Left hand to right hand? Unpacking the financial leverage loop behind the AI boom and Wall Street’s ultimate high-stakes bet

By: WEEX|2026/01/31 04:45:00

Source: ShenChao TechFlow

In the early hours of January 21, 2025, in the small town of Méreau in central France.

David Balland was dragged out of his home in the middle of the night. He is a co-founder of Ledger, the cryptocurrency hardware wallet company that claims to safeguard more than $100 billion worth of Bitcoin for users worldwide.

According to France’s Le Monde, when elite GIGN special forces broke in 48 hours later, Balland was missing a finger.

The kidnappers sent a video of the severed finger to Ledger’s other co-founder, Éric Larchevêque, along with a message: payment in cryptocurrency only. No police. No delays. Or else.

One year later, Ledger announced plans to list on the New York Stock Exchange at a valuation exceeding $4 billion. Goldman Sachs, Jefferies, Barclays—some of Wall Street’s loudest names—are all backing the deal.

This is a business built on “security.”

Ironic?

The leaked addresses

Let’s rewind to 2020.

That summer, a misconfigured API endpoint allowed attackers easy access to Ledger’s e-commerce database. More than one million email addresses were leaked. Worse still, the names, phone numbers, and home addresses of 272,000 customers were exposed.

Six months later, the dataset appeared on the hacker forum RaidForums and was sold for a negligible price, freely accessible to anyone.

You can imagine what followed.

Phishing emails flooded in, luring Ledger users to malicious links in an attempt to steal their private keys. Some users received emails that included their full names and home addresses, threatening physical visits to steal their crypto unless a ransom was paid.

Ledger CEO Pascal Gauthier later stated that the company would not compensate customers whose personal data had been leaked on hacker sites—including those whose home addresses were exposed.

The incident cost Ledger dearly. But the real price has been paid by users who, to this day, continue to live in fear.

So—did Ledger learn its lesson?

Same mistake, three times

On December 14, 2023, Ledger was hit again.

This time, the path was almost absurd: a former Ledger employee fell victim to a phishing attack, giving attackers access to his NPMJS account.

No one explained how long he had left the company. No one explained why a former employee still had access to critical systems.

Malicious code was injected into Ledger Connect Kit, a core library relied upon by countless DeFi applications. SushiSwap, Zapper, Phantom, Balancer—the front end of the DeFi ecosystem instantly turned into phishing pages.

Ledger fixed the issue within 40 minutes. But $600,000 was already gone.

CEO Pascal Gauthier later described it as “an unfortunate isolated incident.”

Isolated?

Just two weeks before announcing its IPO plan, on January 5, 2026, Ledger disclosed yet another breach—this time involving its third-party payment processor Global-e. Customer names and contact details were leaked once again.

Six years. Three major breaches.

Each time, an “isolated incident.” Each time, a “third-party issue.” And each time, the users bore the consequences.

If a traditional financial institution suffered three major security incidents in six years, regulators would have pulled its license long ago. In crypto, it can go public—and triple its valuation.

Recover: a public betrayal

If data breaches can be blamed on accidents or negligence, Ledger Recover was a deliberate self-detonation.

In May 2023, Ledger launched a new service priced at $9.99 per month. Users could split and encrypt their recovery phrase and entrust the shards to three companies: Ledger, Coincover, and EscrowTech. Lose your recovery phrase? Show your ID and get it back.

For everyday users worried about losing their seed phrase, it sounded reassuring.

But there was a fundamental problem: the entire premise of hardware wallets is that “the private key never leaves the device.”

Former Ledger CEO Larchevêque later admitted on Reddit that if users enabled Recover, governments could legally compel the three companies to hand over the key shards and access user funds.

The community exploded. Photos of users burning their Ledger devices circulated on Twitter.

Polygon’s Chief Information Security Officer Mudit Gupta tweeted: “Anything protected by ‘identity verification’ is inherently insecure, because identities are easy to fake.”

Binance founder Changpeng Zhao also questioned whether this meant cold wallet seed phrases could be separated from the device, calling it fundamentally opposed to crypto’s core principles.

Ledger’s response was blunt: “Most crypto users today still rely on exchanges or software wallets with limited security. For many people, managing a 24-word recovery phrase is itself an insurmountable barrier. Paper backups are becoming obsolete.”

The logic isn’t wrong. But when a company’s growth strategy requires diluting its core value proposition, things get complicated.

Ledger’s early users were geeks. Geeks argue. Geeks write long Reddit posts criticizing you. But geeks already bought their wallets—and they don’t drive growth.

Growth comes from newcomers. Newcomers hate friction. Newcomers will gladly pay $9.99 for peace of mind. They don’t care about “private keys never leaving the device.”

This isn’t a trade-off between security and convenience.

