News reports have found a video of officers searching a suspect’s vehicle, which contained seed phrases for a self-custody cryptocurrency wallet.
The video emerged and triggered outrage on social media. The incident took place in Nevada, where State Police revealed his seed phrase on body cam footage.
According to the video, the two officers showed his self-custody phrase written on a piece of paper, inadvertently publicising the information to the general public.
Social Media Response
The camera footage later sparked replies from the global crypto community. Binance chief executive Changpeng Zhao (CZ) cautioned people investing in crypto on the risks linked to storage methods.
Responding, he said: “I am a proponent of free choice. Feel free to hold your crypto anyway you wish. But learn the risks of each method.”
He added that investors should “learn to hold your own keys [by] starting with a small amount” until mastering the setup method and its technologies.
Others recommended memorising the seed phrase, with most consisting of 12 to 24 words. However, CZ warned investors that forgetting the passcode would become a major flaw when storing data on the “brain wallet.”
The news comes after Paxful chief executive Ray Youssef urged investors to keep their wallets in self-custody to avoid the pitfalls of bankrupt centralised platforms such as FTX. He added he would send weekly reminders to Paxful users to move to self-custody to protect their holdings.
Ahead of FTX’s collapse, Sam Bankman-Fried tweeted that “everything is fine” and stated investors were assured their holdings were safe and accessible.
The company filed for Chapter 11 bankruptcy on 11 November, locking millions of customers out of their custodial wallets due to what authorities later discovered was the company’s misappropriation of funds.
Bahamian authorities recently detained Bankman-Fried and could extradite him to the United States for his role in the collapse of FTX, Alameda Research, and 130 linked affiliates.
