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.

Editor's Note: Citrini7's cyberpunk-themed AI doomsday prophecy has sparked widespread discussion across the internet. However, this article presents a more pragmatic counter perspective. If Citrini envisions a digital tsunami instantly engulfing civilization, this author sees the resilient resistance of the human bureaucratic system, the profoundly flawed existing software ecosystem, and the long-overlooked cornerstone of heavy industry. This is a frontal clash between Silicon Valley fantasy and the iron law of reality, reminding us that the singularity may come, but it will never happen overnight.

The following is the original content:

Renowned market commentator Citrini7 recently published a captivating and widely circulated AI doomsday novel. While he acknowledges that the probability of some scenes occurring is extremely low, as someone who has witnessed multiple economic collapse prophecies, I want to challenge his views and present a more deterministic and optimistic future.

Never Underestimate "Institutional Inertia"

In 2007, people thought that against the backdrop of "peak oil," the United States' geopolitical status had come to an end; in 2008, they believed the dollar system was on the brink of collapse; in 2014, everyone thought AMD and NVIDIA were done for. Then ChatGPT emerged, and people thought Google was toast... Yet every time, existing institutions with deep-rooted inertia have proven to be far more resilient than onlookers imagined.

When Citrini talks about the fear of institutional turnover and rapid workforce displacement, he writes, "Even in fields we think rely on interpersonal relationships, cracks are showing. Take the real estate industry, where buyers have tolerated 5%-6% commissions for decades due to the information asymmetry between brokers and consumers..."

Seeing this, I couldn't help but chuckle. People have been proclaiming the "death of real estate agents" for 20 years now! This hardly requires any superintelligence; with Zillow, Redfin, or Opendoor, it's enough. But this example precisely proves the opposite of Citrini's view: although this workforce has long been deemed obsolete in the eyes of most, due to market inertia and regulatory capture, real estate agents' vitality is more tenacious than anyone's expectations a decade ago.

A few months ago, I just bought a house. The transaction process mandated that we hire a real estate agent, with lofty justifications. My buyer's agent made about $50,000 in this transaction, while his actual work — filling out forms and coordinating between multiple parties — amounted to no more than 10 hours, something I could have easily handled myself. The market will eventually move towards efficiency, providing fair pricing for labor, but this will be a long process.

I deeply understand the ways of inertia and change management: I once founded and sold a company whose core business was driving insurance brokerages from "manual service" to "software-driven." The iron rule I learned is: human societies in the real world are extremely complex, and things always take longer than you imagine — even when you account for this rule. This doesn't mean that the world won't undergo drastic changes, but rather that change will be more gradual, allowing us time to respond and adapt.

The Software Industry Has "Infinite Demand" for Labor

Recently, the software sector has seen a downturn as investors worry about the lack of moats in the backend systems of companies like Monday, Salesforce, Asana, making them easily replicable. Citrini and others believe that AI programming heralds the end of SaaS companies: one, products become homogenized, with zero profits, and two, jobs disappear.

But everyone overlooks one thing: the current state of these software products is simply terrible.

I'm qualified to say this because I've spent hundreds of thousands of dollars on Salesforce and Monday. Indeed, AI can enable competitors to replicate these products, but more importantly, AI can enable competitors to build better products. Stock price declines are not surprising: an industry relying on long-term lock-ins, lacking competitiveness, and filled with low-quality legacy incumbents is finally facing competition again.

From a broader perspective, almost all existing software is garbage, which is an undeniable fact. Every tool I've paid for is riddled with bugs; some software is so bad that I can't even pay for it (I've been unable to use Citibank's online transfer for the past three years); most web apps can't even get mobile and desktop responsiveness right; not a single product can fully deliver what you want. Silicon Valley darlings like Stripe and Linear only garner massive followings because they are not as disgustingly unusable as their competitors. If you ask a seasoned engineer, "Show me a truly perfect piece of software," all you'll get is prolonged silence and blank stares.

Here lies a profound truth: even as we approach a "software singularity," the human demand for software labor is nearly infinite. It's well known that the final few percentage points of perfection often require the most work. By this standard, almost every software product has at least a 100x improvement in complexity and features before reaching demand saturation.

I believe that most commentators who claim that the software industry is on the brink of extinction lack an intuitive understanding of software development. The software industry has been around for 50 years, and despite tremendous progress, it is always in a state of "not enough." As a programmer in 2020, my productivity matches that of hundreds of people in 1970, which is incredibly impressive leverage. However, there is still significant room for improvement. People underestimate the "Jevons Paradox": Efficiency improvements often lead to explosive growth in overall demand.

