Blockstream’s Jade wallet and the silent threat inside ESP32 chip

Yet another hardware vulnerability has rocked the cryptocurrency world, this time rooted not in a software bug or malicious update, but in the silicon that powers some of the industry’s most trusted devices. The ESP32 chip, a low-cost microcontroller manufactured in China and used widely across the Internet of Things (IoT) devices, has now been exposed as a critical threat vector in BTC hardware wallets. The vulnerability, identified as CVE 2025 27840, opens the door for attackers to reverse-engineer private keys and potentially empty wallets without leaving a trace.

This is not the first time hardware wallets, long considered the gold standard of BTC self-custody, have shown cracks in their armor. In fact, the history of crypto hardware is riddled with cautionary tales that often go unnoticed by the average user entrusting these devices with their life savings. From flaws in firmware security to side-channel attacks exploiting electromagnetic leakage, the idea that hardware wallets are immune to compromise is an increasingly dangerous myth.

Ledger, one of the most well-known names in the hardware wallet space, has faced multiple controversies over the years. In 2020, Ledger suffered a massive data breach that exposed the personal information of hundreds of thousands of customers, leading to phishing campaigns and threats against their physical safety. While this incident did not compromise the wallets themselves, it revealed how tightly hardware security and personal privacy are intertwined.

More concerning were physical attack demonstrations such as those revealed by security researcher Saleem Rashid, who in 2018 exposed a vulnerability in the Ledger Nano S that could allow an attacker with physical access to the device to tamper with its firmware. Trezor, another heavyweight in the space, has also been the subject of successful extraction attacks, where researchers used voltage glitching and chip decapsulation techniques to retrieve seed phrases from supposedly secure environments. These techniques require sophisticated tools and physical access, but they have shown that even so-called cold storage can be thawed with enough determination.

The ramifications extend beyond just one brand or model. Any hardware wallet, DIY device, or even custom-built signer that employs the ESP32 is potentially vulnerable. This is not a software update that can be patched over the air. It is a fundamental flaw in the hardware itself, calling into question whether secure cryptographic operations can ever truly rely on mass-market microcontrollers that were never designed with high-stakes financial use in mind.

There is also a broader geopolitical context to this revelation. The chip is produced in China, a country whose relationship with Western tech and digital privacy has long been viewed with suspicion. While there is no public evidence of state involvement in this particular vulnerability, the idea that foreign-manufactured chips could undermine the core cryptographic processes of BTC self-custody is enough to reignite debates about supply chain sovereignty in critical infrastructure.

What is at stake here is more than just a few vulnerable wallets. It is the foundational promise of BTC and other cryptocurrencies: that individuals can truly take control of their assets in a secure and censorship-resistant manner. When the very hardware entrusted with this task is compromised, it casts a long shadow over that promise.

As the crypto space continues to evolve, the lessons are becoming clearer. Hardware wallets are not silver bullets. They are tools that must be scrutinized with the same rigor applied to financial institutions or critical infrastructure. Manufacturers must conduct deeper reviews of every component in the supply chain. Users must demand transparency not only in code but also in hardware design, sourcing, and testing.

Ultimately, this latest vulnerability is a reminder that security is not a one-time purchase or a brand decision. It is a constant, deliberate practice of verifying, understanding, and adapting to new risks. For now, users of ESP32-based wallets should exercise caution.

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