Ex-Singapore Diver Admits $1.7M Crypto Seed Phrase Theft

Teo Rong Xuan, a 34-year-old former member of Singapore’s elite Naval Diving Unit, admitted in court to charges including housebreaking, misusing a computer system, and dealing with ill-gotten gains. According to court records, Teo met the 30-year-old Chinese national victim through a mutual friend in mid-2022. During a football match gathering at the victim’s home, Teo obtained a condominium access card under the pretense of helping another guest and deliberately failed to return it, laying the groundwork for his criminal scheme.

On December 31, 2022, Teo exploited his retained access to re-enter the victim’s unit while the victim was out. Inside the residence, he located and photographed a piece of paper containing the 24-word seed phrase for the victim’s Ledger Nano X hardware wallet. The next day, Teo used the compromised seed phrase to transfer $1.7 million in USDT stablecoin to his own wallet, executing one of Singapore’s most significant cryptocurrency thefts through physical intrusion rather than digital hacking.

Seed phrases—typically a sequence of random words—act as the master key to cryptocurrency wallets, and unlike passwords, they cannot be reset once compromised. This fundamental characteristic of blockchain technology means that access to funds is irrevocably lost once a seed phrase is stolen. According to blockchain intelligence firm TRM Labs, infrastructure attacks targeting private keys and seed phrases constituted 70% of all stolen cryptocurrency funds last year, highlighting the systemic nature of this security vulnerability.

TRM Labs further noted that seed phrases are most commonly obtained through poor storage practices, phishing campaigns, and malware deployment. In Teo’s case, the victim’s decision to store their seed phrase on a physical piece of paper in their bedroom, combined with inadequate access control to their residence, created the perfect conditions for theft. The case exemplifies how traditional security failures can have catastrophic consequences in the digital asset space.

Prosecutors revealed that Teo quickly converted his ill-gotten gains into luxury purchases and personal expenses. He spent the stolen $1.7 million in USDT on luxury watches, online gambling, and mortgage payments. Approximately $1.1 million was converted into US dollars and transferred to his personal bank account, demonstrating how cryptocurrency theft increasingly bridges the digital and traditional financial worlds.

The theft was discovered when the victim noticed the missing funds and engaged blockchain investigators who traced the transactions to Teo’s wallet. Faced with overwhelming evidence, Teo confessed to the crime. In his defense, Teo claimed he was motivated by heavy financial losses following the 2022 collapse of cryptocurrency exchange FTX, though this explanation did little to mitigate the premeditated nature of his actions.

Industry leaders have pointed to this case as a stark reminder of ongoing security challenges in the cryptocurrency space. Veronica Wong, CEO and Co-Founder of crypto wallet suite SafePal, told Decrypt that “this case is a strong reminder that user behaviour is as important as product security.” She recommended that long-term holders use hardware wallets with encrypted chipsets, while active traders might consider cloud backups, though she cautioned that such methods introduce additional risks tied to third-party encryption and account access.

Petr Kozyakov, Co-Founder and CEO of payments platform Mercuryo, emphasized that securely safeguarding a seed phrase is critically important for individuals practicing self-custody. “Storage in a secure location, such as a bank safety deposit box, is best practice. However, there is unfortunately not a panacea in regard to keeping digital assets safe,” he stated. Kozyakov recommended writing seed phrases on durable materials like fireproof metal plates and storing them in multiple secure locations, or using multi-signature wallets that require approvals from two or more private keys to authorize transactions.