ZachXBT Slams Hardware Wallets After Rising Crypto Scam Losses

Highlights:

• Hardware Wallets have sparked fresh debate after ZachXBT recommended using a dedicated iPhone for managing crypto.
• Most recent crypto thefts have happened because scammers tricked users, not because hardware devices failed.
• Keeping recovery phrases safe remains the most important step, no matter which wallet you choose.

Onchain investigator ZachXBT criticized hardware wallets in a Telegram post and urged crypto users to avoid them for important transactions and large holdings. He said users should not rely on hardware wallets for signing important transactions or storing significant cryptocurrency holdings.

ZachXBT Says Hardware Wallets Are “Garbage,” With Ledger the Worst

ZachXBT, one of the crypto industry’s most prominent onchain investigators, said he does not consider current hardware wallets suitable for signing critical transactions or storing large amounts of assets,… pic.twitter.com/UuVYX7NbjH

— Wu Blockchain (@WuBlockchain) July 16, 2026

Instead, ZachXBT recommended using a separate iPhone dedicated only to cryptocurrency management instead of a hardware wallet. He said technically competent users should adopt the dedicated iPhone setup because they can manage its security requirements more effectively.

ZachXBT described hardware wallets as “complete garbage” and said users should not trust them for transaction signing or storing significant cryptocurrency holdings.

He directed his strongest criticism at Ledger, saying the company’s wallet software complicates basic functions through frequent updates. He claimed Ledger Wallet receives frequent interface and application updates that disrupt basic wallet functions even though users only need reliable signing software.

However, ZachXBT did not report any new Ledger device breach or claim attackers had compromised the company’s hardware security. He also did not claim attackers had compromised Ledger’s private-key protection or its secure element technology. Ledger recently renamed Ledger Live to Ledger Wallet as part of a broader update to its companion software. Ledger released Ledger Wallet version 4.8.0 on June 11 with security improvements, interface changes and minor bug fixes.

Why Hardware Wallets Face Growing Scrutiny

Recent crypto attacks have targeted hardware wallets through phishing, fake applications and social engineering instead of technical exploits. Criminals convince users to reveal recovery phrases or approve fraudulent transactions without breaking hardware wallet security.

In January, one crypto holder lost more than $282 million in Bitcoin and Litecoin through a social engineering attack. ZachXBT later tracked the stolen assets across multiple services. The attackers also converted part of the funds into Monero. The January theft showed that criminals gained access through social engineering instead of breaking the hardware wallet’s secure element.

Another major incident occurred in April when a fake Ledger Live application appeared on Apple’s App Store. The fraudulent application copied Ledger’s branding and appeared legitimate to users searching for Ledger’s official wallet software. Victims entered their wallet recovery phrases into the fake Ledger application after believing it was legitimate.

🚨UPDATE: A fake Ledger Live app listed on @Apple's Mac App Store has reportedly led to the loss of a user’s entire Bitcoin holdings after posing as the official application.

American musician Garrett Dutton lost 5.92 BTC, worth about $424,000, after downloading the app and… pic.twitter.com/UQTGagdHFe

— Cryptic (@Cryptic_Web3) April 15, 2026

The attackers gained full control of victims’ wallets after victims entered their recovery phrases into the fake application. The attackers stole Bitcoin, Ethereum, Solana, Tron and XRP before Apple removed the fake application from the App Store.

In June, scammers mailed fake Ledger letters that exploited growing fears about quantum computing to trick hardware wallet owners. Reports linked the phishing campaign to customer information exposed during Ledger’s 2020 ecommerce data breach, which revealed customer names and addresses.

Dedicated iPhone Proposal Sparks Self-Custody Debate

ZachXBT believes a dedicated iPhone reduces hardware wallet risks because users separate cryptocurrency activity from everyday browsing, messaging, and entertainment. Modern iPhones protect cryptographic keys through Apple’s Secure Enclave, which isolates sensitive information from the main operating system.

Apple’s operating system isolates applications through sandboxing and supports biometric authentication to strengthen device security. Apple regularly delivers security updates that address software vulnerabilities and strengthen iPhone security.

ZachXBT also argued that buying a smartphone through normal retail channels avoids exposing crypto ownership through hardware wallet customer databases. However, critics argue that a dedicated iPhone still depends on internet connectivity, installed applications, and operating system security. The fake Ledger application also demonstrated that malicious software can bypass App Store reviews and reach unsuspecting users.