Update

He got a Groth16 verifier working on Cardano preview to explore recovering funds encumbered at a vend contract.

The upcoming hard fork adds BLS oriented Groth16 proofs, so with 24 seed words you can prove ownership of derivation paths and embed a destination address.

The private repo has about 306 commits of MPC ceremony logic and on chain Groth16 verification, kept private until a clean bill of health.

Second Fi got hacked when bad cryptographic code, changed from the open source Yoroi to closed source, introduced vulnerabilities an attacker exploited.

The blast radius is still unknown, whether it is only signatures or extends up to key derivation and client side information leaks.

Working with Intersect, the recommendation is that the independent security auditor answer to Intersect's security council for objectivity.

The Groth16 exercise tests the worst recoverable case: everything compromised except the seed words, which then need a zero knowledge proof of ownership.

The happy accident is proving Cardano can do high depth circuits, K22 with almost 4 million parameters, at constant size verification.

Non binding advice: the white hat should move funds into a multi sig holding contract under a neutral party with clear redemption rules.

It is unclear whether the license agreement allows a white hat, and under what legal authority the funds were moved.

The legal layer covers sweeping assets to a white hat and redemption rights, which blockchain says little about unless legality is embedded in the transaction.

Midnight paired with the Legal Context Protocol can embed legal intent, jurisdiction, and dispute resolution into transactions, work Integra Ledger is pursuing.

The hardest layer is whether Emurgo can be a trusted entity again, since this is not a bug but bad code deliberately added, needing an impartial investigation.

Moving from open source community audited code to closed source, modifying solved things like signature generation, calls the technical leadership into question.

When IO acquired Nami it gave users a choice to keep their seed words or upgrade to Lace, the best practice, since force migrating changes the social contract.

The hack landed right as Leios launched, so instead of celebrating solving the trilemma the narrative is a preventable Second Fi hack.

The priorities in order are the integrity of Cardano and making lawful holders whole, then the pentad's integrity, then preserving useful partnerships.

Wallet builders must agree on standards, as the node builders did in the diversity workshops with Blink Labs and Harmonic.

Future funding should prioritize meeting standards, so certified wallets, certified cryptographic libraries, and verifiable software get safety built in.

He built a VibSec agent into his zero knowledge library that real time checks security invariants as code commits, which would likely have caught the Second Fi attack.

Non custodial means losing everything on any mistake, so the third option is insured non custodial with a premium for coverage.

Wallet insurance could become an on chain real world asset that pays a yield to those providing collateral to back the wallets.

The next step is unrestricted auditor access via Intersect to ascertain the blast radius, after which most claimants could likely be redeemed automatically on chain.

Cardano itself has not been hacked, blocks are still being made, and the largest upgrade in its history is coming, with RealFi, Pogen, and Midnight advancing.

The long term consequence is that every ada holder gets more secure wallets and a recommitment to open source, and founding entities carry the same burden of trust.

A full zero knowledge redemption will take months not weeks, since zero knowledge is delicate and a proof of concept is far from a production system.

Cardano has enough expressiveness for a complex zero knowledge redemption across over 16,000 addresses, built with Blaster and UPLC in the extended UTXO model.