$172 Million Bitcoin Mysteriously Disappears: Surveillance Camera Steals Seed Phrase, CZ Warns of Self-Custody Security Risks

Gate News reports that on March 17, a dispute involving approximately 2,323 Bitcoins drew attention in the UK. British businessman Ping Fai Yuen accused his separated wife Li Fenyong of stealing hardware wallet seed phrases through home surveillance devices and transferring assets worth about $172 million. The case is now in judicial proceedings.

According to documents filed with the High Court of England and Wales, the involved assets were originally stored in a Trezor hardware wallet protected by a PIN and a 24-word seed phrase. The allegations state that Li Fenyong secretly installed cameras in their Brighton residence, recording the victim entering the seed phrase. In August 2023, these Bitcoins were transferred to 71 addresses, with no further on-chain movements since then.

Court documents also reveal that Ping Fai Yuen had installed recording devices at home, capturing discussions about fund transfer methods and ways to evade financial regulations. In December 2023, police arrested the suspect and seized multiple cold wallets and recovery seeds.

Legally, the court dismissed the charge of “tangible property embezzlement,” but the case continues to proceed on grounds of unjust enrichment and trust responsibilities. The judge indicated that the plaintiff has a high likelihood of winning and has issued an injunction to restrict further circulation of the involved Bitcoins. The defendant denies all allegations, and the case is still under review.

Notably, CZ commented on social platform X, pointing out that this incident highlights potential vulnerabilities in the “self-custody” model of crypto assets, especially when private keys or seed phrases are physically obtained, which can completely compromise security.

This event also serves as a reminder to market participants that, despite decentralized storage emphasizing user control over assets, in practice, protecting private keys, device isolation, and physical security are equally critical. As the value of digital assets like Bitcoin continues to rise, risks related to seed phrase leaks and cold wallet security remain a growing concern.