Changpeng Zhao, known as CZ and CEO of Binance, has issued a fresh warning to crypto holders about rising security risks fueled by advances in artificial intelligence, emphasizing that phishing and social engineering attacks remain a major threat even if blockchains like Bitcoin remain cryptographically secure.
AI and the limits of crypto security
CZ addressed these concerns through recent public posts, arguing that fears about AI hacking Bitcoin’s cryptography are misplaced. Instead, he highlighted that AI-assisted attackers target personal data exposed through breaches or leaks, which can enable more sophisticated phishing campaigns and impersonation scams.
“Everyone worried about AI hacking crypto, but the internet and banking systems rely on weaker encryption,” CZ wrote, referencing the generally higher cryptographic standards for cryptocurrencies compared to traditional web and banking systems. He underscored that AI does not need to break a blockchain’s cryptography to create significant harm. Exploitation of leaked information—from addresses to recovery phrases—can enable fraudsters to craft credible scams.
Such attacks, CZ explained, can convince holders to hand over wallet credentials or click on fraudulent links, resulting in stolen funds. Blockchain transactions are irreversible, meaning assets lost through deception typically cannot be recovered.
Leaked personal data enables more phishing and social engineering, even if blockchain cryptography stays secure. Users must remain cautious and “Stay SAFU,” CZ stated.
While Zhao compared encryption strength across sectors, he acknowledged that security ultimately depends on each system’s technical setup and operational practices.
Recent hardware wallet breaches expose new vulnerabilities
In 2026, two major hardware wallet incidents have highlighted growing risks in self-custody. Devices designed to keep cryptocurrencies safe from online threats proved vulnerable due to supply chain tampering and software flaws, resulting in considerable financial losses.
Ledger, a leading French hardware wallet manufacturer, investigated significant asset thefts linked to devices sold by regional distributor CryptoBilis. Analytics firms estimate that losses from this breach ranged between $93 million and $95 million. Investigators found an unauthorized hardware implant in at least one wallet, which captured users’ recovery phrases and relayed them to attackers. Tether, the issuer of USDT, responded by freezing $10 million in funds associated with the incident.
A separate vulnerability involved Coldcard devices, a hardware wallet popular in the Bitcoin community. A flaw in older firmware led to insufficient randomness during seed generation, exposing affected wallets to potential brute-force attacks. TRM Labs reported that this bug resulted in the theft of 1,816 BTC—valued at about $116 million—from over 5,200 addresses.
Updating firmware alone did not secure wallets already generated with weak seeds; new recovery phrases and transfers were required to restore full security.
These events illustrate that real-world attacks often exploit user errors, faulty manufacturing, or compromised distribution chains, rather than any fundamental vulnerability in blockchain cryptography.
| Incident | Device/Company | Funds Stolen | Exploit Method |
|---|---|---|---|
| Ledger-CryptoBilis | Ledger via CryptoBilis | $93M–$95M | Hardware implant, phrase theft |
| Coldcard flaw | Coldcard | 1,816 BTC (~$116M) | Seed generation vulnerability |
Mini dictionary: CryptoBilis is a Southeast Asian reseller known for distributing hardware wallets and related crypto products. Security concerns arose after tampered Ledger devices distributed by CryptoBilis were linked to significant asset losses in 2026.
No crypto wallet is absolutely secure
CZ issued a broader security reminder, stating, “No crypto wallet is 100% safe. No software is bug-free. No tech is 100% secure.” He noted that both taking risks and failing to act can endanger user funds. While self-custody offers independence from centralized exchanges, it transfers full responsibility for security to the wallet owner.
Unlike physical wallets, self-custody hardware and software wallets manage private keys necessary to authorize blockchain transactions. Anyone with those credentials may access funds, and transactions confirmed on chain cannot be reversed due to fraud or error.
Hardware wallets lower digital exposure but can fall victim to compromised manufacturing, distribution, or software. Software wallets, meanwhile, may be targeted by malware or phishing attacks. Choosing a secure method depends on how wallets are created, stored, and maintained, as well as the user’s risk tolerance.
Using an exchange introduces different trade-offs; custody rests with the platform, but users are exposed to its operational risks. Neither self-custody nor third-party custody can guarantee total safety.
Protecting against AI-driven threats
CZ’s advice for crypto users is practical: treat all unsolicited messages, urgent warnings, and wallet verification requests with skepticism—even when they sound convincing or reference personal details. Recovery phrases or private keys should never be shared, entered on unfamiliar sites, or sent through email or messaging platforms.
Buyers are encouraged to obtain hardware wallets only from official sources and to carefully inspect devices for tampering. If a wallet or recovery phrase is suspected to be compromised, users may need to move their funds to a new, uncompromised wallet rather than just updating software or firmware.
Regularly checking security bulletins and keeping wallet devices updated reduces vulnerability. Importantly, users should be aware of what an update addresses and whether existing recovery information remains at risk.
CZ emphasized that maintaining cryptocurrency security is an ongoing process requiring vigilance, especially as AI advances make social engineering and phishing attacks more credible. He called on all users to stay informed and proactive, as blind trust in a particular device or technology is not sufficient to ensure safety.
