Coldcard Hack Reverses Bitcoin Trend as Investors Send Coins Back to Exchanges

A recent hack on Coldcard devices has led to a significant shift in Bitcoin's movement. After the $89M Coldcard hack, data from CryptoQuant shows that people are sending their Bitcoin back to exchanges, reversing the trend seen after FTX's collapse.

The vulnerability exploited by the attacker was a five-year-old firmware bug, which allowed them to drain 1,367 BTC worth approximately $89 million from 4,585 addresses across three separate waves. The bug silently routed seed generation through a weak deterministic fallback rather than the device's hardware random number generator.

Casa CEO Nick Neuman estimates that 10 times more Bitcoin was protected through self-custody than was stolen in this attack. However, Bloomberg's Eric Balchunas argues that for investors who only want price exposure and do not need to move their Bitcoin around, an ETF with Coinbase Custody holding keys in segregated cold storage under regulatory oversight can remove the risk represented by the hack.