Markets · Theme of the week

People break, bitcoin holds, and banks inherit the risk

Binance, Bitget, Coldcard, Ledger, Liquid: in 2026 exchanges and private wallets were drained in series. The cryptography held; staff, firmware and supply chains failed, just as Germany's savings and co-operative banks move into crypto custody.

WORTH Signals · 31 Oct 2026 · 7 min read · Deutsch

People break, bitcoin holds, and banks inherit the risk

None of this year's big crypto thefts broke the encryption; the thieves came in through a developer's laptop, months of cultivating contacts, a firmware flaw or tampered devices. AI makes exactly this work cheaper; that is documented for deception and bug-hunting, but not yet proven for the individual large thefts.

The week

1 and 18 April: Drift ($285m) and KelpDAO ($292m) are drained. TRM Labs attributes both to North Korea; at Drift, according to TRM, months of cultivating the signers preceded the theft, including in-person meetings.
30 July: a sweep of Coldcard wallets begins. A firmware flaw from 2021 made devices fall back on a weak random-number generator; according to TRM about 1,816 BTC ($116m) were taken from more than 5,200 addresses without touching a device.
31 July: eleven countries, Germany among them for the first time, jointly warn of North Korean IT workers using AI to infiltrate companies.
7 September: about 4,000 BTC ($320m) leave the reserve of the Liquid network. The perpetrators call themselves white hats; 3,400 BTC are returned.
24 September: Bitget loses $387.5m from hot wallets; its chief executive suspects North Korea.
Mid-October: tampered Ledger devices from a South-East Asian reseller cause estimated losses of $86m-93m; on 26 October Keystone reports the loss of its authentication key.
19 October: the first savings banks launch crypto trading in their app.
29 October: Binance loses about $6.3bn in roughly 20 minutes, the largest crypto theft to date.
30 October: American bitcoin ETFs record outflows of $409.5m after four days of inflows.

What happened

The year's list has a pattern. At Binance, according to the exchange, a compromised laptop belonging to a DevOps employee opened the way; the attackers got its own signing system to sign their transfers. Binance says no private keys leaked. The Bybit theft in 2025 ran along similar lines, via the computer of a developer at Safe, a wallet provider. At Drift, months of contact-building came first. At Coldcard the flaw lay in a build setting, at Ledger in electronics added after manufacture, at Liquid in verification code. Elliptic, an analytics firm, sums it up: the infrastructure and people around the wallets were attacked, not the cryptography. North Korea is the dominant actor. TRM attributed 76 per cent of the year's losses to it by the end of April and also links Binance to the TraderTraitor group. By TRM's count, $1.73bn had been stolen in 333 incidents by 24 September; adding Bitget and Binance brings the total to more than $8bn, by WORTH's calculation.

On the thesis that AI is driving this wave, the evidence is mixed. The toolkit is documented: Google reported in November 2025 that UNC1069, a North Korean group, used Gemini to write phishing messages for exchange employees and to look for scripts to read wallet data. According to South Korean reports in August, the Kimsuky group runs its own language models on its own servers to avoid providers' oversight. The eleven-country warning names AI as a means of disguising identities; Microsoft describes AI-made CVs and profiles. Falling costs are documented too: in 2025 Anthropic had AI agents attack real smart contracts in a simulator. A scan cost $1.22 on average, and the sum that could be stolen doubled roughly every 1.3 months. It is not documented that AI was used at Binance, Bitget or Coldcard. Coinkite, Coldcard's maker, says it must assume someone reviewed the old firmware with AI; its own AI check weeks before the theft did not find the flaw. That is an assumption, not proof. Assessment: the stronger thesis is not that AI carries out the attacks, but that it makes the most expensive steps cheaper: scouting targets, building trust and finding flaws in code.

Questions

Is self-custody now less safe than an account at a bank?

