hello everyone welcome back to another emergency broadcast of bitcoin news live we've got a great
panel ahead of us today to describe what is going on with the ongoing cold card exploit the over
1800 bitcoin that have been stolen and what to do next so let's get right into it on july 30th
someone emptied 1100 bitcoin wallets in 41 minutes there wasn't a single person fished and nobody
touched a single device those wallets were simply drained while in cold storage because five years
ago a build error meant the keys generated by cold cards were never really random in the first place
every one of them was guessable from the day it was created and the average coin taken had been
sitting untouched for more than three years these people believe that they did everything right
and the attack is still running now this morning at least 15 different thieves are hunting the same
wallets today we have three bitcoin security experts to walk us through the situation and explain what
to do next if you are still affected gentlemen gonna add you up on stage thank you so much for joining us
we have jan the head of security over at treasure nick the head of casa and jameson the cto over there
at casa as well uh three gentlemen who i think have a very interesting and uh skilled perspective on
this subject we are dealing with so jan as the head of security over at treasure i'd like to start this
question over to you please explain what happened with the cold card simply for people to understand
was this software hardware where did it all go wrong sure so there was a critical bug in firmware in the
most critical part of the firmware uh which is seed generation um so this is uh the basic function of
every wallet uh the seed that is generate that it generates has to be truly random it has to have
enough entropy um you can imagine your wallet seed as a huge number
and this number for it to be random uh has to be picked from a huge range of numbers
um the the biggest number on this range uh is or should be um bigger than the amount of uh atoms in
the known universe so uh it is very huge and for someone trying to brute force to guess this number
even using the most advanced technology they would have to spend their entire life
and it would still not be enough in fact it has never happened in bitcoin history for anyone to
brute force a wallet seat if the seed was generated correctly but that's the problem here with this
vulnerability the seed was not generated correctly it didn't use the true random number generator
module it was supposed to use true randomness comes from sources that are not predictable like
temperature inside the microprocessor for example or some time variations between processes
this is something no one can guess and that was a function in cold cards code that uh was supposed
to guarantee that this is used but unfortunately there was a bug on one line uh which was supposed
to check whether this is enabled or not but unfortunately it was just checking whether this function exists or not
and that's unfortunately a critical vulnerability that was introduced back in march 2021 and probably no one
really noticed until until now and um people started abusing it um so there was a fallback to a different
source source of entropy but it's called pseudo entropy because it doesn't use these truly random inputs instead
it used things like id of the of the micro microprocessor or uh uh system timer and these are things that
people can guess they're not random enough the entropy is lower it's not 128 bytes as it should be it was
something between 32 and 40. so uh the attackers uh took advantage of that um what this means
if you initiated your cold card anytime between march 2021 and last week uh you are affected and no firmware
update can fix it it fixes seed generation but if your seed was already generated uh you are vulnerable
and you should move your funds quickly uh just using a different wallet even trezor or anything does
not help you you have to get this wallet generate a new seed and then send the funds
to it um theoretically uh you should be safe if you use some extra features on the cold card during
the c generation like the dice rolls but they would have you would have to do uh 100 dice rolls and do
that properly or you could have super secure passphrase that is at least eight random words or
16 random characters for you to be so so safe but still i would recommend to move the funds
um how this happened um cold card is an air gift device which is a security layer it means that it
does not communicate directly with the host the host being a computer here um being air gap means
that you would use uh partially signed transactions and cure codes uh for the devices to communicate but there is no direct channel so
um this prevents a theoretical man in the middle attack however there's a problem this security layer
means that you cannot use the host the computer or a phone as a source of entropy when you generate
the seed so uh cold card was only relying on the one source of entropy and because of this bug in the code it was not used
uh so this is different in trezor in trezor we're not pair gapped we use cable or bluetooth because we don't think
the security benefits of the air gap are enough and obviously there are drawbacks to this approach so we
always use uh entropy from host and it's also validated by the entropy check in trezor suite that this entropy is used
uh also an extra measure we don't have any sort of fallback to the testing module of pseudorandom generating
um in our firmware so also this should not happen um so basically that's it what's also interesting about
this uh vulnerability is how it was introduced cold card was initially forked from treasured that's why people
sometimes ask whether this vulnerability is also present in treasure but it is not because uh later
cold cards code was also forked by their competitor and they decided to change their licensing so that no
more competitors can use their code and in order to do this they had to rewrite the code base
and during this rewrite they introduced this bug unfortunately so that's why only cold card is
vulnerable and no other hardware wallets at this point thank you for that great explanation there and
jameson people have looked at this firmware problem from back in 2021 some people have brought up this issue
