Case files: real failures, real lessons

Beginner Intermediate

People learn most from other people's mistakes. This page now covers 69 documented incidents and legal developments (20 added on 24 October 2026). Each case links to the original reporting or disclosure so you can read the evidence yourself.

Weak randomness

Milk Sad (bx seed, CVE-2023-39910)

2023

32-bit time-seeded Mersenne Twister in Libbitcoin Explorer; wallets drained.

milksad.info

Generate seeds on dedicated hardware; distrust CLI tools and libraries unless audited.

Trust Wallet browser extension (CVE-2023-31290)

2022–2023

Only ~4 billion possible seeds; exploited before and after disclosure.

Ledger Donjon

After any entropy bug: new seed, move funds.

Randstorm (BitcoinJS 2011–2015)

Disclosed 2023

Browser-generated wallets from that era may be crackable.

Unciphered

Sweep old web/paper wallets into modern hardware seeds.

Profanity vanity addresses — Wintermute

2022 · ~$160m

1inch · Reuters

Never use vanity/novelty key generators.

Brain wallets cracked

2015

Castellucci, DEF CON 23

Never derive keys from memorable phrases.

COLDCARD firmware weak RNG (2021–2026)

Disclosed 30 July 2026 · funds stolen

What happened: A build error made affected COLDCARD firmware generate seeds from a non-cryptographic software generator instead of the hardware TRNG (about 40 bits effective on Mk2/Mk3, about 72 bits on Mk4/Q/Mk5, by Coinkite's estimate). Attackers regenerated seeds offline. Seeds with at least 50 private dice rolls added were, per Coinkite, not at risk from this bug alone.

What failed: A single maker's RNG path, unnoticed in published code for five years.

Coinkite advisory · Block Engineering

Mix your own dice into device entropy for large sums, use vendor diversity in multisig, and replace (not just update) any seed covered by an entropy advisory. See full case note.

Cake Wallet weak Bitcoin seeds

2020–2021 · analysed 2024

What happened: Affected versions used a non-secure generator for Bitcoin wallets; the vendor told users to migrate in May 2021. Researchers later showed the wallets could be recomputed quickly and found funds still in them years afterwards.

What failed: A general-purpose PRNG, and users who never migrated.

Milk Sad update #9 · update #10

Act on entropy advisories: new seed, move funds.

Trust Wallet iOS (CVE-2024-23660)

2018 · disclosed 2024

What happened: Early iOS builds used test-only random functions with a small, time-seeded state; researchers linked them to the July 2023 thefts.

Milk Sad update #5 · NVD

Retire old wallets from apps with entropy advisories.

Android SecureRandom flaw

August 2013

What happened: Improperly initialised randomness on Android led to repeated signature nonces, exposing private keys in Bitcoin wallet apps.

Bitcoin.org alert · Android Developers Blog

Randomness matters at signing time too; sign on dedicated hardware.

Blockchain.info repeated R-values

December 2014

What happened: A randomness fault in the web wallet produced signatures from which private keys could be computed; a white-hat swept about 255 BTC from 1,019 exposed addresses before thieves could.

Finance Magnates

Browser wallets have many places for randomness to fail; keep savings on hardware.

Debian OpenSSL predictable keys (CVE-2008-0166)

2006–2008 · general computing

What happened: A packaging change removed most entropy from Debian's OpenSSL, making keys from nearly two years enumerable.

Debian DSA-1571-1 · CERT/CC

Patching does not fix keys already made; they must be regenerated.

Ethercombing: guessable Ethereum keys and a "blockchain bandit" (2019)

2019 · Independent Security Evaluators

732 private keys in predictable parts of the key space had been used in 49,060 transactions; an automated "bandit" account held 37,926 ETH (about $54m) in January 2018, and test funds were swept within seconds.

ISE paper · Wired

Weak keys are hunted automatically. Generate keys only on audited, dedicated devices. See the full case note.

Biased signature nonces: hundreds of Bitcoin keys computed (2019)

2019 · academic research

Partly predictable ECDSA nonces let researchers compute hundreds of Bitcoin private keys from public signatures using lattice attacks.

Breitner & Heninger, IACR ePrint 2019/023

Randomness matters at signing time too. Sign on dedicated hardware with deterministic or anti-exfil nonces. See the full case note.

Vendor & supply-chain incidents

Ledger customer data breach

2020

~1m emails and ~272,000 names/addresses leaked; years of phishing followed. No seeds or funds were exposed by the breach itself.

Ledger · FAQ

Your purchase data is a target — use privacy-preserving delivery and expect phishing.

Ledger Recover controversy

May 2023

Announcement that firmware could export encrypted seed shards to third parties provoked a backlash and launch delay.

CoinDesk · The Block

Understand what your device's firmware could do; vendor diversity and multisig reduce reliance on any one maker.

Ledger Connect Kit supply-chain attack

December 2023

A phished ex-employee's NPM access let attackers inject a wallet drainer into many dApps.

Ledger report · Revoke.cash

Hardware wallets don't protect you from signing a malicious transaction — read what you sign.

