# This Week in Crypto: Coldcard Breach Tests Wallet Security > This Week in Crypto: Coldcard Breach Tests Wallet Security News · 5 min read Published 7 August 2026 This week in crypto, a major hardware wallet breach has grown into one of the largest Bitcoin security incidents in recent years, with more than US$100 million stolen from wallets linked to vulnerable Coldcard Mk3 devices. What began with a suspicious 594 BTC sweep has since expanded into several waves of attacks. Elsewhere, Strategy sold another portion of its Bitcoin holdings, US lawmakers pushed the CLARITY Act vote back to September, and blockchain gaming studio Proof of Play announced it will shut down. The Coldcard incident first emerged on 30 July when approximately 594 BTC was swept from hundreds of Bitcoin addresses. Researchers investigating the transactions traced the affected wallets to older Coldcard Mk3 hardware devices, with the suspected vulnerability linked to insufficient randomness during the generation of wallet seeds. Importantly, Bitcoin itself was not compromised. Instead, the weakness appears to have occurred when certain Coldcard devices created the recovery seeds used to generate users' private keys. Researchers believe insufficient randomness may have made some keys vulnerable to brute-force attacks, potentially allowing funds to be stolen without attackers ever gaining physical access to the devices. The scale of the breach grew quickly as investigators uncovered further attacks. Galaxy Research has identified three major waves affecting thousands of addresses and pushing confirmed losses beyond US$100 million, with a suspected fourth wave potentially increasing the total further. Later attacks also targeted smaller wallets, suggesting vulnerable addresses were being systematically identified and drained. Galaxy now believes at least 15 separate attackers may have exploited the weakness. For hardware wallet users, the incident is a reminder that self-custody still carries technology risk. Hardware wallets are designed to isolate private keys from internet-connected devices, but their security ultimately depends on the hardware, firmware and processes used to generate those keys. Coldcard manufacturer Coinkite has advised potentially affected Mk3 users to generate a new seed using an unaffected device and move their Bitcoin. While the Coldcard investigation continues, Strategy made another adjustment to its Bitcoin position last week as the company manages its growing capital and dividend obligations. Between 27 July and 2 August, Strategy sold 1,638 BTC, generating approximately US$104.7 million. The proceeds were used to fund dividend payments and repurchase shares in its STRC preferred stock. The transaction continues a change in how Strategy manages its Bitcoin holdings. After years of almost uninterrupted accumulation, the company has shown a greater willingness this year to sell Bitcoin when required to meet obligations across its expanding capital structure. Despite the latest sale, Strategy still holds more than 842,000 BTC. STRC remains below its US$100 target value, while Strategy confirmed its annualised August dividend will remain unchanged at 12%. The latest activity shows how the company's Bitcoin strategy is becoming increasingly connected to the preferred stock products it has introduced to fund and manage its enormous treasury. In Washington, lawmakers will not vote on the Digital Asset Market Clarity Act before the Senate's August recess after all. Senate Majority Leader John Thune has confirmed the vote is being pushed back to September. The CLARITY Act has been a recurring story in recent weeks as Congress works towards clearer rules for the US digital asset market. Senate Banking Committee Chair Tim Scott had wanted the chamber to hold its first vote before lawmakers left Washington, but with Thune confirming the delay, that will now wait until next month. The legislation needs 60 votes to advance, requiring support from both sides of the Senate. Negotiations have continued around stablecoin rules, illicit finance provisions and ethics restrictions relating to public officials and digital assets. Bernstein had warned that failure to progress the legislation before the recess could produce a short-term negative reaction across Bitcoin and the broader crypto market. Bitwise chief investment officer Matt Hougan offered a less pessimistic view, arguing that while the bill risks entering a "walking dead" state, crypto's regulatory position in the US has already changed considerably. The SEC and CFTC can continue developing their approach towards digital assets even without CLARITY. Legislation passed by Congress, however, would provide a more permanent market structure framework and greater certainty over how the industry is regulated in the years ahead. Elsewhere, Proof of Play, the a16z-backed developer behind blockchain game Pirate Nation, announced it will cease operations after failing to build a sustainable business around its decentralised gaming model. Much of the company's work will remain available. Proof of Play plans to open-source its code, artwork, smart contracts and development tools, while Pirate Nation and its Founder Pirates NFT artwork will be released under a CC0 licence. The independent Pirate Nation Foundation will continue supporting the PIRATE token, while Shiba Story Go! has been acquired by an undisclosed third party. The closure adds to a difficult period for blockchain gaming despite years of investment in the sector. Digital ownership and on-chain economies remain central Web3 concepts, but developers are still searching for models capable of attracting and retaining mainstream players over the long term. This week's developments show some of the challenges emerging as crypto matures. The Coldcard breach has exposed an unexpected weakness in one form of self-custody, Strategy continues to reshape how its enormous Bitcoin treasury supports its broader financial structure, and Washington is still working towards lasting rules for the US digital asset market. The immediate focus now turns to the full scale of the Coldcard breach and to the CLARITY Act vote when the Senate returns in September. **Other news:** - Bitcoin ETF demand jumps after Coldcard hack - BlackRock expands tokenised funds into Europe - Circle revenue falls below expectations - Cyberattack forces Zeus Wallet offline About the editorial team The Digital Surge Editorial Team Our editorial team writes and reviews Digital Surge’s news, insights and crypto guides, pairing plain-English explanations with the practical experience of running an [Australian cryptocurrency exchange](/about-us/). We keep every article accurate, current and easy to act on. 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