Nila Kartika Wati
Today’s cryptocurrency landscape saw significant movements across corporate finance, digital asset security, and long-awaited bankruptcy resolutions. Trump Media & Technology Group (TMTG), the parent company of Truth Social, continued its strategic divestment of Bitcoin, transferring an additional 2,628 BTC to Crypto.com, further reducing its holdings. Concurrently, new analysis from Galaxy Research revealed that the total losses stemming from a critical seed generation vulnerability in Coldcard hardware wallets have escalated to an estimated 1,367 BTC, equivalent to approximately $88.6 million. Amid these developments, former users of the defunct FTX exchange began to receive reimbursements as the FTX Recovery Trust initiated a substantial $900 million creditor payout, bringing the cumulative estimated repayments to a remarkable $11 billion.
Trump Media’s Continued Bitcoin Divestment Signals Strategic Shift
Trump Media & Technology Group, the entity behind the social media platform Truth Social and recently listed on Nasdaq under the ticker DJT, has executed another significant sale of its Bitcoin holdings. The company moved 2,628 BTC, valued at approximately $165 million at the time of transfer, to the cryptocurrency exchange Crypto.com. This latest transaction extends a series of divestments that began seven months ago, indicating a clear strategic shift in the company’s asset management.
According to blockchain analytics platform Lookonchain, TMTG initially accumulated a substantial 11,542 BTC, acquired at an average price of $118,522 per Bitcoin. This initial investment phase predated Bitcoin’s significant bull run of late 2023 and early 2024, suggesting a calculated entry into the digital asset market. However, the subsequent sales, including the most recent tranche, have been made at an average selling price of $74,855 per BTC, as calculated by Lookonchain. These figures suggest that TMTG’s Bitcoin sales have been executed at a substantial loss relative to their reported average purchase price.
The total reported Bitcoin sales by Trump Media over the past seven months now amount to 7,281 BTC, generating approximately $545 million in proceeds. Following this latest transfer, TMTG’s remaining Bitcoin holdings, according to data from Arkham, stood at 4,261 BTC, valued at roughly $269.8 million at the time of reporting. This dramatic reduction in holdings signals a strategic decision to de-risk its balance sheet from volatile crypto assets or to generate capital for operational needs and new ventures.
The timing of these transactions coincides with TMTG’s launch of its new paid data service, "Truth API." This service offers companies faster and licensed real-time access to Truth Social posts, particularly those from former President Trump, which are often market-moving. Reports suggest that the Truth API could cost as much as $100,000 per month for subscribers seeking direct feeds of the platform’s most impactful "Truths." The revenue generated from these Bitcoin sales could provide vital capital to support the development and scaling of such new services, fund ongoing operations, or bolster the company’s financial liquidity following its recent public listing via a merger with a Special Purpose Acquisition Company (SPAC), Digital World Acquisition Corp (DWAC).
The decision to sell Bitcoin, especially at a reported loss, contrasts with strategies adopted by other publicly traded companies like MicroStrategy, which has consistently accumulated Bitcoin as a primary treasury reserve asset. TMTG’s approach suggests a preference for more traditional forms of capital or a re-evaluation of its exposure to cryptocurrency market volatility. The impact on the broader Bitcoin market from TMTG’s sales is likely minimal given Bitcoin’s vast market capitalization and daily trading volumes, but it underscores how corporate entities are navigating the complexities of integrating digital assets into their financial strategies.
Coldcard Wallet Incident: $88.6 Million Lost to Seed Generation Flaw
In a concerning development for hardware wallet security and self-custody advocates, a new report from Galaxy Research, the analytical arm of crypto investment firm Galaxy Digital, has revealed the full extent of losses from a critical vulnerability affecting certain Coldcard hardware wallets. The incident, which centered on a seed generation bug, has now been linked to 4,585 distinct addresses and resulted in the loss of 1,367 BTC, an amount valued at approximately $88.6 million.
Coldcard wallets are renowned within the crypto community for their robust security features, particularly their air-gapped operation and multi-signature capabilities, making this incident particularly alarming. The vulnerability reportedly involved a flaw in the seed generation process, which is the cornerstone of cryptographic security for hardware wallets. This bug reduced the randomness, or entropy, used to create the 24-word recovery phrases (seed phrases) that secure a user’s private keys.
A lack of sufficient randomness in seed phrase generation means that the possible combinations of seed phrases are significantly narrowed. In essence, instead of a truly random sequence that is practically impossible to guess, the bug made it mathematically feasible for sophisticated attackers to predict or reconstruct a subset of these compromised seed phrases. Once a seed phrase is compromised, the associated private keys can be derived, allowing attackers to gain full control over the funds stored in the wallet. This type of vulnerability is considered one of the most severe as it undermines the fundamental security assurances provided by a hardware wallet, which is designed to protect private keys from online threats.