over the last couple of years how inexcusable is it for this company coin kite as well as the wider bitcoin
community that this was not addressed sometime since 2021 that's a difficult question to answer because
uh you can play coulda woulda shoulda all day long um the the short version is like there there is no such
thing as perfect software um we we assume you know all software all hardware has some
level of vulnerabilities um really the i think the problems that that come up are
first of all people having this assumption that open source software is automatically secure
and that is not the case uh the reason that open source software is generally more secure
at least in the case where it is popular software is because you end up with more eyes on the code
i think that one of the issues that happened here is that you know coin kite is one of the smaller
companies in the space uh you can you could you know compare coin kite to trezor or ledger along any
number of vectors such as like employee head count or revenue or total number of devices shipped or
whatever um and i i think that in comparison your coin kite is probably an order if not several orders
of magnitude smaller and therefore you know they just have fewer resources devoted to looking at this
uh fewer contributors looking at the code i think coin kite only had like one or two engineers like full
time that we're actually working on this um there have been you know as as this has come out like a few
other random security researchers have kind of piped up and said hey like i was looking at the code a few
years ago and noticed some weird stuff and i was some of them have even said i was looking directly at
that line of the code and and it something felt wrong but i couldn't you know actually find the problem and so
um you know part another part of the problem with this is that um you know as as he said earlier
the the the actual bug was arguably not in the the main part of the mic micropython code but rather it
was in the build system and uh i think that you know when people are looking at the code they're just less
likely to look at the build system um you know we've also heard from a number of security researchers that have
used llms to audit the firmware of cold card is that this is not something that that all of the llms are
catching either it really has to do with like how much context you're giving to the llm you're basically
having to tell it you know look at the entirety of all of the sub modules within the code base you know
simultaneously and try to find any ways that they could be linked together poorly because if you're just
looking at the code line by line it's a lot less obvious that this is a problem
and i think right now is a good juncture 10 minutes in to give a psa if you are watching this and don't
know what's going on if you have a cold card from 2021 or later you need to move your funds off of that device
as calmly but as quickly as possible uh they are at risk this attack is ongoing since
july 30th over 1800 bitcoin have been stolen thus far uh nick i would love to get your perspective on
the attack uh how it's played out as you somebody who's always thinking about bitcoin security um
what's what's transgressed over the last four days well so actually one thing to add to your psa there
is some so you know originally the cold cards that were getting hacked were the mk3s and we think that
a lot of the just like default mk3s are basically either drained by the attackers or people have moved
the assets to safety by now and so there may not be a lot left and so then for mk4s q
cold card q and mk5 those are a little bit harder to crack than mk3 for various reasons
and we think that there haven't been any cracked yet but that it might still be possible
and so you should still move off of those if you're on a single sig with those um and then the last
thing is some people have been saying hey if you have a passphrase um on your mk3 then you're okay
and jan mentioned this earlier the and jan said this but the really critical point that i want to
re-highlight is often the passphrase is called the 25th word to your seed phrase and so people
might just think of it as like ah i just had one more word in here and if you did one word your wallet
is definitely not safe because the next step that they're going to do after they went through all the
mk3s with no passphrases and i think they're already doing this is they're starting to just go through
very low entropy aka like small passphrases and try to grind through those uh you know from a compute
perspective to fit to to guess what they are so if you're using a bad passphrase that isn't like the
eight words that jan was saying earlier which i think a lot of people don't necessarily take that
approach you still need to move off your cold card very quickly because your funds are up next to be
attacked um so it like the blanket advice is just if you are using a cold card move your assets
not worth risking it um the second thing uh to answer your question about like what's
taken place over the last few days unfortunately like it's kind of the nightmare fuel scenario of
the whole situation of like cold storage in general because um you take this approach where you're like
well i've got this air-gapped hardware wallet the only way somebody's going to get this is if i
mistakenly put my seed phrase into the internet somewhere or maybe if somebody like wrench attacks
me or tricks me into giving them information so that they can steal my money but this was just straight
up like no you could have done kind of the default setup on an air-gapped hardware wallet thought you
were safe and somebody was suddenly able to remotely crack it and so this is uh it's a very bad situation
for the people who owned these wallets obviously but it's also just kind of sad because i think it
um it has a it puts a bad reflection on like self-custody hardware wallets in general if you're
not really like if you're just thinking it like kind of looking at it from the outside like i've seen
people say oh this this shows you how hard self-custody is and and you know maybe people should just
trust custodian and i don't think that's necessarily should be the takeaway from this i actually have a
very different takeaway which we can go into but like the unfortunate part of this type of vulnerability
and attack is that is the kind of naive conclusion to make from this and so i'm afraid a lot of people
