Former Mt. Gox CEO Mark Karpelès has launched a project to create an inexpensive device for detecting whether spy implants are present in Ledger hardware wallets.
This may provide a much-needed alternative in the face of the current security crisis at the French crypto wallet maker.
Karpelès took to X to share the news. "Is my Ledger safe? Is there a spy implant in it?" Karpelès, the former Mt. Gox boss, suggests that it's possible to check for the presence of malicious hardware components without actually opening up the wallet.
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He's working to create a cheap, accessible device for this purpose. What's more, Karpelès says he will make the printed circuit board (PCB) design and technical specifications available for anyone to build the detector themselves.
Karpelès' idea might allow Ledger users to perform a check on their hardware without taking it apart.
Of course, Karpelès hasn't yet shown us a fully functional, independently verified detector.
The idea behind this detector is to spot the presence of unauthorized antenna components within the wallet.
This is done using a low-power radio signal and resonance testing. The idea is that these antennas may have been planted in some wallets.
Hackers discovered them in wallets that had been altered to send out sensitive data to them.
Growing security problems
Karpelès' project comes in the wake of a major security breach surrounding tampered Ledger wallets sold by a reseller in Southeast Asia.
It seems attackers managed to buy some genuine hardware wallets. Then, they injected secret electronic components into them. Finally, they managed to get the doctored hardware back out into the wild.
Ledger's security team claims these implants were able to capture the 24-word recovery phrase of users as they initialized their devices.
Then, these implants allegedly transmitted these phrases to the attackers via an LTE connection. This was made possible by an eSIM inside the wallet.
Independent researchers say the total amount of crypto lost is over $90 million.
On Oct. 15, Ledger issued an official statement regarding this issue. They stressed that their security chips, OS, and servers weren't hacked. In fact, they say the entire problem stems from criminals compromising their devices once Ledger no longer had control over them.
Ledger also said they were imposing stricter rules on their approved resellers. Among them, they said they would ban resellers from selling returns. Products would also have to be kept out of sight on public displays until they are bought.