Trust Wallet browser extension 2.68: a backdoored official update

24–26 December 2025 · worldwide

What happened: On 24 December 2025 a malicious version 2.68 of the Trust Wallet Chrome extension was published to the Chrome Web Store outside Trust Wallet's normal release process. It collected wallet data from users who opened and logged in to it between 24 and 26 December, and attackers drained the wallets. Trust Wallet identified 2,520 affected addresses and about $8.5m in assets linked to 17 attacker addresses, said it would reimburse victims, and told users to update to version 2.69. It linked the attack to the "Sha1-Hulud" npm supply-chain worm of November 2025, which it believes exposed its source code and Chrome Web Store API key. The mobile app was not affected.

What failed: The official update channel itself: a build pushed automatically to users' browsers with a leaked publishing key.

Trust Wallet incident update · SecurityWeek

Browser wallets can change overnight without you doing anything. Keep only spending money in them and use a hardware wallet for savings. After an incident, move funds to a new seed. Beware fake "reimbursement" sites: Trust Wallet received over 5,000 claims for 2,520 affected addresses. See supply chain and the directory entry.

Counterfeit Trezor with pre-generated seeds

Published May 2023 (attack over a year earlier, per Trezor)

What happened: A "Model T" bought through a classifieds website had a replacement chip with read protection off and modified firmware. It handed out one of 20 pre-generated seeds and reduced any passphrase to its first character, leaving about 1,280 combinations. Funds were taken a month after the first deposit.

What failed: An unofficial seller; intact holographic stickers gave false comfort.

Kaspersky

Buy direct from the manufacturer.

Physical seed extraction from Trezor One/Model T

January 2020

Kraken Security Labs

A passphrase protects against physical device theft on chips without secure elements.

Trezor support-portal breach used for seed phishing

January 2024

What happened: Unauthorised access to Trezor's third-party support ticketing system exposed names and emails of up to 66,000 people who had contacted support since December 2021. The attacker emailed 41 users asking for their recovery seeds, claiming they were needed for firmware validation (BleepingComputer); Trezor said no seeds were disclosed.

What failed: A supplier's system, not the devices.

Trezor · BleepingComputer

Any request for your words is phishing, even if it comes from a real support address.

Locked-out owner recovers a Trezor via a firmware flaw

2017 · about $30,000

What happened: Journalist Mark Frauenfelder forgot the PIN to a Trezor holding bitcoin. Saleem Rashid, then 15, used a firmware-update weakness to read the PIN and key from memory. Trezor fixed the flaw in 2017.

Wired

Back up the seed properly; a device is not a backup. Physical attacks work for owners and thieves alike.

wallet.fail at 35C3

December 2018

What happened: Researchers demonstrated glitching attacks on Trezor's STM32 chip and a bootloader bypass on the Ledger Nano S's non-secure microcontroller. Ledger responded that the secure element kept the seed and PIN out of reach; both makers issued firmware updates.

35C3 talk · Ledger response

Update firmware; buy direct so the device in your hands is the one the maker built.

Hardware hacker recovers about $2m from a Trezor One

January 2022

What happened: Joe Grand glitched an old-firmware Trezor One to recover the forgotten PIN and seed for an owner who had lost access. Trezor called it an outdated exploit fixed in 2017, though the chip weakness remains.

The Verge · Decrypt

On chips without a secure element, a strong passphrase is what stops a thief with lab tools.

Ledger Donjon bypasses Trezor Safe 3 authenticity checks

Reported November 2024 · published March 2025

What happened: Using voltage glitching on a disassembled device, Donjon bypassed the Safe 3's authenticity and firmware hash checks — a supply-chain risk. No PIN or private key was extracted; the issue cannot be fixed by firmware and Safe 5 was not affected.

Trezor · Ledger Donjon

Buying from official sources is a real security control, not just advice.

Laser fault injection on Trezor Safe 7's TROPIC01 chip

June 2026

What happened: Ledger Donjon used a lab laser on a decapsulated TROPIC01 to run unsigned firmware on the chip. Trezor says this removes one of three layers protecting the PIN, cannot create persistent tampered devices and needs no owner action; Tropic Square plans a hardware fix.

Ledger Donjon · Trezor

Layered designs limit the damage when one chip falls; a strong PIN or passphrase adds margin.

Bybit / Safe{Wallet} — ~$1.5bn

February 2025

A compromised developer machine let attackers alter the Safe{Wallet} interface so multisig signers approved a malicious transaction. Attributed by the FBI to North Korea.

FBI · Sygnia

Multisig only helps if each signer independently verifies what they sign on trusted hardware.

Slope wallet logged seeds

August 2022 · ~9,000 wallets drained

Slope forensic report

Hot wallet software can leak seeds; keep savings on hardware.

iCloud backups of MetaMask vaults

2022

BleepingComputer

Disable cloud backup for wallet apps; never store seeds digitally.

Loss: passwords, people, fire and water

Two guesses left on an IronKey

2021

A programmer reported having two password attempts left on an encrypted drive holding keys to 7,002 BTC.

New York Times · BBC

Memorised or single-copy secrets fail; use standard, tested, written backups.