might make that conclusion yeah we're going to dive into the future of self-custody and best practices
moving forward but there's still some basic things i want to touch on before we get there and that's uh
the idea of entropy and how to generate it uh lop i saw you post you had some mycelium entropy generator
that you played with a couple of years ago uh talk about how to properly generate entropy and how much is
enough yeah i mean the real problem that comes down to is how do you know if you have the appropriate
level of entropy and um you know in general the other are there hardware devices like trezor ledger or
whatnot uh as far as i know and i think we can be pretty uh comfortable saying that you know they are
uh properly generating sufficient level of entropy um now this you know you say how do you know well
well uh trezor is open source uh i'm sure uh even more people are going to be going and uh inspecting
all of that code now in fact like their entire teams of people that are devoting tens of thousands
of dollars of hardware and compute time to doing that uh so i mean that's kind of the the bright side to
all of this is that you know whenever there is a security incident the result is you know bitcoin and
this this whole ecosystem is anti-fragile and so we are going to get stronger as a result we're going to
continue to improve our best practices um but you know for the average like normal person who
you know they they may have heard this concept of don't trust verify um i think we should probably
have a bit more self-reflection on that mantra and be more honest with ourselves that very few people
actually have the capability of verifying especially at the software level and especially at the hardware
level like even myself with a computer science background i can read code generally uh i don't
have the capability to inspect hardware like that's something that you know like maybe the ledger donjon
team has the the capability to do but like almost nobody has the capability to do that so point being
at some level you're probably going to be trusting someone or something in this process um unless you're
doing um you know your own entropy generation what does that mean well you know like even the device that i
showed that that was an interesting little toy that never really took off um
though the way to be sure is if you are physically doing something with your own hands so that's
where you start to see stuff about you know rolling dice or um you know getting playing cards and and picking
them up but then of course you're having to take that and you're having to do something to translate that into the
the number which ultimately results in the huge you know two to the 128 uh size number that jan was mentioning
uh earlier and this is where once again the sort of don't trust verify thing becomes a problem
because you're probably going to be using some software to do that translation are you going to then go read
the software that's doing that translation probably not uh there is something called codex 32 uh which
is i think a sort of pencil and paper way of doing it but you know that is going to take a lot of work
so you got to be pretty dedicated to do that so um you know what what i guess would be the best practice
for a non-technical person if you want to be super duper sure i mean there's a few options uh of course
there's the like multi-key multi-vendor option of just you don't trust any one vendor and you're you're
you're generating entropy on multiple different pieces of hardware and software from different
vendors and and and then it's okay if one of them has weak entropy because it doesn't bust your whole
wallet uh if you're doing single sig though i think you would want to do something similar
where you're you're going to want to have multiple different pieces of software and hardware they're
all running that same um you know numerical translation so that you're basically you're not
trusting anyone but you're basically verifying or you're you're attesting them against each other
to make sure that they're both doing the same thing and therefore the likelihood that they both have
the same exact vulnerability or bug becomes much lower and i think the like the thing with this is
we're talking a lot about entropy right now the chance of there being another entropy bug
feels pretty low because because of this everybody's paying a lot of attention to entropy
the chances of there being a different kind of bug that might affect your funds in a different way
maybe it's not as catastrophic as the entropy bug but some other kind of security vulnerability
this is security it's a constant game of cat and mouse whereas people make updates to the products
that they put out there for people to use for this they have a chance of introducing bugs and there are
attackers out there that are always searching for holes in the code or whatever uh you know product
you're using that they can take advantage of and so you want to plan to protect yourself with multiple
levels of defense so that you are prepared no matter what the vulnerability is
and another way to add entropy on top is the passphrase 25th word we mentioned that briefly before
jan talk to us how do you properly make a passphrase in this environment yes so uh passphrase in order to be
really safe that has to be super long in random in order for it to be random you should use some software
uh probably that uh generates a random passphrase like uh um like uh password manager uh then again
you're trusting some software but a lot of these tools are open source and battle tested
um so that's one way to generate the passphrase but of course if you do this there is the drawback that
you digitalize the passphrase so there is some digital footprint
may be controversial but i think that is fine as long as the seed itself doesn't have a footprint
but again if if there is a vulnerability in the seed generation then this doesn't help you much
so all in all i'm a little bit skeptical about passphrases uh it's a very advanced feature
we've been recommending with trezor for a long time but it's also a massive foot gun for people so it's no
longer a default feature in trezor suite uh because what people do is that they set a passphrase
then they forget about it because they treat it as a password and then they reach out to our customer
