The Canadian hardware wallet manufacturer involved in a Bitcoin hacking incident, Coinkite Inc., has issued a warning that artificial intelligence failed to detect the software vulnerability exploited by hackers to steal user funds, with losses now estimated at $130 million.
Coinkite stated that the vulnerability exposed in the Coldcard hardware wallet, which was attacked over the weekend, serves as a cautionary tale "not just for us, but for all companies developing Bitcoin hardware and software." In a blog post on its official website, the company urged businesses that rely on AI to monitor critical security code to immediately conduct a review.
Coinkite said: "If your team is using AI to review critical security code, we recommend specifically testing for boundary and sub-module boundary issues. We believe many Bitcoin projects, including those using open-source code, need to be reviewed immediately."
The Coldcard hack has unsettled cryptocurrency investors, as hardware wallets—physical devices that store private keys offline—have long been considered one of the safest ways to protect digital assets. This breach has also cast doubt on the core cryptocurrency industry principle of "self-custody."
Nikhil Raghuveera, CEO of blockchain compliance infrastructure provider Predicate, commented: "Self-custody is a key feature of digital assets, but the Coldcard incident shows that a single point of failure can shake trust in the entire model. The impact could be long-term, as the whole ecosystem is built on the promise of 'trustlessness.' The bigger risk in the long run is investors completely walking away from digital assets."
According to the latest analysis from Galaxy Research, the Coldcard hack appears to have involved four rounds of attacks, resulting in losses of approximately $130 million.
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