WTF?! Cold wallets are supposed to keep crypto safe from online attackers, but that protection counts for nothing when the threat is inside the house. A UK businessman is accusing his estranged wife of stealing 2,323 Bitcoin, worth about $172 million, after she allegedly used covert CCTV cameras to capture the recovery phrase for his hardware wallet.
According to High Court filings, Ping Fai Yuen claims his wife, Fun Yung Li, secretly recorded him entering the seed phrase and access codes for his Trezor cold wallet at their family home in August 2023.
The judgment says the device was protected by a six-digit PIN, but anyone with access to the 24-word seed phrase could recreate the wallet on another device. The exact amount at the center of the dispute is 2,323.28423347 Bitcoin, worth around $172 million.
Yuen says the information was then used to recreate the wallet and transfer the Bitcoin out without his knowledge on August 2, 2023.
The complaint alleges the funds were moved across 71 blockchain addresses not held at third-party exchanges, where they have reportedly remained since December 21, 2023.
Yuen is suing his estranged wife and her sister, who he claims may also have been involved, seeking the return of the Bitcoin or its cash equivalent as well as a worldwide freezing order over the crypto assets.
Yuen says he was warned by his eldest daughter in early July 2023 that Li was trying to take the Bitcoin. He then installed audio recording equipment of his own, which allegedly captured conversations on July 29 and July 31 about the missing crypto, whether the transfer could be traced, how hard it would be to explain that much money to banks, the risk of attracting money-laundering scrutiny, the possibility of using the funds in small amounts, and even using a second wallet and calling a hacker. There was also discussion about Hong Kong.
The case became even messier after police arrested Li on December 23, 2023. According to the ruling, officers allegedly searched her home and seized valuable watches, 10 cold wallets, and five recovery seeds.
Police were reportedly able to access four of the wallets, while three others had names attributable to Yuen. Li later gave a no-comment interview, and police have since said they would take no further action pending new evidence.
Mr Justice Cotter allowed the broader claim to continue and said Yuen appears to have a very high probability of success, with the transcripts described as damning and the seized hardware adding to the weight of the evidence.
But the judge also dismissed claims based on conversion and trespass to goods, essentially saying those traditional property laws do not clearly apply to Bitcoin because it is not a physical asset.