support hey can i reset the passphrase and unfortunately no you lost your bitcoin um so
passphrase is a way um that can help you here but really it's an advanced feature
not for everyone so not not really a silver spoon that can help you yeah just
i wanted to point out real quick that like uh i'm so glad that jan just said that because um
if you're going around listening to twitter spaces for the last few days you're hearing all of the kind
of like influencer guys being like use a passphrase roll dice do these different things to add entropy
and when you talk to the people who are building products used by lots of people to do these things
they're telling you people tend to mess up passphrases because they forget that they did it and then they
think it's a password and then they lose all their money and so like it it behooves people to listen to
the people who have the battle scars of like we have actually dealt with lots and lots of customers using
bitcoin wallets and like some of these things that are being suggested as so easy by the experts are for
many people big time foot guns yeah it's it's a it's very easy to uh do what i would call um actually
perfectly securing your bitcoin uh and and this is one of the things about security in general and i think
this is what makes a lot of people uneasy in the space is that actually like there is no such thing as a
guaranteed security or perfect security um unless you're talking about something where um you know
if you want to perfectly secure your bitcoin you you basically generate a private key send the bitcoin
to the corresponding address and then you destroy the private key great you now have perfectly secure
bitcoin uh however it's not very useful bitcoin to you so like the the problem with the security game and
the reason why this is a big industry and the reason why this is never going to stop being a back and
forth is that what all of us here like everyone who works at a security related organization what we're
trying to do is we're trying to find the right balance between security and convenience we want people to be
able to use their bitcoin when they want to uh while you know not allowing unauthorized people to use their
bitcoin and you know that's the real challenge especially then when you have been in the space long
enough and you start seeing just all of the ways that people can naively and accidentally harm themselves
and um it's it's an unfortunate problem that i think is the natural result of just freedom in general is
that you know people love exercising their freedom but they don't always like having to put in the effort
required to actually take the responsibility that comes along with it
and one thing that was jarring really this week is that a lot of people had to move their funds
under a state of duress right like this was friday you heard the news on twitter you needed to
either send your single sig or put your multi-sig together and get those bitcoin off a cold card
and a lot of people just didn't have the practice they had sent the the bitcoin once to a cold card
and then had just never touched it and when you do that the device itself could just malfunction
sitting in a drawer somewhere or you just get too scared and you mess up you fat finger it uh how
do you say people should practice using their bitcoin playing with their bitcoin so that they're ready
in a situation like this uh start with uh start with nick and then go around the whole entire table
everyone should have fun playing with their bitcoin yeah trump was right at the bitcoin conference
like you need to have fun playing with your bitcoins because this gives you the comfort to um to use it
when the time comes and so like we always say that you should always any wallet that you're using you
should test send what before you start using it send a little bit in send it back out make sure that
you feel comfortable with that process but then a lot of people treat cold storage as something where
you kind of lock it up you dig the hole in the backyard you bury it you don't think
about it for years and that's that um actually in self-custody you need to be doing very regular
maintenance of your setup and it's important to do that because of all the things that you said like
what happens if your key your hardware device uh malfunctions and breaks we've seen over the years
we've seen hardware wallets just completely stop working like the screen will stop working or you know
battery doesn't work whatever it is and so um what we recommend is every six months you do a health check
which is just you're taking your key you're either signing a cryptographic message with it if the
software that you're using allows you to do that or maybe you're just sending a little transaction in
and out of the wallet just to make sure that you know how to do it um i think this like is partly a
problem with just how bitcoin is used today so like there's a lot of focus around bitcoin as digital gold
you invest in it you don't spend it you keep it for the long term as your savings and that's that's
where we are right now with bitcoin i hope that we will transition over time to a mode where people
are using their bitcoin more they're using it as money i think that's better for bitcoin as a whole i think
it's also going to make people more comfortable with doing these things in in the long run
jan do you have any tips on how to make sure you're ready in a situation like this
yes i agree with nick and i would say uh it's it's not only about transactions but also about checking
your backup i think that's that's a critical feature in in wallets where you have the ability to to
verify that your backup is valid so i'm not sure about all other competitors but first for example
in suite you just click check backup and then you enter your uh backup words on your treasure and in
the end you learn it's correct or it's not uh if it's not you have a you have a real problem and you
should move your funds uh to a different wallet uh and also i agree about the health check it should be
regular so people can set up some notification to their calendar to do it once or twice a year
we actually we wanted to add this feature to suite so so that it sends a notification to users that they
should do the back of the backup check i don't think it's implemented yet but it's somewhere in the
the back of the back lock and then lop any tips