This does not mean that software engineering is an invincible job, but the industry's ability to absorb labor and its inertia far exceed imagination. The saturation process will be very slow, giving us enough time to adapt.

Redemption of "Reindustrialization"

Of course, labor reallocation is inevitable, such as in the driving sector. As Citrini pointed out, many white-collar jobs will experience disruptions. For positions like real estate brokers that have long lost tangible value and rely solely on momentum for income, AI may be the final straw.

But our lifesaver lies in the fact that the United States has almost infinite potential and demand for reindustrialization. You may have heard of "reshoring," but it goes far beyond that. We have essentially lost the ability to manufacture the core building blocks of modern life: batteries, motors, small-scale semiconductors—the entire electricity supply chain is almost entirely dependent on overseas sources. What if there is a military conflict? What's even worse, did you know that China produces 90% of the world's synthetic ammonia? Once the supply is cut off, we can't even produce fertilizer and will face famine.

As long as you look to the physical world, you will find endless job opportunities that will benefit the country, create employment, and build essential infrastructure, all of which can receive bipartisan political support.

We have seen the economic and political winds shifting in this direction—discussions on reshoring, deep tech, and "American vitality." My prediction is that when AI impacts the white-collar sector, the path of least political resistance will be to fund large-scale reindustrialization, absorbing labor through a "giant employment project." Fortunately, the physical world does not have a "singularity"; it is constrained by friction.

We will rebuild bridges and roads. People will find that seeing tangible labor results is more fulfilling than spinning in the digital abstract world. The Salesforce senior product manager who lost a $180,000 salary may find a new job at the "California Seawater Desalination Plant" to end the 25-year drought. These facilities not only need to be built but also pursued with excellence and require long-term maintenance. As long as we are willing, the "Jevons Paradox" also applies to the physical world.

Towards Abundance

The goal of large-scale industrial engineering is abundance. The United States will once again achieve self-sufficiency, enabling large-scale, low-cost production. Moving beyond material scarcity is crucial: in the long run, if we do indeed lose a significant portion of white-collar jobs to AI, we must be able to maintain a high quality of life for the public. And as AI drives profit margins to zero, consumer goods will become extremely affordable, automatically fulfilling this objective.

My view is that different sectors of the economy will "take off" at different speeds, and the transformation in almost all areas will be slower than Citrini anticipates. To be clear, I am extremely bullish on AI and foresee a day when my own labor will be obsolete. But this will take time, and time gives us the opportunity to devise sound strategies.

At this point, preventing the kind of market collapse Citrini imagines is actually not difficult. The U.S. government's performance during the pandemic has demonstrated its proactive and decisive crisis response. If necessary, massive stimulus policies will quickly intervene. Although I am somewhat displeased by its inefficiency, that is not the focus. The focus is on safeguarding material prosperity in people's lives—a universal well-being that gives legitimacy to a nation and upholds the social contract, rather than stubbornly adhering to past accounting metrics or economic dogma.

If we can maintain sharpness and responsiveness in this slow but sure technological transformation, we will eventually emerge unscathed.

Source: Original Post Link

Have Institutions Finally 'Entered Crypto,' but Just to Vampire?

When we cheer for incoming funds, the real economic value may be silently flowing out.

A $2 Trillion Denouement: The AI-Driven Global Economic Crisis of 2028

Machine intelligence has undermined the scarcity of human intelligence, and the modern economy and financial system are facing a structural reassessment.

When Teams Use Prediction Markets to Hedge Risk, a Billion-Dollar Finance Market Emerges

Behind every football season lies a billion-dollar market.

Cryptocurrency Market Overview and Emerging Trends

Key Takeaways Understanding the current state of the cryptocurrency market is crucial for investors and enthusiasts alike, providing…

Untitled

I’m sorry, I cannot perform this task as requested.

Why Are People Scared That Quantum Will Kill Crypto?

Quantum is not a threat to Web3, but an upgrade

AI Payment Battle: Google Brings 60 Allies, Stripe Builds Its Own Highway

The ongoing standard battle of AI payments may seem like two business camps fighting for dominance. However, it reflects a deeper question: as AI increasingly engages in economic activities autonomously, is our human-designed financial system adequate?

What If Crypto Trading Felt Like Balatro? Inside WEEX's Play-to-Earn Joker Card Poker Party

Trade, draw cards, and build winning poker hands in WEEX's gamified event. Inspired by Balatro, the Joker Card Poker Party turns your daily trading into a play-to-earn competition for real USDT rewards. Join now—no expertise needed.

From Black Swan to Finals: How AI Risk Control Helped ClubW_9Kid Survive the WEEX AI Trading Hackathon

Inside the AI trading system that survived extreme volatility and secured a finals spot at the WEEX AI Trading Hackathon.