Alby Wallet Under Fire as Users Claim Bitcoin Balances Mysteriously Vanish

Another day, another crypto mystery—this time with users pointing fingers at Alby Wallet after reporting unexplained Bitcoin outflows. No hacks, no phishing, just... poof. Gone.

Where’s the money? Theories range from sync glitches to backend bugs, but Alby’s silence isn’t exactly reassuring. Meanwhile, Bitcoiners are left scrambling—because nothing says ''decentralization'' like watching your sats disappear without a trace.

Pro tip: Maybe keep that cold wallet handy. After all, trusting third parties with your crypto hasn’t exactly had a stellar track record—just ask your 2022 self.

Alby wallet’s updated ToS allows it to empty inactive legacy wallets

Alby is also different from other wallets in that it has a subscription fee for some of its paid services. Alby also tries to manage both new and legacy wallets, with the recent confiscation rule affecting wallets created before 2023. 

“To manage these inactive accounts effectively, we reserve the right to deduct the entire remaining balance from a user’s legacy Alby Account with a shared wallet after 12 consecutive months of inactivity, defined as no completed transactions during that period,” explained Alby in its ToS.

The wallet operator has also opened a helpline for affected wallets. Alby has the ability to retain balances, as it offers a switch between Lightning network and the Bitcoin main chain. Up to 70,000 users may be affected based on the total download count. 

Michael Bumann, Lightning network and Alby wallet developer, also stated that the legacy wallets were affected only after a long transition period with multiple warnings. However, the recent transfers and inability to withdraw funds worried users whose balances disappeared.

Hi,
I understand your frustration. The old system from 2023 and before was shut down and replaced. There has been a grace period of 1.5 years in which many emails and notifications have been sent and many public announcements have been made. Old users have to move to the new…

— Michael Bumann 🍉 (@Bumi) June 10, 2025

The transfer rule was also meant to nudge users to create new wallets and move their funds from the legacy accounts. Alby was able to move the funds, as it initially launched custodial wallets where it controlled the keys. New wallets leave the holder in control of the private keys and hold no similar vulnerability.

Alby offers a model based on wallet-as-a-service, with a $9.90 monthly subscription. The wallet offers cloud hosting, but can also be self-hosted. 

The ability to hold BTC for a long time is key for most wallet owners, so Alby’s move goes against the main crypto ethos of holding BTC in a self-custody wallet.

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