um yeah i mean just the main thing is to understand that uh security has not set it and forget it as
we've already said several times this constant cat and mouse game and so that means that if you want to
ensure that you are staying on the forefront of the best practices of security need to be paying at least a
a little bit of attention to what's going on in the space and now jameson i'd like to get a little
bit deeper with you on just the current state of the attack right we've had this kimmy k3 open
weight chinese model come out and since then we've seen a lot of different cyber attacks right like
there are water facilities under attack in minnesota uh from under cyber threat and now we've got this big
exploit with the cold card what changed in the last couple of weeks and is everything vulnerable now
uh kind of going back to my earlier point i think we should operate under the assumption that everything
is vulnerable we just don't know the extent to which it is vulnerable um so the the main thing that has
been happening over the past year uh with the acceleration of advancement in large language models
is just the fact that the uh capabilities of these models are progressing so quickly uh and and so like
we said security is a cat and mouse game and normally it's just like a little bit at a time you know one
little new thing here one little new thing here attacker finds a new thing defender comes up with
a new defense um and now it's just that the step functions of the capabilities in both the attackers
and the defenders you know assuming we all have access to the same models which isn't always the case
that's a whole other issue um but um because the the the sort of delta and the capabilities of models is
changing at almost like a monthly pace uh the the incentives are now for the attackers
to go and you know basically they set up all of their uh auditing uh harnesses frameworks and whatever
and as soon as the new model drops they're just going to be slamming it against all of the software
you know all of the infrastructure that they think might have anything of value behind it therefore if the
defenders are not doing the same thing there's going to be a lag the attackers are going to be able to
get and hit them until the defenders can react and i think you know this kind of gets into why some of
the the western companies are trying to like gate access to their models to try to give defenders a
lead time on that but of course i think any any sort of essentially kyc and gating and nannying uh of
technology is ultimately going to fail uh we just have to we just have to get all of the defenders on
the same page that they just have to be faster to react and take advantage of the tooling otherwise they
will get uh taken advantage of yes and nick i want to hop this over to you because it seems like bitcoin
is a very valuable asset of course to go after there's lots of open source projects to try to poke
and prod at but once they've swept that bitcoin all eyes are on it right and i think 90 of the bitcoin
that has been stolen thus far has made one move to another wallet but then hasn't moved since not to any
mixes or anything like that can you give some color on what's going on there uh what do you think is
going to happen to that bitcoin that has been moved out of people's wallets yeah i mean this is this is
hard to say because there are um so on the one hand law enforcement especially in the us has gotten way
more advanced over the last few years around tracking these kinds of uh stolen funds flows
and actually they've gotten much more advanced thanks to all of the problems in the rest of crypto so
like this actually doesn't happen in bitcoin so much but every time there's like a new hundred million
dollar you know l2 bridge hack over on ethereum or something uh by north korea like there's a pretty
well established group of companies and uh or groups in law enforcement that are tracking those funds flows
and trying to uh freeze them before when they go to exchanges or whatever unfortunately there are still ways to
get past all of that and effectively like launder the money through exchanges or platforms that will take
the money and refuse to comply with freezing orders from like us fbi or some of these other um you know
three-letter group law enforcement groups like that and so um i don't really i can't say for sure what's
going to happen from here i know that some people have been doing really excellent work with tracking the
funds flows and and trying to identify not just that original wave of still of stolen assets but i think
up to like four waves now by multiple different types of attackers um alex thorn over at galaxy digital
has been doing a ton of work around this and so i hope that uh through that kind of work law enforcement
will have what they need to then submit you know assets seizure notices when these assets eventually
do try to go to an exchange but there are groups that are very good at moving this type of uh these
types of funds and laundering them and so um it's also possible that some of it doesn't or some of it
gets away now if they're able to freeze it uh in in that best case scenario or freeze some of it you
then have this quite difficult process of identifying who to give it back to which is like you know that
i i saw some people talking about doing like white hack uh white hat hacking here it's happening yeah
yeah and so where they're actually going in and stealing preemptively stealing the bitcoin from these
wallets and i think it's like it's happening but i haven't necessarily seen it happening to the extent
that the black hats are getting stuff but even in that scenario it's like how are you going to figure
out who the original owner of this wallet was like coin kite doesn't really keep that many records so
you can't really cross-reference versus them you could arguably say like maybe if they bring the actual
cold card physically which has a unique identifier on it you could potentially use that as some way to
identify them but logistically it's just going to be a huge challenge and i think um that's like the
whole next it's going to take years to figure out how to do that from here it's super messy and the whole
entire ethics behind the question you steal these things you steal these bitcoin preemptively then you got
a lawyer up if you're a white hat hacker right you got to get a lawyer and give these things to a
