Joe Burnett, Vice President of Bitcoin Strategy at Strive, described the past week as "possibly one of the worst weeks in the history of Bitcoin," arguing that large holders should place greater trust in institutional custodians than in hardware wallets. The recommendation is notable given Bitcoin's foundational ethos of self-sovereignty, encapsulated in the widely repeated phrase "not your keys, not your coins," which has long discouraged reliance on third-party custodians.

Coldcard Firmware Exploit Leads to ~1,082 BTC Loss

A firmware exploit in Coldcard hardware wallets resulted in the loss of approximately 1,082 BTC, valued at roughly $70 million. Coldcard devices, produced by Coinkite, are specifically marketed for their air-gapped security design and are widely used among Bitcoin self-custody advocates. The vulnerability, which exploited weak seed randomness, was present in version 4.0.0. Coinkite shipped that version from a code commit dated March 1, 2021, and subsequently patched it in version 4.21. The years-long window before discovery underscores a persistent challenge in hardware wallet security: firmware defects can remain undetected long after deployment.

The incident prompted Burnett to caution large Bitcoin holders about the risks associated with hardware wallets, recommending institutional custodians as a more secure alternative.

Despite the theft, Bitcoin's price remained relatively stable, hovering around $63,000 through the weekend. However, Santiment recorded the most negative Bitcoin social sentiment on record, a reaction attributable to the alarming discovery that even carefully managed self-custody arrangements could fail.

Burnett: Setup Flaws, Not User Error, Drove the Loss

Burnett emphasized that the victims were not at fault through carelessness. According to Burnett, affected users purchased genuine devices, generated their seeds offline, and followed recommended security practices, yet still lost their funds. He argued that a self-custody arrangement with a single point of failure is inherently fragile and can fail in multiple ways.

Drawing a distinction between self-custody risks and institutional custody, Burnett noted that large firms such as Fidelity and BitGo operate under fundamentally different security frameworks compared to the exchange landscape that preceded the COVID-19 pandemic. These custodians typically employ multi-signature architectures, cold storage, and regulated oversight. He stated that institutional custodians actively work to avoid the same vulnerabilities that plague individual self-custody setups.

Changpeng Zhao (CZ), founder of Binance, also responded to the attack, urging holders to distribute their coins across multiple wallets, noting that "nothing is 100%."

Strive's Bitcoin Position

Strive, led by CEO Matt Cole, is a company built around holding Bitcoin. The firm trades on the Nasdaq under the ASST ticker and ranks as the seventh-largest public company holder of Bitcoin, with 20,000 BTC valued at nearly $1.3 billion as of late July. Burnett's custody stance carries direct relevance to Strive's own treasury management approach for its substantial Bitcoin holdings.

Burnett is among Bitcoin's most prominent advocates. He predicts that Bitcoin will reach $11 million per coin by Q1 2036, positing that AI-driven deflation will compel central banks to continue expanding the money supply, ultimately driving prices to those levels.

Source: CryptoNewsNet