← Coin Stories with Natalie Brunell
Coin Stories with Natalie Brunell
News Block: ColdCard Hack Explained - First Self-Custody Breach at Scale, Strategy Makes First STRC Buyback, Fed's Most Hawkish Dissent in Decade
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Welcome to the Coinstories newsblock, powered exclusively by LEDN. I'm Natalie Brunel, and in about 10 minutes or less, I'll provide you with insightful updates on Bitcoin, financial markets and the global economy. Everything you need to know in one block. Let's go. Let's start with the story the entire Bitcoin community is talking about right now. Because it affects anyone who has ever used a cold card hardware wallet. This past week, attackers drained more than 1300 bitcoins worth tens of millions of dollars from thousands of wallets that all had one thing in common. Their recovery phrases were originally generated on cold card devices. The number is still growing as Galaxy Research continues tracking additional waves of the attack. Now, to be clear, for some context, in dollar terms, this is not the largest theft in Bitcoin's history. Mount Gox, bit, bitfinex and FTX were all bigger, but those were exchanges, centralized platforms where someone else holds your keys. This is the first time a major self custody device has been compromised at such a scale, and that's what makes it so alarming. And this is also important. It doesn't matter if someone later moved their Bitcoin to a different wallet or even a multisig setup. If the seed phrase was originally created on an affected cold card, you're. You're at risk. So here's what happened. When you set up a cold card, you either let the device generate your seed phrase for you, or you create your own using physical dice rolls. Now, most people, of course, take the simpler route and let the device handle it. That seed phrase is supposed to come from a dedicated hardware random number generator, rng, which produces what's called entropy. It's essentially randomness that's so complex that guessing the seed phrase is mathematically impossible. But in March 2021, a code change in a cold card firmware update switched that process. Instead of using the device's dedicated hardware to generate your recovery phrase, affected cold cards started using a much weaker method, one that produced seed phrases that were far, far easier to guess. Think of it like the difference between a combination lock with a trillion possible combinations versus one with a few thousand. And nobody noticed this. Not Coinkite, not users, not reviewers for more than five years. Well, this week, someone figured it out. The attacker reconstructed private keys remotely, never touching a single physical device. And they swept wallets clean across thousands of users. Galaxy Research reported the initial wave drained over 1,000 addresses in just about 40 minutes. Coinkite has confirmed the flaw and and published an advisory and believes the attacker may have used AI to find the flaw in the code. They acknowledge that their own AI review of the same code missed it entirely. Now I want to say something personal about this. Coldcard used to be a sponsor of Coinstories. I have used the product myself. I want to be transparent about that. And I also had to move funds last week. I feel terrible for promoting a product that failed the people who trusted it. When you produce free content, sponsorships are part of how the work gets funded. I do the best I can to partner with companies I believe in and products that I actually use and trust. But as I've learned, no product is infallible and this situation is a painful reminder of that. So my heart goes out to everyone who was affected. Losing Bitcoin, especially from a device you trusted to keep it safe, is devastating. As soon as the story broke, I recorded an emergency episode with Rob Hamilton from Anchor Watch to walk through exactly what happened, what it means for self custody, and what steps you need to take. Right now, the episode has no sponsor and no ads. It is just information. So please go listen to it. If you own a cold card, check the advisory and take the steps that are recommended to move your Bitcoin if you haven't already. Self custody remains one of the most important principles in Bitcoin, but this is a reminder to stay vigilant to diversify your security practices and never assume any single device is beyond failure. LEDN has a perfect track record of protecting client assets during every market cycle backed by proof of reserves. LEDN is the home of Bitcoin backed loans for the serious holders. The larger the loan, the lower the rate. Your Bitcoin stays custody and is never lent out for interest. Get a quarter percentage point off your first loan at LEDN IO Natalie let's turn now to strategy because a significant shift happened last week. During its Q2 earnings call, Strategy confirmed that it will no longer allocate 100% of future capital raises to Bitcoin purchases. Instead, proceeds will be split between buying Bitcoin and strengthening the company's cash reserve, with the ratio depending on market conditions. Saylor explained it this way. If we sell $1 billion of credit, I don't think you'll see 100% Bitcoin and US$0 as the norm. I think it'll be a ratio for a company that built its entire identity around buying Bitcoin with every dollar it could raise. This is a meaningful evolution. But here's the context. Strategy has not stopped buying over the first seven months of 2026, the company purchased nearly 175,000 Bitcoin and sold about 3,600, meaning purchases exceeded sales by 48 to 1. This is not a retreat. It's a company managing a larger, more complex capital structure than it had when it started buying Bitcoin. In 2020, the company also made its first stretch buyback, repurchasing roughly $25 million worth of preferred shares at a discount to their $100 par value. CEO Fong Li said buying stretch below par reduces future dividend obligations, making it an attractive use of capital. Ant strategy boosted its cash reserve to 3.75 billion, which is enough to cover more than two years of preferred dividends and interest payments. All right, finally, now to the Fed. The Federal Reserve held rates steady at its meeting this week. That was expected, but what wasn't expected was the descent. Three FOMC members, including Neel Kashkari, voted for a quarter point rate hike. That's the most divided FOMC vote since September 2016, and the clearest signal yet that parts of the Fed believe inflation still isn't under control. Inflation has now been above the Fed's 2% target for more than five consecutive years. Long term, treasury yields moved higher on the news. The 10 year hit roughly 4.74% and the 30 year moved above 5.2%. For Bitcoin, this remains a headwind. Higher rates mean tighter financial conditions, which typically weigh on risk assets. And with the Fed now openly debating hikes, not cuts, the liquidity tailwind bitcoin bulls have been hoping for is not arriving anytime soon. But we should take solace in the fact that despite this cold cart incident, bitcoin has been remaining pretty steady over the last few days. Now here's the longer view about all of this. The fiscal math of the US hasn't changed. We are running structural deficits. The debt keeps growing and eventually the Fed will have to accommodate that reality, whether it wants to or not. The question is timing, not direction. That's it for the Newsblock, your weekly Bitcoin and economic news update. Powered exclusively by ledn. I'm Natalie Brunel. Make sure you're subscribed to Coinstory so you never miss an episode. This show is for educational purposes and should not be construed as investment advice. Until next time, keep stacking.