government right and is that what we want to be doing here and then the people have to wait for
a decade plus to get their bitcoin back uh as we saw with mount gox i mean it's just such a messy
situation the number one thing you can do is get the word out like we're trying to do right now if you
have a cold card uh that is mk3 uh four or five or q that has firmware from after 2021 be sure to move
your bitcoin as calmly but as quickly as possible uh huge thing and so and now jan kicking it over to
you in this age of ai what are you guys doing to make sure that your devices at trezor are safe against
these attacks yeah so ai has changed the game uh we can definitely feel it like i can talk about our
bug bounty program for example where anyone can report vulnerabilities they find in our open source code
under responsible disclosure guidelines which means they report the vulnerability
we fix it and after it's fixed it's disclosed to the public and in the past we have a couple reports
a year but it's changed massively we we get several reports daily and most of the reports are spam because
they're super easy to generate with ai but actually in fact when i look at the statistic we fixed an
unprecedented amounts of uh security bugs uh in our products and i don't want people to panic uh it's
normal to have vulnerabilities in products is nothing as critical as the cold card exploit uh there are
some things that can be hardened and improved and we pay out uh bounties for these rewards to the
uh the researchers and there's been so many of the reports that we have to create a position dedicated
just to uh deal with these researchers and we're grateful for all their reports uh however it's a
lot of time to triage all of them and and fix it and then of course we use ai internally for code reviews
we have several layers uh we have ai to fix uh each pull quest that is kind of industry standard these
days but we also have a second layer uh to check whether a backdoor was introduced to our product
maybe a stolen developer account or a rogue developer could do that so we also have ai to check that
and we are working on uh getting all all sorts of licenses uh to have the most advanced models to
perform security analysis on our code so we're doing that uh we're doing these with ai uh we're using
better and better tools but as jameson uh already hinted at the process can be long before you get uh the
approvals from and for fake open ai etc it's a new game it's a new era absolutely and as we enter into
this new era we realize that single sig uh bitcoin hardware is somewhat we just saw a huge exploit right
and so what's next what what steps do we take and the the word the words of this moment are multi-vendor
multi-sig and you guys at casa have been doing that for many years now um what are the benefits of
multi-vendor multi-sig and uh what when did you guys decide that that was the way to go forward
well we built we started building this at casa in 2018 so we've been doing it for eight years now and
multi-vendor multi-sig was like maybe we didn't talk about it with those exact words but that
was what it was from the beginning we've always had within your multi-sig we've always had like
at least two different types of hardware wallets that make up the keys and then you've got your phone
involved and then you've got a key that's held by casa involved and so it becomes you know many layers
of different types of devices that have to fail at the same time in order to lose your assets and so
this is the whole like i feel like uh this is the thing with multi-sig that just people need to think
about it like the simplest way to think about it is it is just adding layers of security where all of
them have to fail at the same time in order for you to lose something and when you say multi-vendor
multi-sig it sounds kind of complicated and people are like whoa that's maybe over my head and it really
doesn't have to be i mean you can have this very simply by taking one treasure and connecting it to
casa and the two of three multi-sig and then you've got that gives you a key on your phone a key on the
treasure and a key held by casa so if you are already using a treasure as a single sig wallet you can
significantly improve your security by just connecting it to multi-sig without needing to
manage all these extra wallets because i think when people think about this like they're often hearing
about it from the same kind of x space influencer crowd which is like okay go buy one of these
hardware wallets one of these hardware wallets one of these hardware wallets and then connect them all in
sparrow and like or electrum and do all these things it just feels like a lot and it doesn't have to be
that way and even to like not show only casa's book like there's other companies that do a great job of
helping you set this up bit key is good unchained is good um so there's other people that have been
doing this for a long time along with us and you can kind of see like which product has the right uh set of
trade-offs for you i think one other important point to bring up is that um you know some
i think common pushback that you get is you know why would i need to involve you know yet another
company uh in my setup when i can do this all myself and to be clear you can and you always have been able
to uh you know before any of these like multi-sig coordinator companies existed you could go get
like an electrum wallet and and create multi-sig or you know you even at like you could use command
law command line bitcoin core to create multi-sig like it's always been possible i think since like
2012 2013 at the protocol level uh to to do multi-sig um but the i think the problem uh with doing self
custody really the problem with architecting a custody solution is that as jan has also said there are
foot guns and and so once again you always have the freedom to do whatever you want within the confines
of the protocol um but if you are not or like really really deep technical expert and security nerd
the problem that you're going to run into is kind of in a way the same problem that coin kite ran into
which is as i said earlier uh the strength of any given system you know open source or otherwise is going
to be uh correlated to how many eyes are on it how many people are using it how many people are trying
