FTX claims broker courts Coinkite hack victims for lawsuit
SkimNews Take
117 Partners moving from brokering nearly $1 billion in FTX bankruptcy claims to organizing Coldcard hack victims signals an emerging secondary market where loss-recovery rights themselves are becoming tradeable assets.
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- Thomas Braziel and his Savannah, Georgia-based firm 117 Partners created an intake form and are speaking with Canadian law firms to assemble victims of the Coinkite Coldcard hack into a potential lawsuit.
- Galaxy Research said it has "high confidence" hackers stole at least 1,719 bitcoin (over $155 million) by exploiting a 2021 coding error that bypassed a dedicated random number generator, making the 12- or 24-word seed phrases — master keys to wallets — easier to guess.
- Chainalysis estimates Canadian bitcoin users account for more than 25% of losses so far; Coinkite CEO Rodolfo Novak said the company "takes full accountability for the firmware bug" and issued a patch requiring users to generate new seed phrases.
- WeirFoulds LLP lawyers in Toronto say they have been contacted by victims who cumulatively lost "many millions" and are assessing two legal avenues: a product liability suit against Coinkite (which risks bankrupting the company), or tracing stolen bitcoin to freeze funds when hackers try to cash out.
- 117 Partners previously brokered close to US$1 billion of FTX bankruptcy claims; Braziel said the firm is not yet buying Coinkite claims because the situation is "so fresh," but could "definitely consider" it later if recovery drags on.
- In 2024, a Delaware court found Braziel had used $1.95 million from a receivership he oversaw (Fund.com) for personal investments and luxury goods — litigation he says has been settled.
- Victim Jonathan Goodman, a Toronto author, told The Globe he lost more than $1.6 million in bitcoin: "The money's gone... Maybe it's on USB sticks buried in the ground somewhere."
Why it matters: For thousands of Coldcard users, the practical barrier isn't catching the hackers — it's finding money to make recovery viable, since suing Coinkite could bankrupt the small Toronto firm and the stolen bitcoin sits in anonymous wallets that may never be cashed out. Braziel's role as organizer rather than claim-buyer signals the case is too early to price but too large for victims to pursue individually.
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