Cryptocurrency has brought many benefits to users, but it has also put the responsibility of self-custody in their hands. A recent update of Phantom, the signature wallet for the Solana blockchain, inadvertently caused some users to log out of their accounts. This means that affected users would have to enter their seed phrases, a combination of several words unique to each wallet, to access their funds.
However, not all users back these words when the wallet is opened. 0xFiyopi, a meme coin trader and founder of Solcasino, was one of the ones affected by this update, losing access to over $1 million worth of POPCAT, a Solana-based meme token currently part of the top 100 cryptocurrencies by market cap.
Phantom acknowledged the issue in social media, stating that it was “aware that a small number of Ios users are experiencing app resets.” Furthermore, the wallet directed affected users to “restore your wallet using your recovery phrase” and remarked that they had sent a new update correcting this behavior.
0xFiyopi explained that while he normally doesn’t save a high amount of funds in his wallet, he was trying to get money to give a bonus to his team. “I thought I had the phrase from the beginning, but it didn’t belong to these wallets. So, it’s a $1M lesson — even newbies wouldn’t make this mistake,” he concluded.
For Armani Ferrante, CEO of Backpack, a crypto wallet and exchange, events like these underscore the problems inherent to self-custody even for cryptocurrency-savvy users. “Self custody is completely, totally, and utterly broken–and the keep your funds off exchanges meme, although well-intentioned, is just not supported by the facts.” he assessed.
Read more: Bitcoin Self-Custody Calls Intensify as Centralization Grows: ‘No One Is Ready for the Biggest Hack in History’
