Bitcoin Whales Move Big Amid Coldcard Security Fallout

Bitcoin (BTC) network activity has surged sharply over the past week, with 712,000 active addresses recorded in the last seven days, according to Santiment. This marks a three-month high. Whale activity also hit a five-month high, with 61,800 transactions exceeding $100,000 during the period.

The surge is attributed to the recent security incident involving Coldcard hardware wallets. Santiment flagged the late-July attacks, which were linked to weak keys generated by affected devices. Losses are estimated at over 2,055 BTC, or approximately $130 million, with affected users rushing to move funds, consolidate wallets, and reduce exposure.

Galaxy Research identified that tokens were stolen from 7,300 addresses across three confirmed waves of attacks, along with 14 smaller incidents. The exploits related to seed generation issues in Coinkite’s Coldcard Mk3, Mk4, Mk5, and Coldcard Q firmware versions. Coinkite released emergency firmware updates for all affected models and destroyed remaining vulnerable inventory. The issue became public on July 30, and the attacks appeared automated, with possible use of large language models.

Galaxy Research suspects losses could climb if a fourth wave is confirmed, though no direct confirmation from victims was received. Santiment warned that Bitcoin volatility could stay elevated in the coming weeks, with fear potentially driving retail selloffs. However, continued whale accumulation and security-driven coin movement could reduce liquid supply over the coming months if stronger holders absorb panic.

Regarding monetization of stolen funds, Leone Parise, co-founder and CTO of Trace Finance, noted the difficulty: “Not at anything close to face value. These are the most heavily surveilled UTXOs in BTC’s history. Bitcoin can’t be frozen, but every regulated on-ramp can refuse these coins. That leaves mixers, cross-chain bridges, OTC desks in weak jurisdictions, and peer-to-peer channels, all of which cost real money and introduce counterparty risk. They’ll extract a fraction, over years, with heavy leakage.”

Source: https://cryptopotato.com/bitcoin-btc-whales-are-moving-big-as-coldcard-chaos-sends-shockwave/