A class action is looming against Coinkite after the COLDCARD wallets hacking

The consequences of the flaw that affected some Coldcard hardware wallets continue to spread. After losses estimated at more than 88 million dollars in bitcoin, several victims are now preparing a legal response. Coinkite, the manufacturer of the wallets concerned, is facing increasing pressure as users from several countries gather information to consider a collective action. This new step could mark a turning point in the management of disputes related to hardware wallets.

Victims organize to take legal action against Coinkite

After pushing investors to move their bitcoins to exchanges, the Coldcard flaw now opens a new front, this time legally. Coinkite could face a class action after the loss of more than 1,300 BTC attributed to this vulnerability. The amounts stolen already exceeded 88 million dollars at the time of available information. Experts also believe this number could still increase.

Thomas Braziel, founder and managing partner of 117 Partners, is currently coordinating the gathering of information from victims across several countries. His goal is to assess various legal options, including an action based on product liability or a class action against Coinkite. This preparation phase aims to precisely document the losses suffered before any procedure.

Meanwhile, other victims are already taking individual initiatives. In Brazil, Felipe Ojeda, a bitcoin advocate, claims, according to Livecoins, to have lost almost all of his assets in this case, stating:

“It was a ‘spiritual guide’ wallet, which only receives payments, and I kept it completely offline. Then, without warning, I wake up, and when I check, they erased all the bitcoins.”

Felipe Ojeda, a bitcoin advocate. Source: Livecoins.

He filed a complaint with the police and also plans to take legal action against Coinkite in his country. Despite this step, he doubts the company could compensate all affected persons.

Legal liabilities remain at the heart of debates

The question of manufacturer liability divides legal experts. Some believe lawsuits could face significant obstacles, even if losses are considerable. Debates mainly focus on the ability to demonstrate that Coinkite could have anticipated or prevented the hacking related to the seed generator flaw.

Cris Carrascosa, head of the law firm ATH21, considers that the company assumes no direct regulatory responsibility regarding funds held by users of its products. According to her analysis, a lawsuit will have to prove that the manufacturer could reasonably foresee this kind of attack. This requirement could complicate the success of a possible class action against Coinkite.

On the other hand, Ana Ojeda, head of institutional business development at Blend, considers that “a partial liability remains possible.” She reminds that there is no automatic right guaranteeing full recovery of lost bitcoins:

Victims do not automatically have the right to a full refund; contracts, Bitcoin self-defense, and cross-border issues make any refund complex. However, there is a credible legal basis to investigate liabilities: Coldcard’s promises, the gap between documented design and the firmware’s actual behavior, as well as the scale and frequency of thefts, are all elements that seriously support claims of defect and negligence.

Ana Ojeda, head of institutional business development at Blend. Source: X / @criptolawyer.

However, she considers that a credible legal basis might exist if investigators demonstrate a defect or negligence in Coinkite’s decisions. This reading opens the way to a more in-depth analysis of the circumstances that led to this flaw.

A case that could set a precedent for wallet manufacturers

The development of this case now goes beyond just affected users. The procedures considered could influence how future disputes involving hardware wallet manufacturers are handled. Jurisdictions will have to determine how far a company’s liability extends when a technical vulnerability causes such significant losses.

This situation also draws attention to the financial consequences of a possible condemnation. Some observers point out that Coinkite likely does not have the resources to compensate all victims if courts hold it liable. This question fuels discussions around the remedies currently under study and their real effectiveness.

Beyond the financial aspects and the significant losses in BTC, this case could also redefine users’ expectations towards self-custody solution manufacturers. Ongoing investigations and possible procedures will clarify the applicable legal framework in this type of case. Upcoming decisions regarding Coinkite will therefore be closely followed as they could serve as references for similar cases involving hardware wallets and the protection of BTC holdings in the future.