Coldcard bitcoin exploit exposes crypto's 'original sin' of private keys, Blockaid CEO says

Blockaid CEO Ido Ben-Natan sees last week's Coldcard exploit as exposing crypto’s “original sin” of relying on private keys, which can ultimately become a single point of failure, he said during an interview with The Starting Block on Friday.

"The fact that we govern who has access to our assets, whether that's from crypto or access to different pieces of data on the Internet, is generally derived historically by a password, and then after that, some sort of private key," Ben-Natan said. "It's a single-use kind of access to these things. Now there's beauty in that no one else can go in and have access to these things. The hardship in that is that it is a single point of failure."

What made the recent Coldcard exploit particularly striking is that the Bitcoin hardware wallet is designed to keep private keys offline, shielding them from many of the risks associated with internet-connected devices. The exploit involved a flaw in how affected Coldcard devices generated wallet seeds, reducing the randomness used to create them and potentially allowing attackers to reconstruct the private keys controlling users' bitcoin, according to the wallet's manufacturer Coinkite and Block.

Estimates of the damage have continued to climb. Galaxy Research said Friday that at least $111 million is confirmed to have been stolen and predicts total losses will likely exceed $130 million. K33 estimates that more than 7,000 addresses had been targeted. Galaxy also said there appear to be "multiple different threat actors" who are "actively exploiting the vulnerability." 

"The learning here is just having your assets sit somewhere and forgetting about them and not thinking about them is not actually the solution because the pace of security is evolving,” Ben-Natan said. “You have to either kind of constantly be paranoid or either outsource that decision making process to someone else.”

Blockaid provides security and real-time threat monitoring services to wallets, exchanges and other companies operating in crypto.

Crypto as the canary in the coal mine

Blockaid said in its most recent report that nearly 75% of the funds lost to crypto exploits during the first half of 2026 resulted from private-key compromises. The firm recently called the period the “most-hacked half-year on record," with more than $1 billion lost as the number of incidents surged.

“The number of incidents that we've reported on in our H1 report here is just the tip of the iceberg," Ben-Natan said. “What we're actually reporting on here is a fraction of what is taking place.”

Ben-Natan expects the threat to grow as increasingly powerful artificial intelligence tools make sophisticated hacking capabilities available to more people.

"Very soon everyone in the world is gonna have one of the best hackers in the world at their fingertips," he said, describing crypto as potentially the canary in the coal mine for how AI could impact cybersecurity.

Crypto presents an especially attractive target because stolen assets can be monetized and moved almost immediately, Ben-Natan argued.

“If you think about the economics that a threat actor has ... they will do the thing that enables them to spend the least amount of time, the least amount of resources, in order to generate the highest reward," he said.