Bitcoin
Ledger and Trezor say hardware wallets unaffected by Coldcard $38M exploit
A firmware flaw in Coldcard hardware wallets enabled theft of $38M in Bitcoin, prompting competitors to clarify their own security designs and reigniting debate over self-custody risks.
Ledger and Trezor have stated their Bitcoin hardware wallets are not affected by a code flaw discovered in Coinkite's Coldcard that allowed an attacker to steal $38M worth of BTC. The vulnerability downgraded Coldcard's random number generation from 128-bit to a guessable 40-bit system, making seed phrases vulnerable to brute force attacks.
Ledger emphasized it uses a 256-bit entropy system, maintaining stronger security than the compromised Coldcard design. Trezor similarly assured users that the incident stems from Coldcard's custom firmware implementation, which it does not share.
The exploit nevertheless sparked broader concern about hardware wallet safety and self-custody. TaprootWizards' Udi Wertheimer warned that self-custody has become "worryingly unrealistic," citing emerging cybersecurity threats. Coinbase CEO Brian Armstrong countered that improved physical security can be achieved through air-gapping keys, a standard Coinbase applies to its crypto ETF custody operations.
Sentiment around Bitcoin fell to a four-month low following the incident, with BTC briefly dropping nearly 3% to $62.4K before recovering above $63K. Spot Bitcoin ETFs recorded a daily net outflow of $265M on Friday amid the weakened market confidence. Some analysts have suggested that self-custody concerns could drive investors toward regulated spot ETFs, though this remains uncertain given current market conditions.
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