In 2013, a British girlfriend accidentally threw away her hard drive containing around 8,000 bitcoins. The years of legal battle for the right to recover the disk from the landfill came to nothing. These stories and four others remind us to treat our crypto assets with caution.
How not to throw away bitcoins: James Howells case
The story of a Welsh computer scientist whose hard drive containing thousands of bitcoins was dumped in a landfill has circulated in the media for years. All this time, he tried in vain to access the landfill where his treasures rest in peace, and it seems that on January 9, 2025, the affair ended in a dismal outcome.
Newport resident James Howells discovered Bitcoin around 2009 and dabbled in mining for a while before forgetting about the cryptocurrency altogether for several years. At one point, he spilled liquid on his computer so he took it apart, while backing up his hard drive. The disk allegedly contains a private key to Howells’ Bitcoin wallet. In 2013, his then-girlfriend Halfina Eddy-Evans accidentally threw away a hard drive.
Here’s what Eddy-Evans told the Daily Mail in an exclusive interview:
“The computer part had been thrown into a black bag with other unwanted items, and he begged me to take it, saying, ‘There’s a trash bag here to take to the dump.’
I had no idea what was in it, but I reluctantly dropped it off at the local dump on my way home from the school run…I thought he was the one who should shopping, not me, but I did it to help… Losing wasn’t my fault.
After a while, Howells realized that the approximately 8,000 BTC he had mined in the past cost millions. He tried to find a valuable disk but failed. After some sort of investigation, he came to the conclusion that the hard drive containing a private key was located somewhere in the Docksway landfill in Wales. The weight of waste present in this landfill is estimated at more than 1.4 million tonnes.
Howells, along with a team of specialists, planned to excavate the site. Although Howells planned to fund the operation himself and return 25 or 30 percent to Newport City Council and local residents, authorities refused him permission, citing the environmental impact. The search of the premises could have caused fires and the release of toxic gases.
Howells sued Newport City Council. In his ultimatum he demanded permission to excavate the landfill or compensation of £495 million. On 9 January 2025, it was reported that the High Court had dismissed the case as it had no realistic prospect of success.
At that time, the total cost of Howells’ bitcoins was estimated at around $750 million. The possibility of the site search being successful is, however, questionable. What are the chances that the hard drive in question is still operational? What are the chances it’s in the Docksway landfill? Does this record really exist? Why did Howells and Halfina split? So many questions.
IronKey on my back: the Stephan Thomas affair
The case of Stephan Thomas is another well-known nightmare in the crypto community. An American programmer of German origin, he was paid in BTC for creating the animated Bitcoin educational video in 2011. Thomas decided to store a reasonable reward of 7,002 BTC (!) on a USB hardware wallet, IronKey (around 5 .$3,000 at the time). ).
Hardware wallets are widely recognized as the most secure way to store bitcoins. The problem is that Thomas lost the paper with the password and IronKey is programmed to lock the rooms forever after ten incorrect password entries. A multi-millionaire, on paper at least, Thomas has done everything he could and more to crack the damn code. He hired cryptography experts. He even resorted to hypnosis. After eight out of ten attempts, nothing works. Fortunately, in 2012, Thomas started working at Ripple and has since acquired a lot of crypto without repeating his old mistakes.
The crypto wallet forgets the password: Peter Schiff affair
On January 19, 2020, Peter Schiff, a staunch Bitcoin critic, gold maximalist and chief economist at Europac, took to X to share a screenshot of his crypto wallet app, showing that he cannot enter the correct password. The caption he added stated that his password was no longer valid and that the wallet “had been corrupted in some way.”
He concluded that owning Bitcoin was a bad idea. Afterwards, a number of Bitcoin enthusiasts gave him advice or offered help. When Anthony Pompliano, CEO of Professional Capital Management and famous Bitcoin maxi, assumed that Schiff had simply forgotten his password, the latter added that it was not him who had forgotten the password, but his wallet.
When another tech CEO, Rahul Sood, asked Schiff to provide his punchline, Schiff said he never had one. Days later, Schiff admitted to mistaking his PIN for a password, but insisted he still couldn’t access his coins. This is not something strange given that the economist did not save his password or seed phrase.
Luckily, he said it wasn’t a tragedy for him because the bitcoins in his wallet were gifted to him and his plan was to HODL until Bitcoin sinks. Quick reminder: when the story took place, Bitcoin was trading at around $8,600. This story tells us that no matter your position in the financial world, if you use crypto apps incorrectly, you can lose your coins.
Orange paper: Mark Frauenfelder case
One of the original Wired authors and co-founder of BoingBoing, Mark Frauenfelder, shared his story in Wired. He spent $3,000 to buy 7.4 BTC in January 2016. When the price of BTC increased significantly, he wisely decided to move his coins to a Trezor hardware wallet. He wrote the 24-word seed phrase on a piece of orange paper, created an easy-to-remember PIN, and added it next to the seed phrase.
While Frauenfelder was on vacation, the cleaning service employee threw away the orange paper. In 2017, when the price of BTC skyrocketed, Mark decided to move his coins, but it turned out he had forgotten a PIN.
One of Trezor’s features is that each incorrectly entered PIN doubles the wait time before the next attempt. Soon, Mark found himself faced with an hour-long waiting period. That’s when he decided to contact the support team. However, without a starting sentence written on the same lost paper, they could do nothing. It took Frauenfelder four hours of hypnosis session to recall the PIN code. A mistake. Subsequent attempts resulted in the wallet being blocked for 18 hours.
As an IT industry professional, Frauenfelder already knew leading fintech experts. One of them advised Mark to seek help from Saleem Rashid, a hacker prodigy. Rashid successfully hacked Trezor and recovered a PIN and seed phrase. Please note that the hacked version of the wallet is no longer supported and later versions are considered safe. Please do your best to store backup data safely.
The professor learned his lesson: the case of Alexander Halviens
Alexander Halavez, a professor of social technology at Arizona State University, purchased $70 worth of BTC in front of the graduating class as part of the educational process in 2010. He didn’t think much about these coins at that time, and so he lost access to his wallet.
Seven years later, in an interview amid the 2017 crypto craze, Halallais joked that he was trying to ignore news about the current price of Bitcoin so as not to get upset.