QuadrigaCX

2018–2020

After the founder's death, access was initially blamed on lost keys; the OSC found most of the shortfall stemmed from fraud.

OSC report

One person controlling keys is a single point of failure — for businesses and families alike.

Fires and floods

Various

Owners report paper seeds lost to floods and fires; in one well-known post, a device survived a house fire that destroyed the paper backup.

Flood · Fire · Fire (device + paper)

Use metal, and keep copies in separate locations.

Lost passphrases

Ongoing

Wallet-maker forums regularly feature users who cannot reproduce a BIP39 passphrase (capitalisation, spaces, keyboard layout).

r/TREZOR · r/ledgerwallet

Back the passphrase up on durable media; record a fingerprint/first address to confirm.

Wrench attacks

Ongoing

Lopp's physical attack list

Privacy, geographic separation and multisig reduce the payoff of coercion.

Digital copies of seeds

SparkCat: apps that read seed phrases from your photos

2025 · App Store and Google Play

What happened: Kaspersky found malicious code in apps on both official stores. The apps asked for photo-gallery access, used on-device text recognition (OCR) to find screenshots containing recovery-phrase keywords, and uploaded them. Infected Google Play apps had over 242,000 downloads before removal.

What failed: A screenshot or photo of a seed phrase, usually taken 'just for now', sat in the camera roll.

Kaspersky Securelist · BleepingComputer

Never photograph or screenshot a seed. If you ever did, treat that seed as exposed: create a new one and move the funds.

LastPass vault breach linked to wallet drains

Breach 2022 · thefts 2023–2025

What happened: Attackers stole encrypted LastPass vault backups in 2022. Researchers then linked a string of thefts (over $35m by 2023) to victims who had stored seed phrases in those vaults; in 2025 US federal investigators tied a ~$150m theft to the same pattern. LastPass said it had no conclusive evidence of a link.

What failed: Seed phrases were stored in a cloud password manager. Encryption bought time, but weaker master passwords could be cracked offline.

Krebs on Security (2023) · Krebs on Security (2025)

A password manager is the right place for passwords, not seed phrases. Keep seeds offline on paper or metal.

Atomic Wallet: more than $100m drained

June 2023

What happened: Over 5,000 users of the Atomic Wallet software wallet were drained in one campaign that Elliptic and the FBI attributed to North Korea's Lazarus Group. The root cause has not been fully disclosed.

What failed: Large balances were held in a hot, closed-source software wallet.

Elliptic · FBI

Keep only spending money in hot wallets; move savings to a hardware wallet or multisig you control.

A Bitcoin Core developer's coins taken after his computers were compromised

November 2022 – January 2023 · United States

What happened: On 1 January 2023 Luke Dashjr, a long-time Bitcoin Core contributor, said his bitcoin — roughly $3.6m — was "basically all gone", that his PGP key had been compromised and that all his computers were compromised. He said the affected wallets included hot wallets and ones he believed were cold. In November 2022 he had reported that someone had accessed his Linux server. Analysts later described three Linux backdoors from the attack; how the attackers first got in was not confirmed.

What failed: Keys that were on, or reachable from, computers the attackers controlled — even for an expert.

Ars Technica · Magnet Forensics analysis

Keep keys on dedicated signing devices, not general-purpose computers. With multisig across different devices, one compromised machine is not enough. See hot vs cold.

Phishing, fake devices and social engineering

Tampered 'replacement' Ledger devices sent by post

2021

What happened: Using addresses from the 2020 Ledger data leak, criminals posted modified Nano X devices with a fake letter from Ledger's CEO saying a replacement was needed. A hidden USB flash drive inside prompted users to install malware and enter their 24 words.

What failed: The victim trusted an unsolicited device and typed a seed into a computer.

BleepingComputer · Kraken Security Labs

No genuine company sends unrequested devices or asks you to type your recovery phrase on a computer.

Electrum fake-update phishing

Dec 2018 – 2019

What happened: Attackers ran malicious Electrum servers that showed fake 'please update' error messages when users broadcast transactions. The 'update' was malware; reports put losses above 770 BTC.

What failed: Users followed an in-app link instead of downloading only from the official site.

Malwarebytes Labs · Schneier on Security

Install and update wallets only from the official site or repository, and verify signatures where provided.

Coinbase support-agent data theft

Disclosed May 2025

What happened: Criminals bribed overseas support contractors to copy customer data (names, addresses, partial ID numbers, balances) for about 69,000 users, then phoned victims posing as Coinbase. Coinbase said no passwords or private keys were taken and estimated costs of $180m–$400m.

What failed: Leaked personal data made the impersonation calls convincing.

Coinbase SEC filing · Reuters

Assume scammers know your name, address and balance. Hang up and contact the company through its official app or site.

Address poisoning: $68m sent to a look-alike address

May 2024

What happened: A victim copied a recipient address from transaction history that an attacker had 'poisoned' with a look-alike, and sent 1,155 WBTC (about $68m). Unusually, after negotiations the attacker returned nearly all of it.

What failed: Only the first and last few characters of the address were checked.

