CZ’s Critical Security Advice After $70 Million Exploit: Do This to Protect Your Funds

Binance founder Changpeng Zhao (CZ) has called on investors to distribute their assets across different wallets following a security vulnerability in Coldcard hardware wallets that led to a $70 million loss.

The cryptocurrency world has been shaken by a critical software bug discovered in devices from Coldcard, a popular hardware wallet manufacturer. The incident, which resulted in the theft of Bitcoin (BTC) worth $70 million from approximately 1,196 addresses, has sparked debate over hardware wallets—widely considered one of the industry’s most reliable storage methods. Following this massive exploit, Binance founder Changpeng Zhao (CZ) issued important warnings on social media, emphasizing that users need to review their security strategies.

CZ’s Critical Security Warning for Hardware Wallets

In a statement on the X platform, CZ noted that even hardware wallets are not flawless, stating: “Even hardware wallets can have bugs. Even old wallets with a long history can have bugs. How to mitigate this? Perhaps split your funds across a few wallets? While this brings different risks, nothing is 100% secure. Stay informed, stay SAFU!” While CZ’s suggestion aims to reduce the risks of holding all assets on a single device, it also brings a more complex private key management process.

Coinkite, the company behind the incident, apologized to users by acknowledging a software bug dating back to March 2021 and released an emergency update. However, the company stated that simply updating the software is not enough; recovery phrases generated in the affected versions must be completely renewed, and funds must be moved to new wallets. This situation has once again demonstrated the limits of self-custody methods and proved the importance of investors turning to diversification, as suggested by CZ, rather than relying on a single technology for security.