Bitcoin News Today: Millions in Bitcoin Lost to Lost Passwords and Seed Phrases in 2025

With the increasing adoption of cryptocurrencies, more users are encountering the frustration of lost passwords and seed phrases. In 2025, the issue remains persistent, with Ledger analysts estimating that between 2.3 million and 3.7 million Bitcoin (BTC) is permanently lost as of early this year [1]. Additionally, the U.S. Federal Bureau of Investigation reported over $9.3 billion in losses from cryptocurrency investment fraud in 2024, with a significant portion affecting individuals over the age of 60 [1].

For users who have lost access to their crypto wallets, the path to recovery largely depends on whether the wallet is custodial or non-custodial. Custodial wallets, typically found on platforms such as Binance, Kraken, and Coinbase, offer a relatively straightforward recovery process. These platforms often allow users to reset passwords via email or through Know Your Customer (KYC) identity verification. In contrast, non-custodial wallets—such as MetaMask, Trust Wallet, and Ledger—do not hold private keys or seed phrases on behalf of users, making recovery more complex if both the password and seed phrase are lost [1].

For those who have lost their non-custodial wallet password but still possess the seed phrase, recovery is possible by importing the wallet and setting a new password. This process generally involves selecting the "Import Wallet" or "Restore Wallet" option within the application, then carefully entering the 12- or 24-word seed phrase. Once restored, a new password can be created for future access [1].

However, the situation is significantly more challenging when a user has lost both the password and the seed phrase for a non-custodial wallet. In such cases, the likelihood of regaining access is slim unless the user has a backup stored elsewhere. Users are encouraged to search for digital backups, such as .txt or .pdf files, or to check password managers, emails, and cloud storage for any stored information. Additionally, keeping multiple physical copies of the seed phrase in secure, separate locations is a recommended practice to mitigate such risks [1].

For those who are locked out of their custodial wallets, the process begins with initiating a password recovery through the platform’s login page. Users are typically prompted to provide an email address, phone number, or username. Verification may also involve answering security questions or submitting personal documents, depending on the platform's security policies. Once verified, a new password can be created, and enabling two-factor authentication is advised to enhance security [1].

In extreme cases where traditional recovery options fail, more advanced methods may be considered, such as using brute-force recovery tools or seeking assistance from blockchain forensics experts. These tools and services can be effective in tracing stolen funds or identifying fraudulent activity, though they come with risks and should only be used after thorough due diligence. It is important to avoid downloading tools from unverified sources and to work with firms that have a transparent, well-documented recovery process [1].

Users seeking professional recovery services must remain cautious, as the market is rife with scams. Legitimate recovery experts typically do not charge upfront fees and operate on a contingency basis, where payment is only made if the recovery is successful. They also provide detailed documentation, progress updates, and have publicly verified reviews. Users are advised to avoid those who make unrealistic claims of 100% success rates, as not every wallet can be recovered [1].

In conclusion, while technological advancements have made cryptocurrency more accessible, the responsibility of safeguarding private keys and seed phrases remains with the user. As of 2025, the loss of seed phrases and passwords continues to be a major issue, with significant financial and personal consequences. Understanding the type of wallet, the available recovery options, and the risks associated with third-party services is essential for users to protect their digital assets and avoid falling victim to further exploitation.

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[1] Lost your crypto password or seed phrase? Here’s what actually works in 2025, https://coinmarketcap.com/community/articles/689de97ecd503f0cdaa227a1/