Chainalysis · Cointelegraph

Check the whole address on your hardware wallet's screen, send a test amount first for large sums, and never copy addresses from history.

Printed letters asking Ledger and Trezor owners for their recovery phrase

From April 2025 · by post

What happened: In April 2025 Ledger confirmed that letters bearing its logo, which told owners to complete a "mandatory wallet validation" by scanning a QR code and entering their 24-word recovery phrase, were a scam. BleepingComputer later reported similar Trezor- and Ledger-themed letters, including a Ledger "Transaction Check" letter with a 15 October 2025 deadline, leading to phishing pages that ask for a 12-, 20- or 24-word phrase. Ledger says it almost never sends physical mail and will never ask for the phrase. The person who posted the April letter suspected the addresses came from Ledger's 2020 customer-data leak; Ledger did not confirm this.

What failed: An official-looking letter, a deadline and a QR code moved the victim from paper to a phishing site.

Ledger: physical mail phishing · BleepingComputer · The Block (April 2025)

No genuine company will ever ask for your recovery phrase — by post, phone, email or website. Do not scan the code; check with the maker through its official site. See a quick check before you act and the Ledger data leak.

A second-hand Ledger that came with the seller's recovery phrase

January 2018 · bought on eBay

What happened: A Reddit user bought a Ledger Nano second-hand on eBay. The seller had supplied a recovery phrase of his own instead of letting the device generate one. The buyer used it, and about a week later found his XRP, Litecoin and Dash — over £25,000 by his account — had been moved out. Ledger warns that a genuine device creates its recovery phrase during set-up and never arrives with one pre-filled.

What failed: A marketplace purchase and a recovery phrase the buyer did not create himself.

Cointelegraph · Ledger: pre-seeded device scams · Ledger: second-hand device warning

Buy from the maker or an authorised reseller. If any recovery phrase comes in the box, do not use it: reset the device and let it generate a new one. See set-up checklist.

Inferno Drainer: phishing sites that only needed you to click "approve"

November 2022 – November 2023 · worldwide

What happened: Group-IB describes Inferno Drainer as a "scam-as-a-service" used on more than 16,000 phishing domains that copied over 100 crypto brands, often promising free airdrops or compensation. Victims connected their wallets and approved transactions that sent their assets to criminals; the developers took 20% and the affiliates who brought victims 80%. ScamSniffer estimated at least $80m was stolen. The operators announced a shutdown in November 2023.

What failed: Victims signed transactions on sites they reached through social media. No seed phrase was needed.

Group-IB

A hardware wallet protects your seed, not your judgement. Read every approval on the device screen, ignore "claim" links in social media, and use a separate low-value wallet for experiments. See what a hardware wallet does not protect against.

$230m+ taken from one person by fake Google and Gemini "support" (ringleader pleaded guilty)

August 2024 · charges filed September 2024 · guilty plea 8 September 2026 · United States

What happened: Prosecutors allege that on 18–19 August 2024 a group contacted a creditor of the failed lender Genesis in Washington, D.C., posing as Google and Gemini support staff, persuaded him to reset two-factor authentication and obtained the means to move over 4,100 BTC (then worth over $230m). Investigators traced the coins through mixers and exchanges; about $9m was frozen and $500,000 returned within weeks, according to CoinDesk. Malone Lam and Jeandiel Serrano were arrested in September 2024; a superseding indictment in April 2025 added further defendants. Update: on 8 September 2026 Malone Lam pleaded guilty in the US District Court for the District of Columbia to one count of RICO conspiracy. According to the Department of Justice, the enterprise stole and laundered more than $245m through social engineering and occasional home break-ins between October 2023 and May 2025; a status hearing was set for 8 December 2026. Charges against other defendants remain allegations unless and until proven; check the court docket for the current position.

What is alleged to have failed: A convincing support call led the victim to change his own security settings and hand over access.

Indictment, US v. Lam (D.D.C.) · CourtListener docket 1:24-cr-00417 · DOJ: guilty plea (8 September 2026) · CoinDesk

Hang up on unexpected "support" calls and contact the company through its official site yourself. Large holdings belong in self-custody that a phone call cannot unlock, ideally multisig. See fake support.

Fake "crypto recovery" law firms target people who have already lost money

FBI warnings: August 2023, June 2024, August 2025 · United States

What happened: The FBI has repeatedly warned that people posing as lawyers contact crypto scam victims, claim to work with the FBI, the CFPB or other agencies, and ask for identity documents, bank details and upfront "fees" or "back taxes" to recover the money. Between February 2023 and February 2024, victims reported losses of over $9.9m to these fictitious firms. The August 2025 update added red flags: invented regulators, knowing the exact amounts of earlier losses, WhatsApp "secrecy" groups, and fake foreign bank sites.

What failed: Victims trusted someone who appeared to offer an official route back to their money.

FBI/IC3 PSA I-062424 (June 2024) · FBI/IC3 PSA I-081325 (August 2025)

Law enforcement does not charge fees to recover funds, and no law firm is an official partner of US agencies. Report losses to the police (UK: Report Fraud in England, Wales and Northern Ireland, or Police Scotland; US: IC3) and ignore unsolicited recovery offers. See recovery scams.

