coindesk.com
Covert hardware implanted in some Ledger crypto wallet devices sold by Southeast Asian reseller CryptoBilis read users’ 24-word recovery phrases from the gadget screen and sent them to an attacker over a mobile phone network, Ledger said Tuesday in an investigation update on X.
Ledger said the spy chip sat inside the device enclosure. When a user set up the signer and the screen displayed the recovery phrase, the implant’s microcontroller recognized and decoded the words, then transmitted them over LTE, a data transmission technology used by cellphones, utilizing an eSIM.
The recovery phrase is the master key to a crypto wallet. Anyone who has it can recreate the wallet elsewhere and move the funds without needing the physical Ledger device or changing any transactions on it.
The account is the first public explanation of the mechanism behind the CryptoBilis-linked thefts. Ledger said the implant did not modify the device’s secure Element, the chip designed to protect private keys, or its operating system. It also did not alter transactions or signatures. The incident was a physical supply chain attack rather than a breach of Ledger’s software or internal systems.
Ledger said it had confirmed one affected signer contained an unauthorized implant and that every confirmed loss in the Oct. 9 incident involved a device sold by CryptBilis. It said it had not verified a theft involving a signer purchased elsewhere and was examining reports of implants in other devices and locations.
The French company has not confirmed the total number of victims or the value stolen. Onchain researchers, however, estimated the losses were up to $93.2 million across more than 300 wallets, with Tether freezing $10 million of its dollar-pegged stablecoin USDT tied to the theft.
CryptoBilis has stopped selling Ledger signers, according to Ledger. The company told customers who bought one from the reseller not to initialize it. Customers who have already used one should move assets to a new device with a newly generated recovery phrase, it said.
