Coldcard Flaw Drives Bitcoin Back to Custodians, Trezor Says

A flaw in Coldcard hardware wallets' seed generation has drained real Bitcoin from real users, and the fallout is already reshaping how people hold their coins. Some of that Bitcoin has moved back onto exchanges and into custodial products, Danny Sanders, chief commercial officer at Trezor, wrote in an opinion piece published by Bitcoin.com.

Sanders called the response understandable but misguided. The wallets that were drained were built with weak randomness at the moment of creation, a specific flaw in one company's product. It does not affect other manufacturers' devices. "If your wallet was made properly in the first place, nothing about this incident touches you," he wrote. "Your funds sit exactly where they did a week ago, protected by exactly what protected them before."

The instinct to move Bitcoin to a custodian after a hardware wallet failure is human, Sanders said. It gets the lesson backwards. "Someone always holds the keys to your Bitcoin. The only question is who. If it is not you, then it is a company, and you are trusting that company to be honest, competent and still standing tomorrow."

Exchanges have been hacked and custodians have collapsed, he noted. The entire reason Bitcoin exists is so that money can be truly yours, rather than a balance a company shows you and promises is safe.

Sanders also pushed back on the knee-jerk move to multisignature wallets. Multisig is a genuinely good tool for large holdings, he said. Trezor has supported it since 2014. For many people it is more than they need. A simple single-sig setup does the job well: one seed written down properly and stored safely. Multisig has real footguns, from falling below the required threshold to the difficulty of backing it up and restoring it correctly. The easily managed versions carry a yearly fee.