to attack it how many people are defending it and so when when you're architecting a custody solution
just for yourself and nobody else is looking at it it's just a lot more likely that you make a mistake
we are all humans we're all fallible we all make mistakes as individuals we all make mistakes as
organizations and and i think that that's like one of the primary things that these companies these
multi-state coordinator companies are trying to do is they're trying to to say look we understand
everybody makes mistakes how can we uh orchestrate a system that tolerates mistakes rather than allowing
a single mistake to result in catastrophic failure
and lob another question for you there's been a lot of people talking about how do exchanges generate
keys how does casa generate a key for a user uh does it look like a hardware wallet or do you guys have
a completely different process yeah i mean in general we don't know right uh so uh very few custody
companies i i can't really think of any off the top of my head disclose the like in inner operational
details of how they do their own key management now for the past eight years i've been on the advisory
committee for the uh cryptocurrency uh security standard and uh that is essentially an organization
that does nothing other than try to codify every single best practice when it comes to uh key management from
generation to storage to access to uh you know rotating keys and off-boarding uh personnel and to date i only
think maybe two or three companies have gone through that whole audit process and uh proved you know
publicly that they follow all of those best practices now i'm sure that many of these other companies do follow
many if not all of those best practices it's just we don't have that additional layer of like public
attestation that this is the case so um you know the short version is you should generally assume the
worst i mean you should assume the worst even when it comes to casa and that's like the entire point
of our system is that even if the casa key is is weak or compromised or whatever it does not result in loss
of your funds well there you have it and then i'd love to get yawn's uh view on multi-vendor multi-sig
you make the treasure but do you think that it is best practices to put multiple wallets together in
a multi-sig for security um this entirely depends on your threat model i think uh if you put all your
life savings into bitcoin um then yes uh i think you should consider upgrading i'm i'm not saying uh
treasure is not safe enough we make it safe enough for everyone but uh there is a level of trust as
as we talked about so i think for for any people uh like that who trust bitcoin to the amount that they
put substantial amount of money into it then it is on the table for them to consider uh a more robust
solution uh another thing they can do is perhaps diversify from bitcoin a little bit i think this
is controversial but i i wouldn't recommend to anyone to uh be 100 percent in bitcoin you know i'm i'm i'm a
bitcoiner i love bitcoin i think it's the best asset uh but i i wouldn't sleep well if i relied on bitcoin uh
even if i had multisig you know bitcoin itself something can happen to the protocol uh so
uh perhaps think about diversifying between vendors but also between assets just go buy some nvidia
yeah there you go no but i mean this this whole process leaves us with a lot of questions and you
guys think about self-custody all day every day where does this leave us what's next how do we pitch
to the average person that they should self-custody bitcoin after an event like this let's take it nick
i think that um i've been thinking about this a lot because obviously our like we are trying to build a
business around self-custody right and so um i think that as i said at the beginning of the
call the naive kind of maybe like easy take or conclusion to make is like oh this is a
this is hugely terrible for self-custody it shows that the average person can't do self-custody
you know they should just keep it at a custodian or an exchange and i think that's the wrong conclusion
because uh if you think about this what actually happened the community trusted people that they
thought were experts to write code that was secure at an exchange if you're keeping your assets with
coinbase or whoever else you are trusting people that you think are experts to write code that is secure
if you're trusting like if you're using treasure same thing and so um a lot of the like if this was
a scenario where oh we had this mass event where people were giving up their seed phrases or they
were you know getting tricked or wrench attacked or whatever and on this hugely massive scale that was
something unique to self-custody maybe that's a little bit different but in this scenario it's just the
makers of a product that we trusted made a mistake and that resulted in a lot of people losing money and
that has happened many times over the years that bitcoin has existed for other types of custody setups
especially in custodians and so what i think is interesting and maybe the the like very small white
pill in this whole scenario is that if this type of vulnerability had happened at a custodian
the bit you know a ton of bitcoin would just be gone in the snap of your fingers because they're
getting access to a wallet that you know maybe the exchange uses a couple of different cold wallets but
many more customers assets are centralized in one wallet in that scenario and so if you have that type of
vulnerability then it can all be swept very easily whereas in this scenario it was many different wallets
and the attackers had to go one by one cracking each wallet and then sweeping the assets out of it
and so that actually gave time for people to who were going to be uh stolen from it gave them time to move
their assets to safety that's a huge like benefit of self-custody because it it's this defense through
distribution in the bitcoin network and it just increases the resilience of bitcoin as a protocol and
as an asset overall when you have more people who are self-custody and because the catastrophic events
like this just can't be carried out as efficiently as they would if everything was sitting in a custodian
and so to me that's the argument for why more and more people should be doing self-custody
i think that's a great point and uh jameson what do you think what about the pitch of self-custody now to
