In For $50,000 in Bitcoin, Dan Reich and his friend decided to buy an early batch of Theta tokens, a new cryptocurrency with a value of barely 21 cents each. Because of a Chinese government crackdown, they had to move the tokens from an exchange in China to a hardware wallet because they would no longer be able to access the exchange. The Trezor One hardware wallet was chosen by Reich and a friend, and they set up a PIN before getting on with their lives and forgetting about it.
$2 Million Crypto Wallet
A fourth of the token’s worth was lost by the year’s end, and it rose briefly before plummeting once more. Reich made the decision to withdraw his winnings, but his companion couldn’t recall the PIN because he’d misplaced the paper on which it was written. Each time they attempted to guess what they thought was a four-digit PIN, the wallet increased the wait period before they could try again. After 16 incorrect guesses, the wallet’s data would be wiped clean. After a dozen tries, they decided to call it quits.
Reiterated that he had no intention of ever seeing the money again. He was ready to accept the loss – until the price began to soar once more.
When the token value was as low as $12,000, it began to soar. In 2020, it would be valued at least $400,000, and at one point, it would be worth more than $3 million. It would be difficult, but not impossible, to get into the wallet without the PIN. And so Reich and his companion resolved to find a way in, with millions of dollars at stake.
It has always been a challenge to manage the private keys connected with a block of currency on the blockchain because of the enormous stakes involved in doing so. Key (or string of words used to generate key, also known as seed) is required to sell or spend your currency, but if anybody else gets hold of it, they can take your coins in a single anonymous transaction from anywhere in the globe. You can’t sell or spend currency without this seed. A software wallet on an exchange service’s server or a software wallet on your PC can be exposed to remote assault if anyone on the internet has access to your key.
For those who don’t want to deal with the hassle of keeping their private keys in an online wallet, there are USB-sized hardware wallets that may be used to store and sign transactions on your computer. In the event that your PIN or key is lost or misplaced, you will be unable to access your cryptocurrency on the blockchain.
Over 3.7 million Bitcoins have been lost to their owners.
More often than you would imagine, this is the case. More than 3.7 million Bitcoins worth $66.5 billion are believed to have been stolen, according to Chainalysis, a cryptocurrency data business. Wallets can be lost for a variety of reasons, including a computer or phone being stolen or crashing, the user accidentally throwing away their hardware wallet, or the owner forgetting their PIN.
With their tokens’ value skyrocketing in 2020, Reich and a friend set out to find a way to get their hands on them. Eventually, after scouring the internet, they came upon a seminar given in 2018 by three hardware specialists who revealed how to gain access to a Trezor wallet’s key without having the PIN. It gave Reich hope that the engineers would not assist them, but they refused.
Reich says, “At the very least, we knew it was conceivable and had some directionality.”
A financier in Switzerland who claimed to have connections in France who could break the wallet in a laboratory was found. As if that wasn’t enough, Reich couldn’t know their names or access the lab. In Switzerland, he would have to hand over his wallet to a financier, who would then give it to his French contacts for safekeeping there. Despite the hazards, Reich and his companion had no choice but to go through with it.
Cracking $2 Million Crypto
With their tokens now worth $2.5 million, Reich was planning to fly to Europe to meet with Joe Grand, a hardware hacker in the US, in February 2021, when they discovered a better option.
As a 10-year-old boy, Grand began hacking computers and other electronic devices. He was a member of the famed L0pht hacker collective, and his hacker name was “Kingpin.” In 1998, he testified before the US Senate about a vulnerability that might be used to shut down the internet or allow an intelligence agency to spy on traffic. For the Discovery Channel in 2008, he co-hosted a show called “Prototype This.” He currently instructs large corporations on hardware hacking so that they may better understand how hackers can break into their systems.