Physical coercion

Kidnapping of Ledger co-founder David Balland

January 2025 · France

What happened: Balland and his partner were kidnapped from their home; the kidnappers demanded crypto and mutilated his hand. Police freed both. French police investigated a series of similar crypto-related kidnappings during 2025.

What failed: Publicly known wealth and a known home address.

Reuters · TRM Labs on wrench attacks

Keep holdings private and limit what any one person can be forced to move: multisig with geographically separate keys, time delays, and modest hot balances.

Greater Manchester gang jailed for kidnapping a man for his crypto

January–December 2023 · sentenced 30 January 2025 · England

What happened: Between January and November 2023 a gang repeatedly held a vulnerable man against his will, attacked him with weapons including machetes and a pistol, drugged him with morphine and demanded cryptocurrency. He told police he had paid them more than £100,000 and that they had visited his home and threatened him. Officers found him at an address in Irlam on 2 December after an anonymous tip-off; DNA on cigarette ends and phone data linked the men to the scene. At Manchester Crown Court seven men received sentences totalling more than 75 years, two of them 20 years each.

What failed: The attackers knew he held crypto and where he lived, and he alone could move it when threatened.

BBC News · Manchester Evening News

Keep holdings private, and arrange things so that you cannot move everything on the spot: multisig with keys in other places, time delays and small hot balances. Report threats to the police early (999 in an emergency). See coercion and the coercion scenario.

Manhattan townhouse kidnapping over a bitcoin password (charges pending)

May 2025 · no verdict reported as of October 2026 · United States

What happened: Prosecutors allege that two crypto investors, John Woeltz and William Duplessie, held a 28-year-old Italian man in a SoHo townhouse from 6 May 2025 and assaulted him repeatedly over about 17 days to get his bitcoin password. He escaped on 23 May and asked a traffic officer for help. Both men were indicted on charges including kidnapping and assault and pleaded not guilty; their lawyers dispute the prosecution's account. In January 2026 the judge refused to dismiss the indictments and ordered hearings on how evidence was obtained.

What is alleged: According to prosecutors, the accused and the alleged victim knew each other through crypto investing. These are allegations, not findings.

Reuters (June 2025) · ABC News · LA Magazine (January 2026)

Coercion often comes from people who know what you hold. Do not let any single password or device unlock everything; keep keys in separate places and tell fewer people. See coercion.

Paris abductions targeting crypto entrepreneurs' families

May 2025 · France

What happened: On 1 May 2025 the father of a crypto entrepreneur was forced into a van on a Paris street and held for about two days in a house south of the city; the kidnappers severed one of his fingers and sent video to his son while demanding a ransom of millions of euros. Police freed him and arrested seven suspects. On 13 May a masked gang tried to snatch the daughter of Pierre Noizat, chief executive of the French exchange Paymium, in broad daylight; passers-by fought them off. Reuters counted at least three such attacks in France in a few months, including the January kidnapping of Ledger co-founder David Balland.

What failed: Attackers targeted relatives, not the holders themselves, because the family's wealth was publicly associated with crypto.

Reuters (16 May 2025) · Reuters (14 May 2025) · AP News · CNN

Your family can be your attack surface. Keep holdings and addresses private, ask relatives not to talk about them, and set things up so that no single person can move large amounts quickly. See coercion.

Home-invasion crew used email hacking and surveillance to pick targets

2022–2023 · sentenced September 2024 · United States

What happened: A crew led by Remy Ra St Felix stole more than $3.5m through SIM swapping and violent home invasions in Florida, Texas and North Carolina, holding victims at gunpoint and binding them with cable ties. In Durham, North Carolina, accomplices first broke into the couple's email account and watched the house for several days; during the invasion the man was forced to open his computer and exchange account, and over $150,000 in crypto was taken remotely. St Felix was arrested on his way to another home invasion on Long Island. A federal jury convicted him in June 2024 and he was sentenced to 47 years; 12 men were sentenced in total.

What failed: Phone numbers and email accounts gave the crew both the information to choose targets and the access to drain exchange accounts.

US Department of Justice (13 September 2024) · ABC11

Secure the email and phone number behind your accounts (no SMS recovery where you can avoid it), keep exchange balances small, and keep savings in a setup you cannot fully unlock on the spot. See coercion and fake support.

Custodians and exchanges

QuadrigaCX: the founder died — but that was not the main loss

Founder died December 2018 · platform collapsed February 2019 · OSC staff report June 2020 · Canada

What happened: On 14 January 2019 the Canadian crypto exchange QuadrigaCX announced that its co-founder and chief executive, Gerald Cotten, had died in India the previous month. By 5 February it had stopped operating and sought creditor protection, owing over 76,000 clients a combined C$215m; the bankruptcy trustee recovered or identified only C$46m. It was widely assumed that most of the loss came from keys lost with Cotten. Ontario Securities Commission staff concluded otherwise: most of the C$169m shortfall came from his fraud — about C$115m from trading against clients with fictitious balances under aliases, covered with other clients' deposits, "in effect, operating a Ponzi scheme" — and he also misappropriated client assets.

