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For physically hardened devices, this attack vector can be mitigated quite efficiently by including an attestation key with each device and validating that after taking possession (or ideally before any interaction). At least one competitor does that.

To my knowledge, current Trezor devices are unfortunately not (sufficiently) key extraction proof, though; in that scenario, attackers might be able to extract the private attestation key of a legitimate device and then go on to impersonate it in their own version.

This again could be mitigated by e.g. making the attestation key device-unique and offering an online validation service (which could keep track of unusual verification patterns and alert users), but it's not an easy problem to solve.



How secure is the attestation key against the wallet CEO's kids being held hostage?


Everyone would know it and the attestation key would be obsolete. New wallets will be made with another key, and for old wallets users already know they are genuine anyway.


Hopefully the attestation (root) key is itself stored in secure hardware (i.e. an HSM or similar) that can't be reprogrammed unilaterally, even by a privileged actor.


Obligatory $5 wrench xkcd: https://xkcd.com/538/

Still, physically threatening/kidnapping somebody is an entirely different threat model, although it's very common in the Bitcoin world: https://github.com/jlopp/physical-bitcoin-attacks


This is not specific to Bitcoin though.

In Latin America there are “Flash/lightening kidnappings” where they take a person hostage and drain their bank account over a period of time.


They can’t take a bank hostage and drain all of it’s customers funds though.


This was solved technically with the invention multisig wallets.

Whether the custodians choose to support them or not is another matter.




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