David Schwartz weighs in on $100M Coldcard hack

David Schwartz said the Coldcard breach shows that rare custody failures can produce devastating losses, comparing the incident with past breakdowns in traditional finance. Summary Coldcard-related thefts have exceeded $100 million, according to Galaxy Research. Schwartz compared the custody risk with MF Global’s 2011 collapse but pointed to differences in insurance protection. A firmware flaw allowed attackers to reconstruct vulnerable wallet seeds without accessing the physical devices. Coinkite said affected users must create new seeds and move their funds because firmware updates cannot repair old seeds. Schwartz compares Coldcard breach with TradFi failures Ripple CTO Emeritus David Schwartz framed the Coldcard attack as an example of outlier risk—the possibility that a rare technical failure can cause losses far beyond what users expect. Schwartz compared the incident with the 2011 collapse of MF Global, where customers temporarily lost access to funds after the brokerage misused money that should have remained segregated. His comments challenged the assumption that self-custody removes every form of counterparty or operational risk. I guess it might be semantics and also a q...