the scammer's wallet.
• Fake or tampered devices: Fake devices may flow through unofficial channels, even with built-in backdoors. Users risk losing their entire balance after transferring their assets.

For Degen users already familiar with hardware wallets, these traps are largely harmless, as they naturally perform security verification during the purchase, initialization, and binding process. However, for first-time or inexperienced hardware wallet users, the risk of falling victim is significantly higher.

In this latest security incident, the scammers created a wallet in advance and then included a fake paper manual. They then instructed users to unpack and activate the used imKey using a fake process, allowing them to directly transfer their assets. Based on my conversations with relevant industry professionals, I have recently noticed a surge in instances of unpacked products being sold with fake manuals.

After all, many novice users often overlook product integrity (whether the packaging has been opened, whether the anti-counterfeiting sticker is damaged), forget to compare the package contents, and are unaware that "new/old" verification can be completed within the official app. If this information is properly verified, most scams can be immediately identified.

It can be said that the most critical factor in disrupting gray market attack chains is whether the hardware wallet's product design fully supports and proactively supports user-side self-verification.

Take SafePal's Bluetooth X1 hardware wallet as an example. Its user-side self-verification process is relatively complete:

• First-time Binding Reminder: When activating the hardware wallet and binding the app, a prompt will appear: "This device has been activated. Is this the person who is doing this?"
• Historical Activation Information Display: SafePal has reportedly... The relevant interface will also display the device's first activation time and whether it's the first time the device has been bound to the phone, helping users immediately determine whether the device is brand new or has been initialized by someone else.

In addition, based on my experience, both the SafePal S1 and S1 Pro, which use QR code interaction, and the SafePal X1, which uses Bluetooth for information exchange, allow users to view the corresponding hardware wallet's SN and historical activation time at any time after binding with the SafePal app (as shown below), further verifying the device's origin and usage status.

This is due to the fact that SafePal's hardware wallets program a SN into each device at the factory. The hardware fingerprint of the device is also associated with this SN and stored in the SafePal backend, further confirming the device's origin and usage status.

This means that the first time a user uses this hardware wallet, they must activate it before creating a wallet. During activation, the mobile app will send the hardware wallet's SN and fingerprint information to the SafePal backend for verification. Only if they match will the user be notified that the hardware wallet can continue to be used and the activation time will be recorded.

Subsequently, when another mobile device is linked to this hardware wallet, the user will be prompted that the hardware has already been activated and is not the first time it is used, and will be asked to confirm again.

Through these steps of verification, users can almost immediately detect second-hand or counterfeit devices, effectively cutting off the first stage of the gray market attack chain.

For first-time hardware wallet users, SafePal's visual and traceable verification mechanism is easier to understand and implement than simple instructions or text warnings, and is more effective in preventing fraud.

III. Hardware Wallet "Full Process" Security Manual

Overall, for first-time hardware wallet users, simply purchasing a hardware wallet doesn't guarantee their assets are secure.

On the contrary, hardware wallet security isn't a one-time purchase; it's a complex, integrated defense built through security awareness throughout the purchase, activation, and use phases. Oversight at any stage could create an opportunity for attackers.

1. Purchasing: Only use official channels

The security chain for hardware wallets begins with choosing a purchasing channel, so we recommend purchasing directly from the official website.

Once you choose to order through an e-commerce platform/livestreaming room, or purchase from a second-hand platform, such as Taobao, JD.com, or Douyin, you are exposing yourself to extremely high risks. No cold wallet brand will sell its products through Douyin livestreams or Kuaishou links; these channels are almost always the main base for shady businesses.

After receiving the goods, the first step is to inspect the packaging and anti-counterfeiting labels. If the packaging has been opened, the anti-counterfeiting sticker is damaged, or the inner packaging is abnormal, you should be immediately alert. It is best to check the packaging items item by item according to the checklist published on the official website to quickly eliminate some risks.

The more thorough you are at this stage, the lower your subsequent security costs will be.

2. Activation: Not Initializing Means "Giving Away Money"

Activation is the core security step for hardware wallets and is also the stage where shady businesses are most likely to set traps.

A common tactic is for shady businesses to pre-open the device, create a wallet, and enter a mnemonic phrase. They then insert a forged instruction manual, directing users to use this ready-made wallet directly, ultimately seizing any subsequent transferred assets. This was the case with the recent JD.com imKey scam.

Therefore, the primary principle of activation is to initialize the device and generate a new mnemonic phrase. During this process, products that can perform device status self-checks and verify past activations can significantly reduce the risk of passive exposure. For example, the aforementioned SafePal will indicate whether the device has been previously activated during initial binding, displaying historical activation times and binding information. This allows users to immediately identify anomalous devices and disrupt the attack chain.

3. Usage: Maintaining Mnemonic Phrase and Physical Isolation

In daily use, the core security of hardware wallets lies in mnemonic phrase management and physical isolation.

Mnemonic phrases must be written down and saved. Do not take photos or screenshots, and certainly not use WeChat, email, or cloud storage. Any online storage activity is equivalent to actively exposing the attack surface.

When signing or transacting, Bluetooth or USB connections should be used briefly and as needed. Scanning QR codes or offline data transfer should be preferred to avoid prolonged physical contact between the device and the network.

It can be said that hardware wallet security is never "infallible upon purchase." Instead, it's a defense built by users through three key stages: purchase, activation, and use:

• Avoid second-hand and unofficial purchases;
• Initialize and verify the device's status during activation;
• Protect the mnemonic phrase during use and avoid long-term online exposure;

From this perspective, hardware wallet manufacturers urgently need to design a "full-process" user-friendly, verifiable mechanism like SafePal, which displays initial activation prompts, activation dates, and binding information. This will truly neutralize the predatory chain that the gray market relies on for survival.

Final Note

Hardware wallets are valuable tools, but they are never a definitive, all-around protection.

On the one hand, major hardware wallet manufacturers need to be constantly aware of market changes, especially targeting the "hunting chain" that novice users are prone to. They should build more intuitive and user-friendly verification mechanisms into their product design and usage processes, allowing every user to easily determine the authenticity and security of their device.

On the other hand, users themselves must also cultivate good security habits. From formal purchase to initial activation and daily management of mnemonics, every step must be taken seriously, fostering a strong sense of security throughout the entire lifecycle.

Only when the wallet's verification mechanism and user security awareness form a closed loop can hardware wallets move closer to achieving "absolute security."