On December 19, 2022, a number of popular tweets surfaced prescribing caution in dealing with the number one cold wallet, Ledger, and two of its partners, the non-custodial exchanges, Changelly and Wyre.
Several community users reported that Changelly and wyre, the recommended trading partners of the most widely used hardware wallet Ledger APP, would freeze users’ funds for no reason, one user froze $3 million. Users should use it with caution. @Ledger @Changelly_team @sendwyre
— Wu Blockchain (@WuBlockchain) December 19, 2022
In accordance with a recent post, the exchanges froze the funds of several users who held funds on Ledger and used Changelly and Wyre to exchange them. One prominent user lost access to funds totalling more than $3 million.
Twitter users OxSea and Kai put up threads detailing transactions with both Changelly and Wyre, complete with emails and transaction receipts that show attempts at stalling, prolonging, and even disrupting the process of recovering their funds. In both cases, the funds have yet to be fully recovered, despite one case running for over a month. Ledger has, in both cases, referred the users to the “dutiful” Changelly and Wyre support teams.
Several calls have gone out, with community users decrying Changelly and Wyre as scams and expressing distrust of the cold wallet, Ledger for officially partnering with them and forging the chain of trust that led users to transact with them.
Cold wallets, which are cryptocurrency wallets that hold tokens offline, unconnected to the internet, and thus uncompromisable, have become increasingly popular in recent years, even more so in the past few months in the wake of FTX’s collapse and cryptocurrency exchange FUD. The FUD wave has all but crippled profits for major players like Binance, Coinbase, etc. and caused a mass exodus of bitcoin and crypto tokens held in online custodial exchanges.
Hard-hit crypto holders’ fears have not been allayed by the proofs of reserves and liabilities that every exchange now feels compelled to publish, and a wave of censorship of these exchanges has emerged.
Surprisingly, it seems as though one of the biggest alternatives to online exchanges, cold wallets, is not immune to this censorship. While cold wallets are ostensibly safe, the means by which the tokens stored on them can be exchanged, traded, and transferred do provide a vulnerability. This is why the official partners are important, and the revelation that two of Ledger’s advertised exchanges have been accused of fraudulent dealings with users’ funds deals a huge blow to the cold wallet.
There are currently no official statements from Ledger or the exchanges between Wyre and Changelly about the accusations levied against them or their handling of user tokens.
