Morning Minute is a daily newsletter by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt.

Today's Top News

• Crypto majors continue sliding despite falling oil prices; BTC at $62.6k
• Coldcard hack surpasses $89 million in losses
• BitGo CEO challenges Anthropic to hack a BTC wallet holding 100 BTC
• Tether Q2 profits jump 50% to $1.5 billion
• CATE soars to $50 million and StonkBrokers reach 6.9 ETH, leading onchain action

The Coldcard Hack Surpassed $89 Million Before a Fourth Wave

Coldcard is among the most trusted hardware wallets in Bitcoin — an air-gapped, offline device that serious holders rely on for deep cold storage. Last week, it became the center of one of the largest self-custody thefts on record. Attackers began systematically draining Bitcoin from Coldcard wallets by exploiting a flaw that allowed them to regenerate users' private keys without ever physically accessing the device.

The root cause is a firmware flaw, not phishing. A March 2021 Coldcard update drew wallet seeds from a weak software fallback rather than the hardware random number generator, reducing an Mk3's key security from the intended 128 bits to approximately 40 bits. For context, 40-bit encryption was deprecated for consumer web browsing in the late 1990s because it could be brute-forced in minutes, making the affected keys trivially guessable by modern hardware. This rendered keys guessable, which explains why coins left untouched for years are now being swept from wallets that were never connected to the internet. One Canadian victim lost 18.25 BTC from keys stored in a safety deposit box, noting that the most difficult part was that he had "done everything right."

The theft escalated throughout the weekend. What began on Thursday as an estimated $38 million drain continued climbing as researchers traced additional stolen funds. Galaxy Research now tracks approximately 1,367 BTC stolen — roughly $88.6 million — across 4,585 addresses in three distinct waves, with the latest wave flagged on Saturday. Galaxy warns that the exploit remains ongoing and that every vulnerable device will eventually be emptied. The firm has handed approximately 600 suspected attacker addresses to federal investigators.

A potential fourth wave of attacks could push total damages near $114 million, though researchers indicate that some of the latest attacks may be preventable by front-running transaction settlements in the mempool — broadcasting a competing transaction to move vulnerable funds to safety before an attacker's sweep is confirmed by miners.

Coinkite, Coldcard's manufacturer, stated it must assume an attacker used AI to comb through its open-source firmware to find the flaw. The company admitted that its own AI review of the same code weeks earlier "did not find this bug or anything serious." Galaxy's head of research, Alex Thorn, said the sweeps appear programmatic and were "probably orchestrated with a large language model." Defenders and attackers had access to the identical tool — this time, it only worked for the attacker.

In barely a week, an AI model cracked a post-quantum cryptography candidate that humans could not break, OpenAI's models escaped a sandbox to breach other companies' servers, and now attackers have reportedly used AI to drain $89 million from wallets marketed as the gold standard of self-custody.

Macro, Crypto and Markets

• Crypto majors are slightly lower: BTC -1% at $62.6k; ETH -1% at $1,840; SOL -1% at $72.30; HYPE +3% at $52.90
• Top alt movers include ALGO (+7%), HYPE (+3%) and ENA (+4%)
• Oil -6% at $79.50; Gold flat at $4,100
• Stock futures are higher on renewed Iran peace potential; DOW +1%, Nasdaq +0.35%
• Solana printed its 10th consecutive red monthly candle on July 31

BitGo CEO Mike Belshe publicly challenged Anthropic to hack a real wallet, telling the AI lab to move beyond "we created a hacking monster" demonstrations and posting a BitGo address holding 100 BTC for its models to attempt to drain.

Tether reported $1.5 billion in Q2 net operating profit, up nearly 50% from Q1. The profits stem primarily from interest income on the US Treasury bills backing USDT, whose circulation reached $184.6 billion. The reserve surplus exceeded $4 billion, and gold holdings rose to more than 146 metric tons.

Eric Trump's American Bitcoin reported a $57.2 million loss in Q2 while its Bitcoin holdings reached 8,002.

Circle obtained a New York trust charter from the NYDFS, enabling the USDC issuer to operate a New York trust company offering digital-asset custody — its second license in weeks following federal national trust bank approval.

South Korea's second-largest crypto exchange, Bithumb, is targeting an IPO in 2028.

Strategy sold $105 million in Bitcoin, funding preferred dividends and a STRC buyback.

Corporate Treasuries and ETFs

Bitcoin ETFs recorded $265 million in net outflows on Friday, ending the week with $60 million in net outflows overall. ETH ETFs saw $9 million in inflows on Friday and $11 million in net inflows for the week.

Meme Coin Tracker

Meme leaders were slightly lower: DOGE -1%, SHIB -3%, PEPE -1%, PENGU -1%, TRUMP +1%, BONK -3%.

The Robinhood chain was led by FRONG (+84%) and Cashcat (+20%); Stonkbroker briefly reached $50 million before retracing.

Solana leaders included CATE (+130%), Manifet (+69%) and Kimchi (+700%); ANSEM -11% at $190 million.

Token, Airdrop and Protocol Tracker

• DEX volumes reached 24% of CEX volumes in July, the highest ratio ever recorded — meaning roughly one in four crypto spot trades now settles on-chain rather than through a centralized exchange
• Polymarket and Kalshi reached $50 billion in combined volume in July, a new all-time high
• New launchpad Flap surpassed Pons in new daily launches on Sunday

NFT Market Update

NFT leaders were mixed: Punks flat at 32.3 ETH, BAYC -3% at 8.16 ETH, Pudgy +2% at 3.86 ETH; Stonkbrokers soared to 6.9 ETH.

Top movers were led by Pitboys (+43%) and Monkeyhood (+200%).