Digital Wallet
By Julie Binoche
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What Coinkite Said — and What It Means for Users. Coldcard's manufacturer, Coinkite, admitted to the flaw.
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CZ's Diversification Call and the Tradeoffs It Brings. CZ's advice sounds simple: don't keep everything in one wallet. Spread it out.
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Binance founder Changpeng Zhao — CZ to pretty much everyone in crypto — is telling holders to split their funds across multiple wallets.
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The numbers kept climbing after the initial shock. On July 30, bitcoin users started noticing unauthorized transactions draining their Coldcard wallets.
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Coldcard's manufacturer, Coinkite, admitted to the flaw. They pushed out emergency firmware updates fast, which is the right move.
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That's a lot of work for users who thought hardware wallets were basically set-and-forget. They're not, clearly.
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The flaw apparently sat undetected from March 2021 until now. That's years of wallets operating with weakened entropy in their seed generation, and nobody caught it — or if…
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CZ's advice sounds simple: don't keep everything in one wallet. Spread it out. If one device or one seed gets compromised, you haven't lost everything.
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Related: Coldcard Firmware Bug Drained Bitcoin Wallets Worth Nearly $70 Million
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But it's not without friction. Managing multiple wallets means managing multiple private keys, multiple seed phrases, multiple recovery processes.
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So CZ's recommendation is sound, but it's also kind of a double-edged thing. Diversification spreads risk. It also multiplies the surface area where human error can happen.
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The broader crypto community has been wrestling with this tension for years. Hardware wallets became popular because they kept private keys offline, away from internet-connected…
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Coinkite moved quickly once the exploit surfaced. Emergency patches, public acknowledgment, clear instructions for affected users.
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Still, 1,196 addresses drained. 1,082.65 BTC gone. Many of those wallets hadn't moved funds in a long time, which means some of those losses probably hit people who assumed their…
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Read also: Bitcoin Closes July Up 7.5% as Coldcard Hack and Fed Fears Rattle Traders
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