A dispute has emerged between Galaxy Digital and online gambling platform Duel Casino after nearly 230 ETH, allegedly linked to the recent Coldcard hardware wallet exploit, was transferred through the casino. The incident has sparked a broader debate over how crypto platforms should respond when potentially stolen digital assets pass through their services.
Galaxy Digital Calls for Immediate Action
Alex Thorn, Head of Firmwide Research at Galaxy Digital, criticized Duel Casino for refusing to freeze the Ethereum after blockchain investigators identified the funds as potentially originating from the Coldcard exploit.
According to Thorn, forensic blockchain analysis connected the transactions to wallets affected by the ongoing Coldcard security breach. Despite receiving the transaction data, Duel Casino reportedly declined to block or suspend the funds, instead requesting formal confirmation from law enforcement before taking action.
Thorn argued that waiting for official legal documentation could allow attackers to move or launder the assets before authorities have time to intervene.
He described the platform’s refusal to temporarily freeze the funds as a failure to respond appropriately to an active cybercrime investigation, warning that businesses handling suspicious assets have a responsibility to act quickly when credible forensic evidence is available.
Duel Casino Defends Its Policy
Duel Casino maintained that it cannot freeze customer assets solely based on claims made by third parties, regardless of how convincing the blockchain evidence may appear.
A company representative explained that allowing external requests to freeze user accounts without official verification could expose the platform to abuse, false accusations, and malicious attempts to disrupt legitimate users.
The casino stated that it requires some form of formal confirmation that a theft has occurred before restricting access to customer funds.
As an exception, Duel indicated it would consider freezing assets if the alleged victim could provide additional verification, including:
- A signed message from the compromised wallet.
- A sworn affidavit confirming ownership of the stolen funds.
- Blockchain evidence tracing the assets directly into Duel Casino’s wallets.
The company emphasized that its policy is designed to balance fraud prevention with protecting legitimate users from arbitrary account freezes.
Industry Divided Over Responsibility
Duel Casino’s stance has generated mixed reactions across the cryptocurrency industry.
Some members of the crypto community argued that platforms should temporarily freeze suspicious funds while investigations are underway, particularly when blockchain analytics strongly indicate assets originate from an ongoing theft.
Others defended Duel’s approach, warning that allowing third parties to freeze accounts without legal oversight could create significant legal and operational risks.
Among those supporting Duel’s position was Gabriel Shapiro, former Chief Legal Officer at Delphi Digital, who argued that requiring official verification remains one of the most practical policies for crypto-focused financial platforms.
Coldcard Exploit Continues to Spread
The dispute comes as investigators continue tracking assets stolen through the recently disclosed Coldcard firmware vulnerability, which affected hardware wallets that generated weak recovery seed phrases.
Blockchain analysts estimate that attackers have already stolen more than 1,300 Bitcoin, valued at well over $90 million, with portions of the funds now moving across exchanges, gambling platforms, decentralized protocols, and other crypto services in an apparent effort to obscure their origin.
As the stolen assets circulate through the broader cryptocurrency ecosystem, exchanges, custodians, casinos, and other digital asset platforms are increasingly facing difficult decisions about when forensic blockchain evidence alone should justify freezing customer funds.
The Galaxy-Duel dispute highlights a growing challenge for the industry: balancing rapid action against cybercrime with protecting user rights and ensuring due process. As digital asset thefts become more sophisticated, similar disagreements over platform responsibility and asset recovery are likely to become more common across the crypto ecosystem.
