Coldcard Bug Drains $130M from Hardware Wallets
HighWhat happened
Hackers have stolen around $130 million in cryptocurrency by exploiting a flaw in Coldcard hardware wallets that made seed phrases predictable and brute-forceable.
Security researchers at Block traced the issue to firmware that fell back to a deterministic software pseudo-random number generator instead of the intended hardware RNG. Attackers reconstructed seeds at scale without physical access to devices. Multiple groups appear involved, per Galaxy Research and Elliptic. Coinkite issued an advisory urging firmware updates and seed migration.
Who is affected
Owners of Coldcard hardware wallets (Mk2, Mk3, Mk4, Mk5, and Q models) who generated seeds on vulnerable firmware versions dating back to March 2021.
Mk2/Mk3 firmware 4.0.1 through 4.1.9 (and some later) carried roughly 40 bits of entropy; later models had about 72 bits instead of the expected 128. Users who added sufficient independent dice rolls or strong unique BIP-39 passphrases face lower immediate risk. TAPSIGNER, OPENDIME, and SATSCARD are unaffected.
Why it matters
Cold wallets are marketed as highly secure offline storage, yet a single firmware RNG flaw from years earlier enabled remote drainage of large holdings without seed sharing or device compromise.
Victims who followed best practices still lost funds, underscoring manufacturer trust and entropy risks in self-custody. Losses reached hundreds of BTC across thousands of addresses in rapid sweeps, eroding confidence in hardware wallet security.
How it could have been prevented
Update immediately to fixed firmware (Mk2/Mk3 4.2.0+, Mk4/Mk5 5.6.0+ or Edge 6.6.0X+, Q 1.5.0Q+ or Edge 6.6.0QX+). Generate a completely new seed on the updated device, verify backups and addresses, test with a small transfer, then migrate remaining funds.
Do not generate new seeds on unpatched devices. Use strong unique BIP-39 passphrases and consider multisig. Destroy old vulnerable inventory guidance was followed by the vendor; keep old backups only until migration confirms.
Relevant professional terms
- Seed phrase
- A list of words that acts as the master backup key to recover a cryptocurrency wallet and all its funds.
- Deterministic PRNG fallback
- A software pseudo-random number generator that produces repeatable outputs from limited non-secret inputs when hardware entropy collection fails or is misconfigured, enabling prediction attacks.
