Why speed and precision matter

Bitcoin transactions cannot be reversed. If an attacker gains your keys they can sign transactions immediately. That makes early detection and the right next steps critical. The good news: not all exposures lead to loss. How you act in the minutes and hours after discovery often determines the outcome.

First 15 minutes: Stop, assess, and isolate

1. Do not panic and do not share more information

Avoid posting about the incident on social media or messaging others the seed, screenshots, or wallet details. Attackers monitor public channels for vulnerable targets. Treat your knowledge like evidence.

2. Determine the nature and scope of the exposure

• Was the device stolen, or was the seed phrase photographed or copied to cloud storage?
• Was a hardware wallet connected to a compromised computer?
• Do you see unusual activity in your wallet or pending outgoing transactions?

3. Immediately isolate the affected device

Power off and disconnect the compromised device from networks. For mobile wallets, enable airplane mode and power down. If a hardware wallet is lost or stolen, factory-resetting a found device may not be safe; assume the seed is exposed.

Next 30–120 minutes: Make a defensive plan

4. Check on-chain activity and pending transactions

Monitor your Bitcoin addresses for outgoing transactions. If you see a pending transaction in the mempool originating from your address, time is critical. If a transaction is not yet broadcast, do not power up the compromised device again.

5. Decide between sweeping and sending

"Sweeping" means importing the private key into a new wallet and moving funds to new addresses in a single transaction. "Sending" may involve using the compromised device to authorize a transfer, which is unsafe if keys are exposed. Always prefer sweeping into a freshly created wallet where feasible.

6. Prepare new, secure destinations

Create a new seed on a trusted, air-gapped device or new hardware wallet. Do this on a clean machine or offline device; avoid reusing any hardware or software that may have been compromised. Consider creating a multisig wallet if your holdings justify it: multisig dramatically reduces the risk of a single point of failure.

Technical steps: sweeping safely

If you opt to sweep the exposed key, follow these controlled steps. If you are not technically confident, find a sober, experienced person you trust to help, but do not share your full seed with anyone unless absolutely necessary.

7. Use an offline or air-gapped wallet for key import

• Create a new seed on a brand-new hardware wallet or a reputable air-gapped software wallet.
• On the offline device, import the compromised private key (not the exposed seed) and create a sweep transaction to the new addresses.
• If using PSBT (partially signed Bitcoin transaction), build the PSBT on an online machine and transfer it to the air-gapped device via USB or QR for signing.

8. Broadcast from a clean machine and confirm

Only broadcast sweep transactions from a network you trust using a clean computer. Double-check that destination addresses belong to your new wallet. Verify transaction details on-chain after broadcast.

If a transaction is pending: advanced options

If an attacker already broadcast a transaction or you see suspicious outgoing transactions, you have limited technical options depending on mempool and fee conditions.

9. Replace-by-Fee (RBF) and Child-Pays-For-Parent (CPFP)

RBF can replace an unconfirmed outgoing transaction with a different one only if the original transaction had RBF enabled. CPFP only helps confirm a stuck outgoing transaction by incentivizing miners to confirm a parent and child together and will not stop a maliciously broadcast outgoing transaction. These techniques are technical and often not applicable when keys are exposed; they are not substitutes for sweeping to fresh keys.

10. Monitor addresses and get ready to act again

Set up watch-only wallets on a separate device to be alerted of movement. If you see additional addresses used, update your plan quickly. Time and swift, correct actions matter most.

Practical law, banking, and reporting steps for Canadians

While blockchain thefts are often irreversible, documentation and reporting matter for legal and insurance purposes in Canada. Here are practical steps to take after securing funds or if loss occurs.

11. Preserve evidence

Keep screenshots, transaction IDs, timestamps, emails, and details of the compromised device. Do not tamper with the compromised device more than necessary; preserving it may help investigations.

12. Report to your exchange and Canadian authorities

Contact any exchange you use to freeze accounts if you suspect attackers might move funds through them. File a report with your local police and include detailed documentation. For larger losses or if criminal activity crosses borders, you may also report to federal authorities. If you are a Canadian business with AML obligations, follow FINTRAC reporting rules as applicable.

13. Notify your bank if fraud involves Interac or bank-based scams

If the compromise resulted from an Interac e-transfer scam or social engineering that touched your bank accounts, notify your bank immediately. Banks have procedures for fraud and may be able to help stop unauthorized transfers unrelated to on-chain Bitcoin movements.

Recovery and future-proofing

14. Build a better custody model

After the incident, invest time in improving custody: use hardware wallets with verified firmware, adopt multisig (two-of-three or three-of-five based on risk), split backups across secure physical locations, and use metal seed backups protected from fire and water. Multisig reduces the chance that a single exposed key leads to total loss.

15. Learn from the attack vector

Was the exposure due to phishing, a compromised computer, cloud backup, or a physical theft? Fix the root cause: strengthen email security, remove sensitive files from cloud services, update operating systems, and adopt a strict wallet hygiene routine.

16. Consider professional help carefully

There are legitimate recovery services and forensic firms, but many scammers target victims again by offering recovery for a fee. Vet providers thoroughly, ask for verifiable references, and never hand over full seeds unless under a legally binding, escrowed arrangement. Open-source tools like btcrecover can help with partial seed recovery scenarios but require technical knowledge and caution.

Example scenarios and responses

Scenario A: Hardware wallet stolen, seed unknown

If only the hardware wallet is stolen and you did not expose the seed phrase, your funds remain safe because the seed is required to restore access. Still, consider moving funds if you suspect the attacker has any chance to access the seed or PIN via social engineering.

Scenario B: Seed phrase photographed and cloud-synced

Treat the seed as fully compromised. Create a new seed on a fresh device offline, sweep funds to the new addresses, and remove any cloud copies. Document the incident and consider reporting to police.

Checklist: Fast-response summary

• Stop using the compromised device and isolate it.
• Assess how the keys were exposed and check on-chain activity.
• Create new secure destinations on trusted, air-gapped hardware.
• Sweep exposed keys to the new wallet; do not reuse compromised seeds.
• Monitor mempool and addresses; consider RBF/CPFP only when appropriate.
• Preserve evidence and report to exchanges and law enforcement when needed.
• Harden your custody model: multisig, metal backups, verified hardware.

Closing thoughts

A compromised Bitcoin key is a crisis, but a calm, methodical response can protect most or all of your funds. Prioritize isolation, creation of fresh keys on trusted hardware, secure sweeping procedures, and quick monitoring. For Canadian users, remember to document the event for banks and authorities where appropriate. Finally, treat every incident as a learning opportunity: harden your setup, adopt multisig if needed, and build redundancy so a single mistake does not become an irreversible loss.

If you want a printable checklist or a tailored recovery plan based on your exact situation, tell me the scenario (device stolen, seed exposed, unexpected transfers, etc.) and I can provide step-by-step actions specific to your case.