What failed: One person controlled client assets with no oversight or internal controls, and there were no proper financial records.

OSC staff review (June 2020) · OSC news release (staff views, not findings of a tribunal or court)

A platform is not an estate plan, and "the keys died with him" can hide a different story. For your own holdings, avoid a single key-holder and leave a tested recovery path. See cross-border pitfalls and single points of failure.

Mt. Gox: a decade to repay

Collapse 2014 · repayments from 2024

What happened: The then-largest bitcoin exchange collapsed after losing hundreds of thousands of BTC. Creditors began receiving partial repayments only in July 2024.

What failed: Customers held claims on an exchange, not their own keys.

CNBC

Exchanges are for trading, not long-term storage.

Celsius: "Earn" deposits ruled the company's property

Bankruptcy July 2022 · ruling 4 January 2023

What happened: The crypto lender Celsius filed for bankruptcy in July 2022. Judge Martin Glenn held that, under Celsius's terms of use, crypto deposited in its interest-paying Earn accounts — about 600,000 accounts worth about $4.2 billion on 10 July 2022 — became Celsius's property and so part of the bankruptcy estate, leaving account holders as unsecured creditors (some defences were reserved for later). The FCA cites Celsius as owing users $4.7 billion when it filed.

What failed: Users had handed legal title to the platform in exchange for yield, often without realising it.

US Bankruptcy Court (S.D.N.Y.) · TechCrunch · FCA

Read who owns the assets in the terms, especially for yield products. See custodial accounts compared.

Voyager's false "FDIC insured" claims

Bankruptcy July 2022 · FTC action October 2023

What happened: The US Federal Trade Commission says Voyager Digital told people that money deposited through its app was FDIC-insured. It was never an insured bank and FDIC insurance does not cover crypto; when Voyager failed, customers were locked out and lost money. Under a proposed settlement the companies agreed to a permanent ban on offering products that could be used to deposit, exchange, invest or withdraw assets.

FTC · FDIC fact sheet

Deposit insurance covers bank deposits, not crypto held by a company. See UK vs USA protections.

FTX bankruptcy

November 2022

What happened: Customer assets were commingled and misused, and withdrawals stopped within days. A plan approved in October 2024 repaid most customers in cash based on November 2022 values, so they missed later price rises.

What failed: Customers had concentrated their trust in an offshore custodian.

Reuters

If you use a custodian, prefer regulated, segregated, audited custody and understand what happens in insolvency.

More loss stories

James Howells: a hard drive in a landfill

Lost 2013 · court rulings 2025

What happened: A Welsh IT worker says a hard drive holding the key to about 8,000 BTC went to Newport landfill. In January 2025 the High Court struck out his claim against the council, the Court of Appeal refused permission to appeal, and by August 2025 he said he had given up.

What failed: There was a single copy on one electronic device, with no paper or metal backup.

High Court judgment (BAILII) · BBC

Electronics are not backups. Keep at least two offline copies of the seed in separate places.

Mircea Popescu: a fortune possibly lost on death

June 2021

What happened: The early bitcoin investor drowned in Costa Rica. Press reports speculated that his (unverified) holdings may never move, because it was unclear whether anyone had his keys.

What failed: There was no known inheritance plan.

Business Insider · BBC Mundo

An inheritance plan does not mean sharing keys today. It means a letter of instruction, a capable executor and a tested recovery path; see our templates.

Matthew Mellon: crypto missing from the will

Died April 2018 · estate debts settled January 2021 · United States

What happened: The banking heir died holding XRP valued in court documents at roughly $193m, about 97% of his estate. His outdated will did not mention it, and he reportedly kept keys on devices under other people's names in several places. His estate's lawyers got control through Ripple, an option most coins do not offer. A pre-death agreement limited daily sales, the value swung around 30% within weeks, and the estate paid about $60m in federal estate tax in late 2020.

What failed: An outdated will, undocumented key locations, no cash for tax, and a lock-up agreement.

Daily Dot (court records, 2021)

Keep the will current, document where keys and agreements are, and plan how tax will be paid in cash. See the US estate guide.

Clifton Collins: wallet codes hidden in a fishing-rod case

Lost 2017 · reported 2020 · partial recovery 2026 · Ireland

What happened: Collins, who was jailed for growing cannabis, bought bitcoin in 2011–2012. In 2017 he moved about 6,000 BTC into 12 wallets of 500 each, printed the codes on a single sheet of A4 paper and hid it in the aluminium cap of a fishing-rod case at a rented house in Co Galway. After his arrest the house was broken into and cleared on behalf of the landlord; items went to a dump and the case was never found. The Criminal Assets Bureau seized the wallets but could not open them (Irish Times, February 2020). In 2026 the bureau, with help from Europol's cybercrime centre, recovered three batches of 500 BTC by July; The Block reported about 4,500 BTC still in nine untouched wallets.

What failed: One paper copy, hidden where nobody else knew to look, in a property he did not control.

