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CZ urges diversifying crypto wallets after Coldcard exploit
The Coldcard firmware flaw dates to March 2021, and analysis by Galaxy Research estimated about $70 million in BTC was drained across more than 1,100 addresses.
CoinDesk reports that Binance founder Changpeng Zhao, known as CZ, urged crypto holders to split funds across multiple wallets after a major security failure involving Coldcard hardware devices. Zhao said even hardware wallets can have bugs and that no single storage method is risk free. He suggested diversification as a way to mitigate the impact of a specific wallet or device being compromised, while noting it introduces a different set of risks.
CoinDesk adds that on July 30, some bitcoin users discovered unexpected transactions that drained funds from Coldcard wallets. The attacker reportedly exploited a firmware flaw dating to March 2021 that weakened randomness used to generate recovery seeds on certain models, allowing private keys to be reconstructed offline without physically accessing the devices.
According to CoinDesk, initial reports estimated about 594 BTC, worth $38 million at the time, were drained from around 500 wallets in about 25 minutes. Subsequent analysis by Galaxy Research expanded the totals to 1,082.65 BTC, valued at approximately $70 million, taken from 1,196 addresses over roughly 41 minutes, with many affected wallets having been dormant for years. CoinDesk also notes that Coldcard maker Coinkite acknowledged the bug, apologized, and issued emergency firmware updates, advising users to create new seeds on patched devices and to migrate funds carefully because simply updating firmware would not secure already created vulnerable seeds.
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