Thousands of victims of the recent Coldcard hardware wallet hack are being encouraged to join a proposed legal action against wallet maker Coinkite—but the effort is being led by an FTX claims broker who was previously removed as a court-appointed receiver after a Delaware judge found he falsified corporate financial records.

Thomas Braziel, founder of distressed claims firm 117 Partners, has begun publicly recruiting Coldcard users who lost Bitcoin in one of the largest hardware wallet compromises in recent years, despite a judicial history that has already raised questions about his handling of investor assets.

Coldcard victims urged to join legal action

Braziel recently called on affected users through social media, asking anyone impacted by the Coldcard firmware vulnerability to contact him directly.

He later said he was assembling between 10 and 30 claimants for potential legal action against Toronto-based hardware wallet manufacturer Coinkite, while directing victims into a private Telegram group to coordinate discussions.

The outreach follows a firmware vulnerability that has already resulted in the theft of an estimated 1,596 Bitcoin from roughly 7,300 Coldcard wallets, according to Galaxy Research. Confirmed losses have surpassed $100 million, with researchers warning the total could exceed $130 million if additional attack waves continue.

Security researchers traced the compromise to a firmware bug introduced in March 2021 that mistakenly generated wallet seed phrases using a deterministic software pseudorandom number generator instead of the device's intended hardware random number generator. The flaw enabled attackers to reconstruct private wallet seeds and drain funds remotely without requiring physical access to the hardware wallet.

Court previously removed Braziel over falsified records

Braziel's legal recruitment campaign has drawn renewed attention because of findings made against him during an unrelated corporate receivership.

In 2016, the Delaware Court of Chancery appointed Braziel as receiver of Fund.com, placing him in charge of liquidating the company and distributing proceeds to investors.

However, in 2024, the court concluded that Braziel had "manufactured alternative versions of the account statements" and "created falsified versions of the company's bank records" while overseeing the receivership.

The court removed him from the role and ordered him to repay $1.95 million to the estate. During subsequent proceedings, Braziel invoked his Fifth Amendment right against self-incrimination more than 500 times.

While the court compared aspects of his conduct to elements of criminal offenses, it stopped short of making criminal findings, and neither prosecutors nor securities regulators ultimately filed criminal charges. Braziel later reimbursed the receivership as ordered.

Legal path remains uncertain

Even if Coldcard victims decide to pursue litigation, legal experts say recovering losses may prove difficult. Coinkite's terms of sale require disputes to be resolved through arbitration under Ontario's Arbitration Act rather than through conventional court proceedings.

Attorney Ariel Givner noted that the company's sales terms also broadly disclaim warranties, cap liability at the purchase price of the hardware wallet, and exclude consequential damages, creating substantial hurdles for any large-scale recovery effort.

For now, cybersecurity experts continue to stress that affected users should prioritize protecting any remaining funds by installing patched firmware, generating entirely new wallet seeds, and migrating assets to fresh wallets rather than relying on future litigation to recover stolen Bitcoin.