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- Dan Reich and his friend spent $50K on Theta tokens in early 2018
- They lost the PIN number to their hardware wallet, locking them out of the current $2M the tokens are worth
- The friends hired Joe Grand to hack the wallet to give them access to the $2M
Two weeks ago a famous hacker by the name of Joe Grand (also known as “Kingpin” in the hacker community) uploaded a video of him cracking a Trezor One hardware wallet that contained $2 million dollars worth of cryptocurrency on it.
Friend of the show @JoeGrand recently reverse engineered a Trezor cryptocurrency wallet to recover $2M. He returns to The Amp Hour after 10 years(!) to talk with @Chris_Gammell about hardware hacking, past projects, and what Joe hopes to learn next.https://t.co/d0rzBXRAwZ pic.twitter.com/szQXmGoLWr
— The Amp Hour Podcast (@TheAmpHour) January 31, 2022
The story was originally reported by The Verge. They revealed the wallet belonged to Dan Reich and his friend, who spent $50,000 on a batch of Theta tokens (name of cryptocurrency) back in early 2018.
At one point the two friends tried to sell their tokens only to find Reich’s friend misplaced the piece of paper where the PIN number to the wallet was, thus locking them out from their funds.
How Hardware Wallets Work in Crypto
Shortly after Reich and his friend bought the Theta tokens in 2018 they were forced to pull their tokens from the Chinese exchange they were keeping them at. The Chinese government was starting to crack down on cryptocurrency laws and if they didn’t move off the exchange they’d lose their investment.
What Reich ended up doing was transferring everything to a hardware wallet, specifically a Trezor One hardware wallet.
If you’ve never heard of a hardware wallet before, these devices store your key (your proof of ownership) off the internet. They’re typically the size of a flash drive and can be used to sign off on transactions when you enter them into a computer and punch in your PIN number.
There are tons of stories on the internet about individuals who have lost their passwords to their hardware wallet, but what makes hardware wallets so secure is they typically are capped at how many passwords you can try before the device wipes all its memory to keep a hacker from getting inside.
Hiring Joe “Kingpin” Grand to Unlock the Wallet
Theta tokens have risen substantially in value over the years—the price started to skyrocket in 2020. When Reich and his friend realized the $50,000 investment had grown to a value of $2 million dollars, they started looking for hackers to unlock the wallet for them.
Reich had actually tried to enter the PIN 12 times out of the allotted 16 the wallet allowed in the past. What’s funny is they were entering a 4-digit PIN number when in reality the wallet’s password was a 5-digit PIN number.
The two landed on hiring Joe “Kingpin” Grand, an electrical engineer and inventor who’s been at the center of the hacking community since he was 10 years old.
Old skater / #L0pht alum Kingpin's come a long way from hacking Palm Pilots 20 years ago! 🙂 Stoked on the @rodneymullen vibe (and hair) now, Joe! #hackerhistory https://t.co/dIKoM2hKiN pic.twitter.com/9AWySeFQX0
— Dug Song (@dugsong) February 4, 2022
How Joe Grand Unlocked the $2 Million Dollar Wallet
Grand bought several identical wallets to practice on. It took him over three months of research and attacking the wallets with different techniques using his firmware.
Once Grand successfully cracked three Trezor One wallets using the same technique, Reich flew from his home in New Jersey to Grand’s place in Portland to commence the official hack.
Grand posted the entire video of the hack to his YouTube page.
The entire process took about three and a half hours. You can read the entire step-by-step breakdown of the hack in the report by The Verge, but what Grand essentially did was glitch the wallet thousands of times to find the exact moment where he could downgrade the microcontroller’s security.
What Happened After the Wallet Was Unlocked
Once Grand secured the PIN number from the hack, Reich unlocked the wallet and instantly gained access to the $2 million dollars. Reich and his friend then transferred the Theta tokens out and sent Grand a hefty percentage of the sum.
So for those of us who missed the boat on buying crypto early, hacking might be an avenue worth pursuing if you’re willing to put in the countless hours honing your craft.