Irish Times (2020) · Irish Times (2024) · The Block (July 2026)

Hiding is not a backup. Keep at least two copies in separate places, and make sure someone you trust knows the item matters. The partial recovery relied on police and Europol resources that an ordinary family cannot count on. See geographic separation.

A family who had to give up on a relative's bitcoin

Reported January 2020 · United Kingdom

What happened: A wills, trusts and estates lawyer at Harrison Clark Rickerbys told BBC News that his firm had a case in which a client's family believed, after his death, that he had owned bitcoin, but had to drop it because they did not have the information to access it. He said about two in ten of his clients then held crypto, and that clients are reluctant to give access details to their lawyers.

What failed: Nobody had a record of what existed or how to reach it.

BBC News

You do not need to hand anyone your seed. A letter of instruction and an inventory that say what exists, where the backups are and who to contact are enough to stop it vanishing. See the letter of instruction and UK estate guide.

A lost wallet password recovered because its generator was predictable

Password made 2013 · recovered November 2023 · reported May 2024

What happened: A European owner (called "Michael" by WIRED) protected a software wallet holding 43.6 BTC with a 20-character password made by the RoboForm password manager. He kept it only in a TrueCrypt-encrypted file, which became corrupted. Hardware hacker Joe Grand and a colleague found that the RoboForm version he used, and later versions until 2015, based "random" passwords on the computer's clock. By making the program believe it was 2013 again they regenerated the password, created on 15 May 2013 at 16:10:40 GMT. RoboForm's maker told WIRED the issue was fixed in version 7.9.14 (10 June 2015).

What failed: The only copy of the password was in one encrypted file, and the password generator was predictable.

WIRED · Grand Idea Studio: technical notes

A recovery that depends on someone else's flaw is luck, not a plan. Keep an offline copy of any wallet password, and use generators you can check. See sources of randomness to avoid.

Parity multisig library: 513,774 ETH frozen by one shared contract

6 November 2017 · Ethereum

What happened: Hundreds of Parity multisig wallets relied on one shared library contract for their logic. A user who found that the library itself had never been initialised made himself its owner and then triggered its self-destruct function. Parity's post-mortem says 587 wallets holding 513,774.16 ETH became frozen: not stolen, but impossible to move. A proposal to restore the code by changing Ethereum (EIP-999) did not gain consensus, so the funds remain stuck.

What failed: Every wallet depended on a single piece of shared code that nobody had locked down; the owners' own keys were safe but useless.

Parity: post-mortem · EIP-999 · CoinDesk (2017)

Keys are only half of a wallet: smart-contract wallets add dependency on code you do not control. Prefer well-audited, widely used contracts, test small first, and understand what else must keep working for you to spend. See smart-contract and MPC wallets.

Storage locations: fire, vaults and boxes

California wildfires: backups in the fire zone

January 2025 · United States

What happened: After the Los Angeles-area wildfires, CNBC reported social media claims of bitcoin losses, including photos of metal seed plates burnt until they could not be read, and difficulties reaching keys kept in a bank safe deposit box affected by the fires. CNBC said the individual claims could not be verified. Separately, Casa's chief executive said a customer who lost a seed phrase in a fire recovered using the other keys of a multisig setup (Casa sells that service).

What failed: Copies kept where one regional disaster could reach them; reliance on a single key.

CNBC · Bitcoin.com News

Separate backup sites by distance and type of risk, and prefer schemes that survive the loss of one copy. See location strategy.

US Private Vaults: boxes seized in someone else's investigation

Raid 2021 · Ninth Circuit ruling January 2024 · United States

What happened: While investigating a Beverly Hills private vault company, the FBI seized its safe deposit boxes and "inventoried" about 700 of them. The Ninth Circuit held that this went beyond the warrant, which did not authorise a criminal search of box contents, and violated the Fourth Amendment.

What failed: Box holders' property depended on a business they did not control.

Snitko v. United States (9th Cir. 2024)

Never keep a whole secret in one box. Use tamper-evident bags so you know whether a backup has been seen. See safe deposit boxes.

Hatton Garden Safe Deposit burglary (general)

Easter 2015 · sentenced March 2016 · United Kingdom

What happened: A gang broke into a London safe deposit vault and took about £14m of jewellery and other property. Sentencing them, the judge said the burglary "stands in a class of its own". This is not a crypto case, but it shows that vaults can be breached.

What failed: A physically secure site was still attacked successfully.

BBC News

A vault is one layer, not a guarantee. Keep only part of a scheme in any one place.

Legal developments that people often hope will rescue lost or inaccessible crypto, and a UK criminal case that shows how control follows whoever holds the keys.

Tulip Trading: asking Bitcoin developers to recover lost keys

Claim 2021 · Court of Appeal 3 February 2023 · discontinued April 2024 · England & Wales

What happened: Tulip Trading, a company associated with Craig Wright, said it owned bitcoin worth about $4bn (April 2021 value) at two addresses whose private keys had been lost in a hack. It sued Bitcoin developers, arguing that they owed owners fiduciary duties and should write software to move the coins to it. The High Court set aside service of the claim; the Court of Appeal allowed Tulip's appeal, holding only that the claim raised a serious issue to be tried, not that developers owe such duties. After the High Court found in a separate case in March 2024 that Wright is not Satoshi Nakamoto, Tulip discontinued the claim in April 2024.

