Storing money in offline devices means absolutely no risk, does it? A recent hacking incident has caused a huge uproar on social media, leaving those whose bitcoins mysteriously disappeared in panic.
According to a report by The National Post, Canadian custodial bitcoin wallet company Coinkite Inc. recently suffered a major security breach, resulting in hackers successfully stealing over $100 million (about 140 million Canadian dollars) worth of bitcoins.
According to statistics from Galaxy Research, as of Monday (August 3), more than 1,755 bitcoins (valued at about $110 million) have been stolen from around 5,000 wallets. The loss amount has rapidly increased in just a few days, making this incident one of the largest cryptocurrency theft cases of the year.
The target of the attack was the Coldcard cold wallet produced by Coinkite. Coldcard is a mainstream cryptocurrency hardware wallet device and a core tool for users to set up cold wallets.
A “cold wallet” refers to storing the private key in offline hardware devices without direct network connection. Originally considered one of the most secure ways to store cryptocurrencies, it was seen as an additional security measure in case long passwords were repeatedly breached, thus favored by long-term investors and large holders.
However, Coinkite issued a notification to users last week admitting that some wallets set up using Coldcard devices had been compromised. The company has released new software in an attempt to mitigate further risks.
Ayesha Kiani, the Chief Operating Officer of digital asset investment company Monarq Asset Management, stated that the incident highlights the importance of the reliability of key generation and protection processes for self-custody security, rather than solely relying on hardware devices.
Aneirin Flynn, CEO of cybersecurity company Failsafe, pointed out that many people mistakenly think that offline cold wallets are absolutely secure, but if there are vulnerabilities in the underlying algorithms, even if the devices are never connected to the internet, they can still be hacked.
He said, “This incident exposes the myth that ‘offline means secure.’ Hardware is only responsible for generating passwords, and if the algorithm itself is flawed, the password can still be reverse-engineered.”
According to a technical analysis report by payment company Block engineering team, the issue lies not with bitcoin itself, but with a flaw in Coldcard when generating the “Seed Phrase.”
The Seed Phrase is a password consisting of 12 to 24 English words that can be used to recover the entire cryptocurrency wallet. Once someone obtains the Seed Phrase, they can have full control over all assets in the wallet.
The report indicates that Coldcard’s random number generator has a vulnerability where in some cases, the system uses easily deducible values like device serial numbers to generate the Seed Phrase instead of truly random passwords.
This allows hackers to derive the user’s Seed Phrase through extensive calculations, establish a new wallet, and steal the bitcoins inside.
In fact, this logic is similar to the principle of saving money in a bank account: while the banking system itself has high security measures, if a user’s password is compromised, their account funds can still be stolen.
Last Friday’s report showed losses from the hacking attack were about $38 million, but this figure rapidly climbed from the weekend to Monday.
One victim, Jonathan Goodman, told Bloomberg in an interview that when he checked his wallet, he found all his assets had disappeared.
He said, “The moment the page fully loaded, I knew it was over because I saw the red withdrawal alert. Between 9:36 pm and 9:43 pm on July 29, all three of my wallets were emptied.”
Goodman mentioned that he lost about $1.6 million as a result.
For affected bitcoin holders, the most infuriating aspect is that they believed they were using the most secure investment protection method. Tim Lamb, Managing Director of EquityEdge Studio, pleaded for authorities to find the culprits as he shared on X Forum that the two bitcoins he held were intended to give his child “a good start,” and the loss now is a “heavy blow.”
While the amount of stolen cryptocurrency has decreased compared to last year, attacks continue to rise.
The latest report from blockchain security company TRM Labs shows that in the first half of 2026, global losses from cryptocurrency hacking were about $972 million, less than half of the $2.3 billion in the same period in 2025.
However, there were 207 network attack incidents in the first six months of this year, setting a record for the highest number of attacks in the same period, indicating an increasing frequency of hacker attacks.
For Goodman, this incident made him realize how deeply he had “blind trust” in the technology he used. He stated that he will no longer invest in bitcoin or use cold wallets in the future.