SecondFi's keys came pre-served to attackers 🗝️

SecondFi has traced its June 23 Cardano wallet exploit to a deterministic nonce derivation flaw in its software signer, a vulnerability that allowed attackers to reconstruct private keys from on-chain data after affected addresses signed transactions. SecondFi confirmed the root cause on Wednesday, identified the underlying issue as address-level rather than application-level, and is now coordinating with Cardano ecosystem platforms and blockchain investigators. The wallet provider urged affected users not to restore their recovery phrases into another Cardano wallet, warning that compromised keys remain exposed even if the seed is re-imported elsewhere.

Initial losses are estimated at roughly 16 million ADA, worth about $2.4 million at an ADA price of $0.150237 as of June 24, down 3.00% over the prior 24 hours, across 374 addresses affected in four separate draining events between June 21 and 23. SlowMist founder Yu Xian, known by the handle Cos, placed total losses above $20 million, noting that more than 129 million ADA plus additional tokens may have moved through addresses linked to the attacker. SecondFi said approximately 4.02 million ADA connected to the exploit remains in one identified collection wallet, which has been flagged and is under active monitoring. SecondFi has isolated two attackers, with one draining 171 wallets across two waves and a second compromising 203 wallets in a separate sweep.

SecondFi has secured roughly 129 million ADA through emergency measures and transferred the funds to an independent third-party custodian, where they will remain pending verification. Phillip Pon, CEO of SecondFi developer Emurgo, said Saturday that the company has completed forensic investigations and established a recovery pathway, with one week allocated to building the solution and a second week for testing before assets begin to be returned. The platform remains in maintenance mode, a dedicated restoration fund has been established to reimburse affected users, and multiple external security firms have been engaged to audit systems before normal operations resume. SecondFi has not yet released a comprehensive post-mortem.

Cardano founder Charles Hoskinson said SecondFi is not an Input Output Global product and stressed that there is no ownership, control, or business relationship between the wallet and IOG. "We didn't write the code and we're not connected to it," he said in a Tuesday video on X, while also noting that some users may have lost their entire ADA holdings and describing that as an unfortunate reality of the industry. SecondFi is a self-custodial platform built on Cardano that rebranded from the Yoroi wallet in April 2026; Yoroi was developed by Emurgo and launched as the first open-source light wallet for the Cardano blockchain. "SecondFi's wallet software exposed the private keys it generated," Mitchell Amador, CEO of Immunefi, told Cointelegraph, adding that while the blockchain remained secure, the key-generation code is the "part nobody audits like a contract."

Community reaction has grown hostile as details of the breach have circulated, with users publicly disputing SecondFi's guidance and criticizing the decision to disable comments. SecondFi has separately warned that malicious actors are circulating fraudulent messages impersonating the wallet during the recovery effort, and said it will never request private keys, seed phrases, wallet credentials or direct wallet access. The exploit surfaced one day after Cardano launched the Leios Musashi Dojo testnet.