Disgraced FTX claims broker is now soliciting Coldcard victims

Thousands of victims of the Coldcard bitcoin wallet hack have been approached to join a legal action against the device’s maker by an FTX claims broker who reportedly stole $1.9 million from another corporate receivership.

According to Galaxy Research, 1,596 BTC has been stolen from roughly 7,300 Coldcard addresses since July 30. That confirmed haul already exceeds $100 million, and a suspected fourth wave of hacks could push it past $130 million.

Thomas Braziel, who now runs distressed claims company 117 Partners, posted an appeal to Coldcard victims on social media which read, “If you were affected by the COLDCARD firmware vulnerability and lost bitcoin, please DM me.”

Two days later, he published a legal update, talking up plans for a legal action with 10-30 claimants. He also steered victims into a Telegram channel to keep communications private.

Read more: 15 attackers now draining vulnerable Coldcard wallets, report

No knight in shining armor for Coldcard victims

In 2016, the Delaware Court of Chancery appointed Braziel receiver of Fund.com after the court had entered a default judgment against that company.

The order tasked Braziel with liquidating Fund.com and distributing proceeds to its investors — a process that would take several years.

By 2024, however, the court determined that “Braziel manufactured alternative versions of the account statements” of Fund.com and “created falsified versions of the company’s bank records.”

The court also concluded that its special magistrate’s report “appropriately compared Braziel’s conduct to the elements of criminal offenses for the purpose of measuring whether Braziel’s actions were sufficiently egregious.”

In that memorandum opinion, a vice chancellor (the name for judges in this Delaware court) removed Braziel as a corporate receiver and ordered him to repay $1,945,063.

Braziel’s own lawyers told the court, “By and large, Braziel accepts the report’s extensive factual and legal findings. He further acknowledges and agrees to reimburse the company for the expense of the special [magistrate’s] investigation.”

Braziel asserted his Fifth Amendment privilege more than 500 times in deposition, though Vice Chancellor J. Travis Laster was careful to add, “Nor has the court purported to convict the receiver of any crimes.”

No prosecutor or securities regulator charged him with any crime, and Braziel paid his restitution.

There are many other lawyers and bankruptcy professionals trying to solicit Coldcard victims. Protos has already warned victims about unsolicited legal outreach.

Coldcard manufacturer Coinkite is a bootstrapped Toronto company and its terms of sale for hardware wallets route disputes into arbitration under Ontario’s Arbitration Act of 1991 — a structural problem for proposed lawsuits.

Attorney Ariel Givner observed on August 2 that those terms “heavily disclaim warranties, limit liability to the device purchase price, and exclude consequential damages” for victims of Coldcard hackers. 

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