The risks of cryptocurrency self-custody are real and should not be underestimated, as the private key can be stolen, destroyed or lost.
Brazilian cryptocurrency streamer Fraternidade Crypto is one of the latest victims of unsafe self-custody practices, reportedly losing thousands of dollars due to a private key accident.
During a live stream on YouTube on Aug. 29, the owner of the Fraternidade Crypto channel, Ivan Bianco, unwittingly exposed his private key to a self-custodial cryptocurrency wallet.
In the middle of the livestream related to Bitcoin and blockchain games, Bianco apparently tried to access his passwords for the blockchain games platform Gala Games through a text file on his computer.
Unfortunately for the streamer, his Gala Games passwords were stored in the same text file as the seed phrase for his MetaMask wallet, which had a significant amount of Polygon’s MATIC.
Shortly after accidentally opening the text file, which exposed two private keys for his cryptocurrency wallets, Bianco closed the livestream, but apparently, it was already too late to recover the funds for the streamer.
Fraternidade Crypto subsequently started a new livestream, claiming that one of his viewers managed to access his MetaMask wallet through the private key and stole his entire Polygon stash of 86,000 MATIC. At the time of the accident, the amount was worth around $50,000.
“I accidentally showed my private key live, and the person had really quickly sent it to another address. I tried to close the broadcast and send crypto to another address, but I was too late,” Bianco said in the emotional video that followed the accident.
In the video, the streamer provided a link to the Polygon address of the unknown perpetrator. The 86,000-MATIC stash then started to be transferred across different addresses.
Bianco claimed that he lost his entire life savings to the accident, pleading with the stream viewer to return the money for a reward. The YouTuber also said that he was planning to file a complaint with the local police, noting that about 70 people were watching his unfortunate livestream.
According to some online sources, Fraternidade Crypto might have managed to retrieve at least some of his funds so far. Local crypto executive Guilherme Rennó took to X (formerly Twitter) on Aug. 30 to report that there have been rumors that Bianco eventually managed to recover a “good part of the money.”
“Self-custody is something that demands extreme care,” the executive noted, adding that crypto users should never store their seeds and passwords on their computers or in an easily accessible place.
Contacted by Cointelegraph, Bianco said that he has somehow managed to recover 86,000 MATIC, but still has to recover his non-fungible tokens (NFTs). “I recovered 50k dollars, approximately 86000 MATIC. Everything else is still lost, incalculable value as they are NFTs, estimated value of approximately 15k dollars still lost,” Bianco noted, adding that he also lost some Ether on the ARB network.
There is nothing more important than the security of a private key when it comes to the self-custody of crypto. It’s crucial to be very careful with handling a private key or a seed phrase, and for some, it might be a better idea to opt for custodial solutions, such as exchanges, instead. Cryptocurrency enthusiasts recommend investors diversify the types of cryptocurrency storage in order to prevent losses of their entire life savings as well.
While self-custody allows users to essentially “be their own bank,” such a method of holding crypto is still prone to many risks, such as theft, destruction or loss. “Not your keys, not your coins” is a popular expression in the cryptocurrency community that warns users about such risks. Once a user of a self-custody wallet exposes their private keys to someone else, the former is no longer the owner of the funds, according to the rules of crypto.
Source: cointelegraph.com