regular people uh yeah so i i think that you know trying to just orange pill uh the average person
and say you know you need to take on this responsibility is going about it the wrong way
and that's that's probably how you end up with this situation where we saw a lot of people who didn't
even know how to use their cold cards because they had just been they just did what they were told they
bought a cold card they put the money on it and they forgot about it uh so if if i could like
wax philosophical a bit i i think the the quote that really uh drives me when it comes to just this
entire space and like trying to tell people what to do is this quote that goes like this if you want
to build a ship don't drum up people to collect wood and don't assign them tasks and work but rather
teach them to long for the endless immensity of the sea and and so i think the point there is that
like we shouldn't just be telling people what to do we should be we should be teaching them to long
for the level of freedom and sovereignty that this protocol and network promises uh what but and by
promise i mean offers the potential of because as we've basically been saying this entire time
uh you have to be willing to take on the responsibility that comes with that if you
want to actually be able to take advantage of it and sleep at night
yeah it's that's a great point that the most important thing is that you show people what is
possible right but don't tell them this is exactly what you have to do or you're not a real bitcoiner
right i think there's a lot of that going along with the cold card and a lot of people got burned
because of it and it's so sad to see um and jan what do you think is the state of self-custody now
in 2026 in the light of this attack
i think uh the self-custody narrative uh is shaken but it survives uh bitcoin survived worse things
and actually i think when you think about it there's no way out of it because ultimately
someone has to hold the key so even if you move your coins to an exchange they still have to hold the
keys and maybe they have a better setup maybe they use multi-sig but then you can use casa and you
have the same but when you're on an exchange you add an extra a tag vector because someone can gain
access to to the wallet and drain the funds or someone can get access uh to your account on the on
the exchange and withdraw the funds uh so i don't really see a reason for people to turn to exchanges
instead of self-custody in the long run yeah it's self-custody all the way down or in other words
uh third-party custody is just self-custody with extra steps there you go um yeah and as we round this
out what about resources where should people go to learn more if they are in need if their first time
hearing about this exploit uh what kind of things are there to give people a helping hand in this time
nick do you have anything well i guess to learn about the exploit i've just been seeing a lot of
info from a lot of people on x um so i don't i guess some of the people that you can follow that have
been i think really that sounded the alarm early um are like kevin from liana i think he was the first
one to really sound the alarm on this and then there's um uh rob hamilton has been talking about
this a lot um but i think as far as like what resources casa can provide you know we're going
to be posting kind of a overview later today on our blog just so people can understand what went down
have a you know a place on the internet that isn't x in the timeline to go and then um you know we're for
people who are uh actively like hey i'm on a cold card and i need help moving off of it we have places on
our site you can book calls with our team like we have so many people that we're talking to that i put
myself on the calendar so like i'm doing calls with people so uh it's a very busy time but we're happy to help
people get to uh better security yeah and lop i mean you've got a website with all the all the resources
there um yeah basically every security resource that i've ever come across that i thought was halfway
decent is on lop.net l-o-p-p dot net and there you go and jan uh if people are in need and want to learn
more uh do you have any resources or ideas of where they should go okay when it comes to trezor we have
our knowledge base on our website where they can learn about entropy in general in our security checks
when it comes to this uh topic i've seen a good podcast just yesterday it was what bitcoin did
with rob hamilton um i like that one i think it's worth watching
yes shout out to the sleepless warriors uh wicked smart bitcoin portland hodl rob hamilton kevin from
liana uh and many many more uh people who have been on x bases for the last four days straight haven't
really slept and have taken a lot of questions handheld people through the process of migration
and made sure that people didn't completely freak out right uh this is a problem with one hardware
wallet not the bitcoin protocol and if you are able to make moves there's still a chance that you can
make sure everything is safe and has the highest level of security well gentlemen thank you so much
for this hour of your time uh it's very important that we do everything we can at this time to make
sure that people know what is actually going on and what they can do about it uh in terms of where people
should go uh nick and then jan yeah so you can find casa casa.io you can follow us on twitter
at casa hodl h-o-d-l and then uh you can follow me at n newman n-n-e-u-m-a-n and then jameson i think
you're at lop l-o-p-p on twitter beautiful and yon um you can find all about treasure at treasure.io
we are on socials uh x instagram linkedin i think tick tock as well uh it's impossible to follow me i'm
not really on socials yes wonderful a true security professional yeah that's what you want out of
your head of security at a hardware wallet absolutely no no footprint cool well guys thank you very
much for your time uh as i said this was very trying for the whole entire community and as many
knowledgeable people that can get out there spread the word and ensure people what the proper next
steps are i think the better so thank you everyone for tuning in to this emergency broadcast of bitcoin
news live stay on board and make sure you see all the latest coming out because we are keeping you up
up to date. Gentlemen, thank you. Thank you.