While specific details on the exact timeline of the bug’s discovery and disclosure by Coldcard have not been fully detailed in the provided information, such incidents typically prompt immediate firmware updates and urgent warnings to users. Hardware wallet manufacturers generally advise users to update their devices to the latest firmware, generate new seed phrases on the patched device, and transfer their funds to the new addresses. For those affected by this specific flaw, the window of opportunity for attackers to exploit the reduced entropy meant that funds could be siphoned off without the user’s direct interaction, provided the attacker could successfully predict the seed.
The broader market implications of this incident were subtly reflected in recent on-chain data. According to Julio Moreno, head of research at CryptoQuant, Bitcoin transfers below 1 BTC surged to their highest daily level since November 2022 on a recent Friday, with 39,600 BTC moved. This figure was just slightly below the 39,900 BTC transferred on November 16, 2022, a period marked by intense market panic following FTX’s bankruptcy filing. Moreno observed that "The Bitcoin plebs had not moved this amount of BTC in a day since the FTX collapse," adding that he was encouraged to see users "taking action." This surge in smaller transfers suggests a heightened sense of caution among retail Bitcoin holders, potentially prompted by the Coldcard incident, as users moved funds to new wallets or exchanges to secure their assets. It underscores the critical importance of regular security audits, robust cryptographic practices, and user vigilance in verifying the integrity of their self-custody solutions.
FTX Creditors Begin Receiving Funds in $900 Million Payout
After nearly two years of uncertainty, former users of the collapsed FTX cryptocurrency exchange have begun to receive reimbursements, marking a significant milestone in one of the largest and most complex bankruptcy proceedings in crypto history. On Friday, the FTX Recovery Trust initiated a new $900 million distribution to creditors, bringing a measure of relief to those who lost access to their assets following the exchange’s dramatic downfall in November 2022.
Users, including prominent former FTX customer Sunil Kavuri, confirmed receiving funds through various distribution partners, such as Kraken, following notifications sent out in the preceding week. This latest payout represents the fifth distribution round since FTX filed for Chapter 11 bankruptcy. The ongoing recovery process involves a network of platforms and service providers, including BitGo and Payoneer, working in concert to facilitate the return of assets to hundreds of thousands of affected individuals and entities worldwide.
With this current round of disbursements, the FTX Recovery Trust is estimated to have returned approximately $11 billion to customers. This remarkable recovery stands as a testament to the efforts of the new management team, led by CEO John J. Ray III, who took over after the initial collapse. Ray, known for his experience in high-profile corporate bankruptcies like Enron, described the FTX situation as one of the most challenging he had ever encountered due to the chaotic record-keeping and alleged widespread fraud.
The genesis of FTX’s bankruptcy stemmed from the egregious misuse of customer funds, primarily through its sister trading firm, Alameda Research. This illicit commingling and diversion of assets led to criminal convictions for several former executives. Former CEO Sam Bankman-Fried was convicted on multiple counts of fraud and money laundering and remains imprisoned, awaiting sentencing. Former FTX Digital Markets co-CEO Ryan Salame also remains imprisoned after pleading guilty to campaign finance violations and operating an unlicensed money transmitting business. In contrast, former Alameda Research CEO Caroline Ellison, who cooperated with prosecutors, completed her prison sentence earlier this year.
The recovery process has not been without its complexities and legal battles. Separately, a U.S. bankruptcy judge recently granted permission for the FTX estate to continue pursuing a substantial $1.76 billion clawback claim against rival exchange Binance and its former CEO, Changpeng Zhao. This decision allows the FTX estate to attempt to reclaim funds that it alleges were improperly transferred or received by Binance prior to FTX’s collapse, even as broader damages claims against Binance were rejected. This ongoing legal pursuit highlights the intricate web of transactions and alleged misconduct that characterized the final days of FTX and the determination of the recovery team to maximize returns for creditors.
The successful distribution of funds to FTX creditors, even if taking considerable time, sets an important precedent for future cryptocurrency insolvencies. It demonstrates that even in the face of massive fraud and mismanagement, a structured legal process can lead to significant recoveries for victims. This outcome may contribute to restoring a degree of confidence in the broader digital asset ecosystem, particularly regarding the enforceability of property rights and the potential for legal recourse in cases of exchange failure. However, it also underscores the inherent risks associated with centralized crypto platforms and the ongoing need for robust regulatory frameworks to protect investors. The journey from collapse to recovery for FTX has been long and arduous, but the current payouts offer a tangible sign of progress and a glimmer of hope for those impacted.
