A crypto investor has lost nearly $7 million after buying a discounted hardware wallet through Douyin, the Chinese version of TikTok—a decision that turned into a devastating security failure. Though the device appeared “factory sealed,” it was later discovered to contain a compromised private key embedded during manufacturing.
According to blockchain security firm SlowMist, the investor’s funds were drained within hours of transferring assets to the wallet. The incident was not a software breach but a hardware-level compromise—highlighting a growing threat in the self-custody ecosystem of crypto.
SlowMist’s Chief Information Security Officer warned against purchasing hardware wallets from unauthorized or third-party sellers, emphasizing that what seems like a bargain can be a deliberate trap.
Funds Laundered Through Huiwang’s Dark Financial Network
Details shared by a former Bitmain executive reveal that the stolen funds were rapidly funneled through Huiwang—a shadowy Cambodian financial group suspected of laundering crypto across darknet-linked platforms.
The information came via crypto X user Hella, a former associate of Bitmain co-founder Jihan Wu. In a post, Hella described the wallet as a “carefully designed hot trap” and disclosed that the victim, a personal friend, contacted him in distress after realizing the wallet had been tampered with.
Hella alleged the crypto was swiftly routed through Huiwang’s web of services, including Huione Pay PLC, an exchange known as Huione Crypto, and a lesser-known darknet marketplace called Haowang Guarantee. The network is believed to specialize in laundering stolen digital assets.
Recovery Unlikely as Experts Warn of Sophisticated Trap
Despite blockchain forensics efforts by SlowMist, the stolen funds are believed to be unrecoverable. The firm’s CISO, known online as 23pds, echoed the grim outlook, warning users that “you’re throwing your life away” by risking major holdings on budget hardware wallets.
23pds explained that many of these compromised devices are sold through seemingly legitimate online listings and third-party distributors. Often, the handlers themselves are unaware the devices are already loaded with malware that activates on first use—harvesting private keys in the background.
The danger isn’t limited to hardware wallets. In May, a Chinese printer manufacturer was found to have embedded crypto-stealing malware in its software drivers, leading to a $950,000 Bitcoin theft. And in April, cybersecurity firm Kaspersky uncovered counterfeit Android phones pre-installed with similar malware designed to extract crypto wallet data.
Quick Facts
- A Chinese crypto investor lost $6.9 million after buying a compromised hardware wallet through Douyin, the local version of TikTok.
- The wallet, though appearing sealed, was embedded with malware that allowed attackers to drain funds within hours.
- The stolen crypto was allegedly laundered through Huiwang, a Cambodian conglomerate linked to darknet markets and illicit financial services.
- Security experts warn against buying cold wallets from unauthorized sellers, noting a sharp rise in malware-laced hardware and fake devices.
