Keystone to Destroy 18,835 Wallets After Security Breach

The attackers gained unauthorized access to Keystone’s systems by exploiting a vulnerability in a third-party data monitoring tool. While the compromised WebAuth key is embedded during manufacturing to verify device authenticity, the company confirmed that private keys, recovery phrases, and transaction-signing capabilities remain secure. The stolen credential, however, poses a significant risk as it could allow for the production of counterfeit wallets that bypass official security checks.

Keystone has halted standard operations to transition to a preorder model using a replacement authentication key. Customers who received devices after the October 20 breach are being advised to contact support for additional verification. The company acknowledged that its data retention policies failed, as an automated tool neglected to purge customer records within the mandated 180-day window. In response, Keystone has reduced its data retention period to 90 days and initiated a comprehensive security audit, while notifying law enforcement agencies across the European Union and the United Kingdom.