Morning Minute is a daily newsletter authored by Tyler Warner. The views shared are his own and do not necessarily represent those of Decrypt.
Good morning!
Here are the highlights for today:
- Major cryptocurrencies continue to decline, with Bitcoin priced at $62.6k.
- Losses from the Coldcard hack have reached over $89 million.
- BitGo's CEO challenges Anthropic to hack a Bitcoin wallet containing 100 BTC.
- Tether's profits for Q2 surged by 50% to $1.5 billion.
- CATE's market cap increased to $50 million, while StonkBrokers hit 6.9 ETH, leading on-chain activities.
🚩 Coldcard Hack Losses Exceed $89 Million Amid Ongoing Attacks
Coldcard is regarded as one of the leading hardware wallets for Bitcoin, designed for serious investors to securely store their coins offline. Recently, it became the target of one of the largest thefts in self-custody history. Attackers exploited a vulnerability to drain Bitcoin from Coldcard wallets by regenerating users' private keys without needing access to the physical device.
The theft was due to a firmware issue, not phishing. A firmware update from March 2021 used a weak software fallback to derive wallet seeds instead of relying on the hardware random generator, which reduced the security of Mk3 keys from the intended 128 bits to about 40 bits. This vulnerability made the keys easier to guess, leading to the theft of coins that had remained untouched for years. One Canadian user reported losing 18.25 BTC from keys stored in a safety deposit box, expressing frustration that he had “done everything right.”
The theft escalated over the weekend. What initially began as a reported $38 million loss continued to grow as investigators traced additional funds. Galaxy Research now estimates that approximately 1,367 BTC have been stolen, valued at around $88.6 million, spread across 4,585 addresses in three separate waves, with a warning about a potential fourth wave. Galaxy has alerted that the exploit remains active and that all vulnerable devices are at risk of being emptied, providing about 600 suspected attacker addresses to federal authorities. Current estimates suggest that total losses could approach $114 million, although researchers note that some recent attacks might be mitigated by prioritizing transaction settlements in the mempool.
Coinkite, the manufacturer of Coldcard, stated that it must assume an attacker utilized AI to identify the flaw in its open-source firmware, acknowledging that its own AI assessment of the code weeks prior “did not detect this bug or any serious issues.” According to Alex Thorn, head of research at Galaxy, the sweeps appear to be systematic and were “likely orchestrated with a large language model.” Both defenders and attackers had access to the same tools, but this time the advantage lay with the attackers.
In just a week, an AI model was able to crack a post-quantum cryptography candidate that humans could not, OpenAI's models escaped a sandbox to infiltrate other companies' servers, and now attackers have employed AI to siphon off $89 million from wallets marketed as the gold standard in self-custody. AI is rapidly emerging as a significant threat in the crypto space, and one of its core principles—self-storage, which empowers individuals to control their wealth—is now facing a serious challenge.
🌎 Market Overview and Macro Insights
- Major cryptocurrencies are slightly down; BTC -1% at $62.6k; ETH -1% at $1,840; SOL -1% at $72.30; HYPE +3% at $52.90.
- Notable altcoin movements include ALGO (+7%), HYPE (+3%), and ENA (+4%).
- Oil fell by 6% to $79.50; Gold remained stable at $4,100.
- Stock futures are positive amid new peace prospects with Iran; DOW +1%, Nasdaq +0.35%.
- Solana recorded its 10th consecutive red monthly candle on July 31.
- BitGo CEO Mike Belshe publicly invited Anthropic to hack a real wallet, challenging the AI lab to stop showcasing "we created a hacking monster" demonstrations by posting a BitGo address with 100 BTC for their models to attempt to drain.
- Tether reported a net operating profit of $1.5 billion in Q2, a nearly 50% increase from Q1, with USDT circulation reaching $184.6 billion and a reserve surplus exceeding $4 billion, alongside gold holdings rising to over 146 metric tons.
- Eric Trump’s American Bitcoin reported a $57.2 million loss in Q2, while its Bitcoin holdings amounted to 8,002 BTC.
- Circle secured a trust charter in New York from the NYDFS, enabling the USDC issuer to function as a New York trust company for digital asset custody, marking its second licensing achievement in weeks after gaining federal approval for a national trust bank.
- South Korea’s second-largest crypto exchange, Bithumb, plans to go public by 2028.
- Strategy liquidated $105 million in Bitcoin to fund preferred dividends and a buyback of STRC.
Corporate Treasuries & ETFs
- Bitcoin ETFs experienced $265 million in net outflows on Friday, concluding the week with $60 million in total net outflows; ETH ETFs saw $9 million in inflows on Friday and $11 million in net inflows for the week.
Meme Coin Tracker
- Meme leaders showed slight declines; DOGE -1%, SHIB -3%, PEPE -1%, PENGU -1%, TRUMP +1%, BONK -3%.
- Robinhood chain was led by FRONG (+84%) and Cashcat (+20%); Stonkbroker briefly reached $50 million before retreating.
- Solana leaders included CATE (+130%), Manifet (+69%), and Kimchi (+700%); ANSEM decreased by 11% to $190 million.
💰 Token, Airdrop & Protocol Tracker
- DEX volumes accounted for 24% of CEX volumes in July, marking the highest level recorded.
- Polymarket and Kalshi achieved $50 billion in volume in July, setting a new all-time high.
- A new launchpad, Flap surpassed Pons in terms of daily launches on Sunday.
🚚 NFT Market Updates
- NFT leaders showed mixed results; Punks stable at 32.3 ETH, BAYC down 3% at 8.16 ETH, Pudgy up 2% at 3.86 ETH; Stonkbrokers surged to 6.9 ETH.
- Pitboys (+43%) and Monkeyhood (+200%) were the top gainers.