While self-custody is considered the ultimate way to secure one's own funds, many do not recognize the risks associated with physically storing seed phrases. A search by the Nevada State Police agency ended up making a suspect's seed phrase public after it was detected by body camera.
A viral video circulating on Twitter shows two police officers searching a suspect's car and finding pieces of paper. It turned out that the suspect was a strong believer in self-custody, as unfolding the pieces of paper revealed the suspect's opening sentence, which was handwritten, a popular method of avoiding online compromises.
As the incident was recorded by one of the officers' body camera, the suspect's seed phrase has now become public information.
This video of cops in Nevada searching for a suspect and finding a seed phrase is pretty wild. Imagine your seed phrase becoming part of the public record due to being captured on an officer's body camera! pic.twitter.com/vS2vm0xh7N
โJameson Lopp (@lopp) December 18, 2022
Binance CEO Changpeng 'CZ' Zhao watched the video and warned investors about learning the various risks involved in different methods of storing cryptocurrencies. The said:
โI am a supporter of free choice. Feel free to keep your crypto the way you want. But learn the risks of each method.โ
The video sparked conversations about the best way to store opening phrases, with the most popular suggestion being to memorize the opening phrase. While the idea of โโlearning the opening phrase โ a unique combination of 12 or 24 words โ rote sounds safe, CZ noted that the human mind's lack of heredity and forgetfulness are two of the biggest flaws when it comes to storing important information in the "brain's wallet."
Related: How to keep your cryptocurrency safe after the FTX crash
The arrest of former FTX CEO Sam Bankman-Fried for alleged embezzlement was seen as a signal to rethink long-term storage strategies for cryptocurrencies.
While an immediate reaction was to withdraw funds from cryptocurrency exchanges, CEOs have gone ahead to ensure the safety of investors' funds, regardless of where they intend to store their cryptocurrency.
On the other end of the spectrum, Ray Youssef, the CEO of cryptocurrency exchange Paxful, sided with the Bitcoin idea (BTC) self-guarding. He promised to send weekly reminders to all investors to withdraw their funds from the exchange.
โMy only responsibility is to help you and serve you. That is why today I am sending messages to all of our [Paxful] users to move their Bitcoin to self-custody. You should not keep your savings on Paxful, or on any exchange, and you should only keep what you trade here,โ he stated.
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