Chinese AI Models Are Defending Bitcoin Wallets Because US Models Won't

Galaxy Digital's Alex Thorn joins Austin, Ram, and Chris on the Coldcard firmware bug that's drained over $100M from cold storage — plus why the researchers chasing the next hack are stuck on Chinese AI models.

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A firmware bug that has sat inside Coldcard hardware wallets since 2021 let hackers drain more than $100 million in bitcoin — an estimated 1,600 to 2,000 BTC — from cold storage. The stolen coins had been dormant for about four years on average, so the victims are long-term holders, not speculators.

Alex Thorn, head of research at Galaxy Digital and host of the Galaxy Brains podcast, has traced the exploit in real time, mapping three confirmed waves of theft and a possible fourth. He joins Austin Campbell, Ram Ahluwalia, and Chris Perkins to work out whether ordinary holders should self-custody at all — and why the researchers racing to catch the next exploit are stuck using Chinese AI models, because US frontier models refuse the security work.

The conversation covers the collapse of an AI hedge fund whose assets fell from $45 billion to $10 billion before a distressed sale to Ken Griffin's Citadel, whether Citadel timed the fire sale or simply had the cash, the multisig setups that came through the hack intact, and the Fed's divided vote to hold rates as Kevin Warsh pushes to make it more accountable.

Hosts

• ⁠Austin Campbell⁠ - Host of Bits + Bips, Founder of Zero Knowledge Group, and Adjunct Professor at NYU Stern

• ⁠Ram Ahluwalia⁠ - Co-host of Bits + Bips and CEO of Lumida

• ⁠Chris Perkins⁠ - Co-host of Bits + Bips and Head of Franklin Crypto

Guest

• ⁠Alex Thorn - Head of Research at Galaxy Digital and host of Galaxy Brains

Timestamps:

📱 00:54 Cape: Get 33% off your first six months of privacy-first mobile service at https://cape.co/unchained

📉 02:22 How a $45B AI fund cratered to $10B in one brutal month

🖥️ 07:59 Alex Thorn: why AI infrastructure demand isn't actually slowing

🏦 15:45 Why Ram calls Citadel and Jane Street the new lenders of last resort

🔐 20:14 Inside the Coldcard hack: over $100M drained from cold storage

🎲 24:11 How a broken random number generator let attackers derive keys

🕵️ 30:19 Alex Thorn traces the Coldcard attacker's wave-by-wave pattern

🤖 40:23 Why US AI guardrails are pushing security research to Chinese models

🔑 45:50 Self-custody or Coinbase? Alex Thorn's advice for grandma's Bitcoin

🏛️ 54:44 The Fed holds rates as Kevin Warsh pushes for more accountability

🇯🇵 57:48 The yen carry trade, a more powerful Treasury, and how to keep rates low