Coinkite, the company behind Coldcard, the hardware wallet affected by a vulnerability in its seed generation code, might face legal action from victims who have lost over $88 million in BTC over the last two days.
Key Takeaways
Victims are planning class-action lawsuits against Coinkite after losing $88 million to the Coldcard wallet bug.Legal experts are sharply divided on Coinkite’s liability, complicating victims’ prospects for recovering funds.These potential product liability cases could establish major legal precedents for crypto hardware wallet makers.Braziel is currently coordinating and gathering information from victims internationally before embarking on these actions.
Nonetheless, he is not hopeful about the future of such actions, as he acknowledges that the company does not have the financial muscle to make everyone affected whole, even as it was one of the most trusted in the field of self-custody.
“What is the valuation of this company? It received two rounds of investment there in 2013; it has no sales volume, despite being the largest in this matter of self-custody; in the real world outside of bitcoin, it represented nothing, a tiny company,” he told Livecoins.
“Those lawsuits are going to be terribly difficult to push through because it will have to be proven that Cold Card could have foreseen the hack,” she assessed.
The outcome of hypothetical legal actions against Coinkite can set a precedent for similar cases happening in the future. At the time of writing, over $88 million in bitcoin had been stolen from Coldcard wallets affected by the random seed generation vulnerability, and experts expect figures to keep growing.
