Transfers of small amounts of Bitcoin surged to their highest level since the collapse of FTX, as the cryptocurrency community continues to respond to an ongoing suspected Coldcard wallet breach. Data compiled by CryptoQuant’s head of research, Julio Moreno, showed that on Friday, 39,600 BTC was moved in transactions under 1 BTC. This figure nearly matches the transfer volume seen on November 16, 2022, just days after the FTX bankruptcy, when 39,900 BTC was moved in small transactions.
Spike in activity follows suspected wallet hack
These recent flows coincided with an ongoing investigation into a major security incident involving Coldcard wallets. The Coldcard hack, which surfaced in late July, has prompted a wave of concern in the cryptocurrency community regarding best practices for fund security and self-custody.
Researchers continue to identify new victims as fresh reports emerge. According to Galaxy Research, the research division of Galaxy Digital, the most recent wave of the attack drained 207.7 BTC, valued at about $13.2 million. This brings total estimated theft to 1,367 BTC, or approximately $88.6 million, spread across 4,585 different addresses.
Alex Thorn, Galaxy Digital’s head of firmwide research, warned in a social media post that the attack had not yet been contained. Thorn advised users to transfer their funds away from Coldcard-generated addresses immediately if they had not already taken action. Galaxy’s team continues to track both victim and suspect addresses, highlighting that reports from affected users have helped in monitoring the movement of stolen funds.
Julio Moreno attributed the rise in small transfers to increased vigilance among individual holders, stating that the Bitcoin community had not moved this volume of BTC in a single day since the aftermath of FTX’s demise. Moreno described it as a positive sign, indicating users were taking control and moving funds proactively amid concerns.
Renewed debate over self-custody and fund safety
The Coldcard incident has reignited discussion over the risks and merits of self-custody in the cryptocurrency space. The practice allows users to maintain direct control of their assets, reducing reliance on third-party custodians but also placing responsibility for security on the user.
Nick Neuman, CEO of Bitcoin security firm Casa, criticized suggestions that recent hacks signal the end of self-custody. He argued that the distributed nature of Bitcoin wallets gives users crucial time to act when incidents occur. Neuman estimated that up to ten times more Bitcoin was protected by self-custody compared to what had been stolen in the current attack, highlighting the resilience of the approach in the face of specific wallet provider failures.
Eric Balchunas, senior ETF analyst at Bloomberg, countered that for many, regulated products such as Bitcoin ETFs offer greater safety and convenience than self-managed wallets, referencing the ETF industry’s long operational history as evidence of reliability.
Some industry voices emphasized that the vulnerability was confined to one hardware wallet provider and warned against drawing broad conclusions about the viability of self-custody more generally. Others noted that robust market surveillance and real-time monitoring can help users respond rapidly to suspicious trends in asset movements.
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