It’s a public betrayal of core users—cashing in their trust for access to a larger market.

The wrench attack

Let’s return to David Balland’s missing finger.

Crypto has a term: the “wrench attack.” No matter how strong the cryptography or how decentralized the protocol, nothing stops someone holding a wrench and demanding your private key.

It sounds like dark humor—a joke programmers make while sketching threat models on a whiteboard.

But when it actually happens, it isn’t funny at all.

In December 2024, the wife of Belgian crypto influencer Stéphane Winkel was kidnapped. In May 2025, the father of another crypto millionaire lost a finger. Balland’s case is part of a broader trend.

A French internal security expert said in an interview: “The methods are strikingly similar. Whether it’s the same group remains under investigation, but one thing is clear—the industry has become a hunting ground for professional kidnappers.”

The question is: where does the hit list come from?

Those 272,000 home addresses from 2020 are still circulating on the dark web. This wasn’t just a data leak—it was a directory labeled “this person owns crypto,” with asset size roughly inferable from the Ledger model purchased. Buyers of the most expensive models likely held the most crypto.

In a sense, Balland’s fate was seeded by Ledger itself.

That may sound harsh—Ledger didn’t hand data to kidnappers. But when a company that sells “security” can’t even protect customer home addresses, it’s hard to claim zero responsibility.

The logic of $4 billion

After all this negativity, why is Wall Street still backing Ledger?

One word: FTX.

In November 2022, FTX collapsed. A $32 billion valuation vanished overnight. Hundreds of thousands of users had their assets frozen, many never to be recovered.

“Not your keys, not your coins” suddenly became a brutal lesson.

Hardware wallet demand exploded—and Ledger was the only player with real brand recognition. According to BSCN, it controls 50–70% of the market. Ledger claims to safeguard $100 billion in Bitcoin—around 5% of total global supply.

Timing matters too.

In 2025, crypto companies raised $3.4 billion via IPOs. Circle and Bullish each raised over $1 billion. BitGo became the first crypto company to list in 2026. Kraken is reportedly lining up at a $20 billion valuation.

It’s an exit feast. Ledger doesn’t want to miss the table.

Founders want liquidity. VCs want out. And secondary markets—fueled by a Bitcoin frenzy—are willing to buy anything labeled “crypto.”

According to Market Growth Report, the global crypto hardware wallet market was valued at $914 million in 2026 and is projected to reach $12.7 billion by 2035, with a CAGR of 33.7%. If adoption accelerates—as Bitcoin ETFs and institutional interest suggest—Ledger is well positioned to capture the upside.

A $4 billion valuation isn’t about hardware. It’s about the narrative of “crypto custody infrastructure.” Investors aren’t buying a device maker—they’re buying the industry’s only recognizable “digital vault.”

In other words, it’s narrative pricing, not business pricing.

The truth beyond the candlesticks

Narratives, of course, can change overnight.

Look at crypto stocks that listed in 2025. How have they performed?

Circle: down from $298 to $69.

Bullish: from $118 to $34.

BitGo: up 25% on day one, gains erased within three days.

That’s the fate of crypto equities: correlated with Bitcoin, disconnected from fundamentals.

Marcin Kazmierczak, co-founder and COO of modular oracle Redstone, said in an interview that despite ongoing uncertainty, the regulatory environment remains favorable for Ledger.

He cautioned that Ledger’s revenue is still tied to consumer hardware cycles—“another prolonged downturn would absolutely hurt, as we saw in 2022”—but noted that an IPO could benefit from “an institutional cycle stronger than pure retail enthusiasm.”

Survival of the adaptable

Ledger’s IPO story is a mirror of the crypto industry.

A company selling “security,” whose greatest historical risks came from security failures.

A product promising full user control over private keys, now offering third-party key custody.

A team whose co-founder lost a finger, preparing to step into the most public capital market of all.

Contradictions? Absolutely.

But crypto has never been about resolving contradictions. It’s about surviving with them.

The 2020 data breach didn’t kill Ledger. Neither did the 2023 supply-chain attack. Nor the Recover backlash. Nor a co-founder’s kidnapping.

It survived. And now it’s going public.

Maybe that’s crypto’s deepest metaphor:

In a world where even a founder’s fingers aren’t safe, nothing truly is.

But money always finds somewhere to go.

And the companies still standing in the ruins often become the kings of the next cycle.

Whether Ledger will be one of them—time will tell.

Or the next breach will.

Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:

To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:

Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:

I. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.

The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.

A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.

（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.

Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.

II. Sound Work Mechanism

(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.

The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.

(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.

(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.

(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.

(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.

（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.

（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.

（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.

（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.

（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.

(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.

V. Strengthen Organizational Implementation

(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.

(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.

VI. Legal Responsibility

(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.

(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.

This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.

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