What failed: Lost keys, and a claim that depended on developers being both able and obliged to move other people's coins.

Court of Appeal judgment [2023] EWCA Civ 83 · LexisNexis: claim discontinued · Bitcoin Legal Defense Fund (acted for developers)

No court has made anyone change Bitcoin to recover lost keys. Plan as if loss is permanent. See single points of failure.

The Property (Digital Assets etc) Act 2025: ownership confirmed, access not

Royal Assent 2 December 2025 · England & Wales and Northern Ireland (legal development)

What happened: The Act, based closely on Law Commission recommendations, says a thing (including a digital or electronic thing) is not prevented from being an object of personal property rights merely because it is neither a "thing in possession" nor a "thing in action". The Law Commission says this confirms a "third category" of personal property into which crypto-tokens can fall, and leaves the courts to develop its boundaries. It came into force the day it was passed.

What it does not do: Clearer property status helps executors, victims and courts. It does not give anyone the keys: as US digital-asset law also says, a fiduciary's rights do not require a custodian to share passwords or decrypt devices (California Probate Code §880).

legislation.gov.uk · Law Commission · California Probate Code §880

Law can confirm that crypto belongs to your estate; only your backups and instructions let anyone reach it. See crypto as property (UK) and RUFADAA (US).

61,000 bitcoin found on devices and in a deposit box: the UK's largest crypto seizure

Seized 2018 · sentenced 11 November 2025 · England

What happened: Zhimin Qian (also known as Yadi Zhang) ran an investment fraud in China between 2014 and 2017 with over 128,000 victims, converted part of the money into bitcoin and fled to the UK. In 2018 police seized devices from a London property she rented and a nearby safe deposit box, after lawyers approached by her assistant over a house purchase raised the alarm; together they gave access to about 61,000 BTC, accessed by police in 2021. She pleaded guilty to possessing and transferring criminal property and was sentenced at Southwark Crown Court to 11 years and 8 months; her assistant Jian Wen had earlier received 6 years and 8 months, and an accomplice 4 years and 11 months. The bitcoin is subject to civil recovery proceedings in the High Court.

What it shows: Keys kept on devices and in one box meant whoever seized those items could take control of the coins.

CPS (11 November 2025) · Sentencing remarks (Judiciary) · Reuters

This is a criminal case, but the storage lesson applies to everyone: whoever holds the device or backup controls the coins. Keep backups split across places and protected by a passphrase or multisig, so that losing one location does not hand over everything. See safe deposit boxes.

Patterns across every case

PatternCasesDefence
Seed existed in digital formSparkCat, LastPass, MetaMask iCloud, Slope, Dashjr 2023Offline paper/metal only; never photograph or type
Bad randomnessCOLDCARD 2026, Milk Sad, Trust Wallet (extension and iOS), Cake Wallet, Randstorm, Profanity, Android 2013, Blockchain.info, Debian OpenSSL, Ethercombing 2019, biased nonces 2019Multi-source or verifiable device entropy, your own dice mixed in, vendor diversity; replace seeds after any advisory (compare methods)
Trusted a message, device or callerFake Ledger post, Electrum, Coinbase, Ledger leak, Trezor support portal, scam letters 2025, eBay pre-seeded Ledger, Genesis creditor 2024 (guilty plea 2026), fake recovery law firmsVerify via official channels; no one legitimate asks for your seed
Single point of failureHowells, IronKey, QuadrigaCX, Popescu, Mellon, California wildfires, Clifton Collins, UK family 2020, RoboForm passwordTwo or more backups; multisig or Shamir; letter of instruction
Someone else held the keysMt. Gox, FTX, Quadriga, Celsius, VoyagerSelf-custody or regulated, segregated custody
One location or institution held everythingUS Private Vaults, Hatton Garden, California wildfires, Qian seizure 2018Split the secret across sites (layouts); tamper-evident bags
Physical attack on the deviceRashid 2017, wallet.fail, Kraken 2020, Joe Grand 2022, Donjon Safe 3, TROPIC01, counterfeit TrezorBuy direct; strong passphrase; secure-element devices; see advisories
Official update channel compromisedLedger Connect Kit, Trust Wallet extension 2.68Small balances in browser wallets; hardware wallet for savings; new seed after an incident
Physical coercionBalland, Greater Manchester 2023, Manhattan 2025 (alleged), Paris 2025, St Felix crew 2022–23Privacy; keys in separate places; time delays (coercion)
Hoping a court or developer can restore accessTulip Trading, Property (Digital Assets etc) Act 2025, Clifton Collins, fake recovery law firmsTreat loss as permanent; leave a tested recovery path
Shared smart-contract code failedParity 2017, Bybit/SafeWidely audited contracts; test small; know what else must keep working (smart-contract wallets)
Blind signingBybit/Safe, address poisoning, Inferno DrainerVerify full details on a hardware screen

Last reviewed: · Educational information only — verify current details with official sources.