Binance-backed Trust Wallet hit by $7M hack, experts warn users

With the online-based Trust Wallet, backed by Binance, already initiating the compensation process following a $7 million hack over Christmas, security experts remind users that many would be safer with hardware wallets.

"Hardware wallets are the security feature you need," a well-known crypto security expert, @beausecurity, said, corroborating the words of their peer @pcaversaccio, who claims that the so-called hot wallets, or wallets hosted online, "are a (security) bug."

"It might be a controversial take (or maybe not lol) but the reality is most people simply can't securely manage a hot wallet," @pcaversaccio said, emphasizing that user devices are constantly being infected by infostealers, while people tend to keep their private keys to their crypto assets and seed words to their wallets online, which is a simple target for criminals tricking their victims into downloading malware.

According to the expert, "the only way forward is going hardcore on hardware wallets" if the crypto industry wants to stop "the endless cycle of thefts from compromised keys."

The debate over wallets in the crypto industry has been ongoing for many years, specifically, the comparison between hot wallets and hardware wallets, or non-custodial and custodial wallets.

The consensus is that hot wallets are suitable for holding small sums, such as for daily expenses, while hardware wallets are better suited for storing larger sums that would be painful to lose.

However, hardware wallets have their own downsides and risks, such as being less convenient for daily use, and people need to take care of their wallet’s seed phrase by themselves, which is relevant to any non-custodial wallet, both hot and hardware wallets.

Additionally, in some cases, using a custodial solution may allow users to be reimbursed for their losses.

For example, Trust Wallet has already started accepting and reviewing reimbursement requests from users after the hack. The team has also warned about fake "compensation" forms, impersonated support accounts, and direct messages sent by criminals seeking to trick potential victims.

On December 26th, the wallet’s team confirmed findings by blockchain sleuth ZachXBT that around $7 million worth of crypto assets were stolen from Trust Wallet users on the first day of Christmas by exploiting its recently updated Chrome extension.

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