Ledger, a prominent manufacturer of hardware wallets, has instructed a reseller in Southeast Asia to cease sales of its products due to alarming reports of customer fund losses. This decision follows an investigation revealing that potential losses could exceed $86 million.

While Ledger is currently investigating the matter, they have not confirmed the loss figure nor addressed whether any of their devices have been compromised. Their warning specifically targets recent purchasers from one reseller, CryptoBilis, based out of Malaysia.

Hardware wallets are vital security tools that store cryptocurrency private keys offline. Ledger is widely recognized for producing these devices.

On Friday, Ledger Support identified CryptoBilis as the seller associated with the ongoing issues. Founded in 2020, this Malaysian shop also sells other crypto-related merchandise and has extended its operations to Indonesia and the Philippines.

Customers who bought devices from CryptoBilis within the last 90 days have been advised against setting them up. For those who may have already activated their wallets, Ledger has recommended transferring funds to a new device, ensuring they generate a fresh seed phrase—a crucial 24-word backup.

“As a precaution, and pending the results of our investigation, we have asked CryptoBilis to pause all sales and shipments of Ledger devices,” Ledger Support stated.

The estimation regarding the $86 million loss was reported by Specter, an on-chain investigator known for examining public blockchain transactions. Specter has traced illicit funds from numerous victim wallets across several platforms, including Ethereum, TRON, and Bitcoin.

Records indicate that three Bitcoin addresses identified by Specter hold approximately 211 BTC, which remained static as of 13:44 UTC on Friday. However, Ledger has not substantiated the $86 million claim nor elucidated how user funds were compromised.

The sale of tampered hardware wallets, particularly through unofficial channels, poses substantial risks. For instance, a separate investigation in April uncovered counterfeit Ledger devices being sold on a Chinese marketplace, which compromised users’ security by transmitting PINs and seed phrases to hackers.

Earlier this year, another incident involved a firmware bug in Coldcard, a competing hardware wallet, leading to severe financial losses of around $70 million for Bitcoin holders.

As the investigation into CryptoBilis unfolds, Ledger has committed to providing updates regarding the situation. The origin of the alleged alterations to the devices before they were sold remains unconfirmed.