Each has different weak points. At Coldcard and Ledger, flaws in firmware and the supply chain hit owners directly, with no compensation fund. At exchanges such as Binance and Bitget, the thefts hit the companies, which say they will make customers whole. At Coldcard, analyses show that users who added their own randomness with dice or a passphrase during set-up were protected. Specialists advise buying devices directly from the maker, keeping firmware current and, for larger sums, using multi-signature set-ups with devices from different makers.

How safe are crypto-assets at a German savings or co-operative bank?

Custody lies with regulated institutions: DekaBank for the savings banks, Boerse Stuttgart Digital for the co-operative banks. The EU's MiCA regulation requires client holdings to be kept separate from the custodian's own assets. That does not protect against a break-in; it governs ownership. No successful attack on a German bank custodian is known. The savings banks themselves call crypto highly speculative and warn of the risk of total loss.

What role does AI really play?

It is documented that North Korean groups use AI for phishing, target research, fake identities and malicious code, and that AI agents in the lab find flaws in smart contracts for a few dollars per attempt. It is not documented that AI was used in any of the big thefts of 2026. TRM calls it speculation, Coinkite an assumption.

What does the Binance case mean for investors in bitcoin ETFs?

ETF investors hold fund units; the bitcoin sits with the fund companies' custodians, not at Binance. The market reacted anyway: on 30 October American bitcoin ETFs saw outflows of $409.5m according to Farside, a provisional figure excluding BlackRock, after four days of inflows totalling $440.8m. Bitcoin fell by 4.8 per cent on the day of the theft, according to CoinDesk.

Coming weeks

In the coming days what matters is what Binance presents on the cause. The exchange now speaks of further points of entry beyond the laptop, promises a proof of reserves by 2 November and plans to reopen withdrawals in stages. It says about 80 per cent of the loss is covered and that it has set aside more than $6.34bn in total. Experience suggests such headlines are followed by waves of fraud with fake refund and verification offers.

One to three years

The old and new financial worlds are meeting at custody. Since 19 October Germany's savings banks have offered bitcoin and four other crypto-assets; according to Blocktrainer, custody lies with DekaBank, and withdrawals can for now go only to other licensed crypto providers, not to a customer's own device. DZ Bank holds a MiCA licence for the co-operative banks, with custody at Boerse Stuttgart Digital; Deutsche Bank plans its own custody service with Bitpanda and Taurus. Assessment: millions of customer holdings will thus be concentrated at a few custodians, the very kind of target that lost most in 2026. The EU's MiCA regulation requires client holdings to be segregated; it does not prevent a break-in via an employee's laptop. For supervisors and boards, staff vetting, device security and access rights move to the centre of crypto risk management.

Five to ten years

In the long run the question shifts from secure technology to secure processes. Self-custody remains free of counterparty risk, but shifts risk to firmware, supply chain and the owner. Custody at banks reduces user error but creates concentrated targets. If AI makes scouting and deception cheaper still, smaller custodians and individual wealthy people become worthwhile targets. Assessment: the winners are providers that spread access across many hands, devices and manufacturers, for example through multi-signature set-ups with independent devices. The losers are models in which one compromised person or computer is enough.

What changes in practice

Hardware-wallet owners: Buy devices directly from the maker and keep firmware current. At Coldcard, users' own dice randomness or a passphrase protected them.
Bank customers holding crypto: At the savings banks DekaBank is custodian. Withdrawals go only to other licensed providers for now, not to one's own device.
Companies: Job interviews and remote staff become a security matter. Eleven countries, Germany among them, warn of applicants disguised with AI.
Crypto custodians: In 2026 break-ins mostly came via people and devices. Access rights, device control and distributed signing move to the fore.

What to watch

Binance's technical post-mortem and proof of reserves
Regulatory response from BaFin, Germany's financial supervisor, and the EU on staff and device security at crypto custodians
Further evidence of AI use in specific thefts, for example in analyses by TRM, Chainalysis or Google