Coldcard Reminds Us That Bitcoin Privacy Comes at a Cost

• The first 65 stolen bitcoins have already begun to be mixed on-chain.
• CoinJoin increases the difficulty of tracking the flow of money.

The attacker who exploited the vulnerability of Coldcard hardware wallets began moving some of the stolen bitcoins (BTC) through Wasabi Wallet, one of the most well-known privacy tools in the ecosystem. According to the analysis firm MistTrack, nearly 65 BTC were initially sent to the mixer before being fragmented into smaller transactions to make tracking more difficult.

At first glance, this may seem like just another move in the theft of over 2,000 BTC. However, it raises a difficult question to ignore: the attacker resorted to one of the tools that has been defended by the bitcoin community for years to protect users' privacy and financial sovereignty.

Wasabi Wallet uses CoinJoin, a mechanism that combines transactions from different users to complicate blockchain analysis. It does not make bitcoins invisible nor does it completely prevent tracking, but it significantly increases the complexity of the work for companies specialized in on-chain analysis.
The attacker who exploited the Coldcard vulnerability began moving the stolen bitcoins. Source: MistTrack -- X.

Their goal was never to hide crimes. It was born to protect the financial privacy of legitimate users in a network where all transactions are public and permanent.

This principle has accompanied Bitcoin practically since its origins. In the years following the closure of Silk Road, the discussion shifted from whether Bitcoin could be used for illicit activities to whether privacy-preserving tools should be restricted simply because they could also be exploited by malicious actors.

Coldcard once again confronts the ecosystem with that same question. Privacy tools do not distinguish between a user seeking to avoid surveillance of their assets and an attacker trying to hide the trail of stolen funds. They function exactly the same for both.

This neutrality constitutes one of the fundamental principles of Bitcoin. The protocol does not evaluate who sends a transaction or for what purpose; it simply applies the same rules for everyone.

Paradoxically, that same neutrality can become an obstacle when victims try to recover their funds.

This was already exposed months ago with THORChain. For years, the protocol defended its decision not to censor transactions, even when on-chain investigations showed that organizations like Lazarus, linked to North Korea, were using its infrastructure to move part of the funds obtained in major hacks like those of Bybit or KelpDAO. The justification was the same: a decentralized protocol should not discriminate between users.

However, when THORChain suffered an exploit exceeding 10 million dollars in May 2026, the team itself decided to pause the network for more than twelve hours to contain the attack, as reported by CriptoNoticias. The decision highlighted how maintaining absolute neutrality becomes more complex when the protocol itself is the one being harmed.

None of this makes Wasabi Wallet or CoinJoin responsible for the Coldcard theft. Just as an Internet browser is not responsible for a scam, a privacy tool is not responsible for how an attacker uses it.

Investigators continue to track part of the flow of the stolen funds. But each round of CoinJoin increases the cost and difficulty of analysis, reducing the chances of quickly identifying their destination.
The hack of Coldcard had a severe impact on the bitcoin community. Source: ChatGPT / CriptoNoticias.

Here lies the true irony. These tools, which were promoted to protect the financial freedom of millions of honest users, now also assist, at least temporarily, the one who just committed one of the largest recent thefts against hardware wallet users.

The Coldcard case will likely not change the philosophy of Bitcoin or the development of privacy tools. It also does not mean that the solution is to give them up.

What it does reveal is an inherent reality of neutral systems: when the rules are the same for everyone, they benefit those who make malicious use of them.

This tension has accompanied Bitcoin for over a decade. The novelty of the Coldcard case is that, this time, the victims were not an exchange or a centralized platform, but users who had chosen self-custody precisely to better protect their bitcoins.

And perhaps that is the greatest irony of all: the tools created to defend user sovereignty ended up providing an additional layer of protection to the attacker who violated that very sovereignty.