According to German news outlet Heise, notable progress has been made regarding the counterfeit Seagate hard drive case. Just like something out of an action movie, security teams from Seagate's Singapore and Malaysian offices, in conjunction with local Malaysian authorities, conducted a raid on a warehouse in May that was engaged in cooking up counterfeit Seagate hard drives, situated outside Kuala Lumpur.
During the raid, authorities reportedly uncovered approximately 700 counterfeit Seagate hard drives, with SMART values that had been reset to facilitate their sale as new. The confiscated batch included several models from Seagate's extensive hard drive range, with capacities reaching up to 18TB. However, Seagate-branded drives were not the only items involved, as authorities also discovered drives from Kioxia and Western Digital.
Seagate suspects that the used hard drives originated from China during the Chia boom. Following the cryptocurrency's downfall, numerous miners sold these used drives to workshops where many were illicitly repurposed to appear new. This bust may represent only the tip of the iceberg, as Heise estimates that at least one million of these Chia drives are circulating, although the exact number that have been recycled remains uncertain.
The clandestine workshop, likely one of many establishments in operation, reportedly employed six workers. Their responsibilities included resetting the hard drives' SMART values, cleaning, relabeling, and repackaging them for distribution and sale via local e-commerce platforms. Occasionally, it's said that workers would upgrade the hard drives to enhance their market value, such as converting a Barracuda into an IronWolf or SkyHawk model.
The modus operandi encompassed all activities from priming the counterfeit hard drives to their sale. In fact, this method led to the apprehension of the suspects. The perpetrators were reportedly marketing these counterfeit hard drives on prominent platforms such as Shopee and Lazada at exceptionally low prices. According to the source, an unidentified Malaysian sales manager flagged the hard drives and subsequently alerted Seagate's security department, which purchased one of the drives and confirmed its fraudulent nature. Seagate collaborated with local law enforcement agencies to trace the goods back to the warehouse, resulting in a subsequent raid. After all, you can't just go kicking in doors on these types of unlawful activities, since criminal syndicates often oversee these scams. It's not something that an average Joe is doing inside a garage or in the backyard at scale.
Due to this unfortunate incident, Seagate has reportedly enhanced its partner program. Partners are now contractually obliged to purchase and resell Seagate hard drives exclusively from authorized Seagate distributors. Additionally, the company has implemented a Global Trade Screening (GTS) process to identify and exclude potentially suspicious suppliers that may be listed on the GTS sanction list.
The counterfeit hard drives were reportedly limited to German-speaking countries. However, there were some user reports from Australia and the U.S. Since we live in a globally connected world, it would be naive to think that none of the counterfeit hard drives made it to the U.S. market. The new discovery that some Kioxia and Western Digital hard drives are also susceptible to fraud means that consumers should exercise extra caution when purchasing a hard drive from non-major retailers, or third-party sellers.
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