COLDCARD Seed Generation Flaw Tied to Nearly $89M Bitcoin Theft

Galaxy Research has linked a firmware flaw in several COLDCARD hardware wallets to three suspected thefts totaling 1,367.05 BTC, worth roughly $88.6 million. The first incident, on July 30, drained 1,082.65 BTC from 1,196 addresses in just 41 minutes, with uniform fees and no change outputs suggesting a single operator. Two subsequent waves brought the total number of affected addresses to 4,585.

According to security analysis from Block, the root cause traces to a 2021 firmware change that mistakenly routed seed generation to MicroPython's deterministic software fallback instead of COLDCARD's hardware random number generator. A faulty check only verified that a configuration flag existed rather than whether it was actually enabled, silently weakening entropy. Coinkite now estimates affected Mk2/Mk3 seeds carry about 40 bits of effective entropy, and Mk4/Mk5/Q seeds about 72 bits — both well short of the intended 128-bit security target.

Coinkite has published the specific firmware version ranges affected and is urging owners to update, generate new seeds, verify backups, and migrate funds via a small test transaction before moving full balances — since restoring an old seed on patched firmware does not fix the underlying weakness. TAPSIGNER, OPENDIME, and SATSCARD are unaffected due to separate codebases. Galaxy cautions its findings rely on blockchain heuristics rather than confirmed proof that every drained address came from vulnerable firmware, underscoring a broader lesson for engineers: RNG integrations must validate actual activation state, not just configuration presence.