IoT Traps: How Your Smart Devices Become Predators of Crypto Assets

As global smart device usage surges, a hidden threat is quietly approaching — every IoT device in your home could become a springboard for hackers to infiltrate your crypto wallets. Data shows that the total number of IoT devices worldwide is expected to reach 1.88 billion, with approximately 820,000 IoT attacks occurring daily, and this number continues to rise.

Underestimated Threat: Security Vulnerabilities in Your Home

According to 2023 statistics, the average American household owns 21 internet-connected devices. These devices may seem harmless on the surface, but security risks are everywhere — about one-third of smart home users have experienced data breaches or scams in the past 12 months.

Tao Pan, a researcher at blockchain security firm Beosin, pointed out, “Unsecured IoT devices (such as routers) can serve as entry points into the entire home network. Once hackers gain access, they can move laterally to access connected devices, including computers or smartphones used for cryptocurrency transactions, and can also capture login credentials between devices and exchanges. This is especially dangerous for users conducting crypto trades via APIs.”

Malicious Code in Coffee Machines

To understand how real these threats are, a 2019 case is enough. Avast cybersecurity researcher Martin Hron successfully remotely hacked his own coffee machine, demonstrating how simple hacking can be.

Most IoT devices use default settings, allowing them to connect to home WiFi networks without passwords. Hron explained, “Many IoT devices initially connect to the home network via their own WiFi, which is only used for setup. Ideally, consumers would immediately secure this WiFi with a password. But many devices leave the factory without password protection, and many consumers do not take action.”

In Hron’s demonstration, he replaced the coffee machine’s firmware (operating system), causing the device to display ransomware — locking the entire machine until a ransom is paid. But that’s just child’s play. Hackers could also cause fires by opening the heater in the coffee machine or threaten victims by spraying boiling water. The most dangerous part is that it could quietly become a backdoor into the entire network, allowing hackers to monitor bank accounts, emails, and even steal crypto seed phrases.

Casino Fish Tank Data Theft Incident

The 2017 Las Vegas casino fish tank intrusion case is a classic example. Hackers infiltrated the casino network through a seemingly harmless connected fish tank and successfully transferred 10GB of data.

This fish tank was equipped with sensors for temperature regulation, feeding, and cleaning, all connected to a casino network computer. Hackers used the fish tank as an entry point to move laterally within the network, ultimately sending data to a remote server in Finland. Despite the casino deploying firewalls and antivirus software, the attack succeeded. Fortunately, cybersecurity firm Darktrace quickly identified and stopped the attack, causing no substantial damage.

Darktrace CEO Nicole Eagan stated in a BBC interview, “We immediately stopped it, and no damage was done.” She also warned that the increasing number of internet-connected devices means “it’s a hacker’s paradise.”

Secret Mining by Robot Vacuum Cleaners

In 2020, during the global office closures caused by COVID-19, cybersecurity firm Darktrace uncovered a shocking incident — hackers exploited servers controlling office biometric access systems to conduct illegal crypto mining.

The clue came from a server downloading suspicious executable files from an external IP address never seen before. Subsequently, the server connected multiple times to external endpoints associated with Monero mining pools. This attack is known as “cryptojacking.”

By 2023, more such cases emerged. Hackers began targeting Linux systems and internet-connected smart devices. Microsoft’s investigations found that attackers used brute-force attacks on internet-facing Linux and IoT devices to gain access. Once inside, they installed backdoors and downloaded malicious crypto mining software.

This mining activity not only caused victims’ electricity bills to skyrocket but also transferred all mining profits directly into hackers’ wallets. Some advanced cryptojacking cases even embedded mining code into fake 404 HTML pages, making detection more difficult. Unlike mobile mining, IoT device mining is characterized by persistence and high stealth, allowing hackers to control devices for mining over long periods without detection.

Robot Vacuums Spying on You

Last year, robot vacuums in several U.S. regions suddenly started operating autonomously. It turned out hackers discovered serious security vulnerabilities in Ecovacs robot vacuums made in China.

Reports indicated that hackers could remotely manipulate these devices to intimidate pets, shout obscenities at users through built-in speakers, and even spy on home environments via built-in cameras. If hackers gain access to videos of your password inputs or seed phrase recordings, the consequences could be dire.

Cybersecurity firm Kaspersky pointed out, “A serious issue with IoT devices is that many manufacturers still pay insufficient attention to security.”

From Power Grids to Crypto Wallets: The Escalating Threat

Even more frightening, Princeton University security researchers proposed a hypothesis: if hackers could control enough high-energy-consuming devices (such as 210,000 air conditioners) and turn them all on simultaneously, it could cause a blackout equivalent to the power outage of California’s approximately 38 million residents.

These devices would need to be concentrated in a part of the power grid and activated simultaneously to overload certain power lines, damaging or triggering protective relays on the lines to shut them down. This would shift the load to remaining lines, further stressing the grid and potentially causing a chain reaction. However, this requires precise malicious timing, as grid fluctuations during extreme weather (like heatwaves) are common.

How to Protect Your Crypto Assets

In the face of these threats, taking protective measures has become essential. Cybersecurity expert Joe Grand adopts the most radical approach: completely avoiding the use of smart devices. “My phone is the most intelligent device in my home, but even so, I’m reluctant to use my phone just for navigation and communication with family. But smart devices? Absolutely not,” he said.

But for most people, this approach isn’t very practical. Here are some practical security tips:

Change Default Settings: Set strong passwords for all smart devices and avoid using default configurations. Avast’s Hron emphasizes that this is the most basic yet often overlooked security measure.

Network Segmentation: Use a separate guest network for IoT devices, especially those that do not need to share the same network as computers and smartphones. This way, even if IoT devices are compromised, hackers will find it harder to move laterally to your main devices.

Disconnect When Not in Use: Power off or disconnect devices from the network when not in use to reduce attack windows.

Keep Software Updated: Regularly update device firmware and operating systems, as many security vulnerabilities can be patched with updates.

Monitor Devices: Use online search engines like Shodan to check your home network devices and potential vulnerabilities, and regularly audit your network security.

As IoT devices become more widespread, security risks are no longer distant threats but real dangers in daily life. Protecting your smart devices is essentially protecting your crypto and digital assets.