Coldcard Vulnerability Caused Cumulative Theft of 1,816 Bitcoin
Key Facts
Coinkite said a flaw in the firmware of Coldcard wallets weakened seed generation, allowing attackers to recreate the associated private keys without remotely taking control of the devices. Cumulative losses linked to the incident reached 1,816 bitcoin, according to the figure cited in The Block’s coverage, following waves of targeting that began in July. That figure reflects the incident’s total losses, not a new transfer on November 12. Galaxy Research estimated that the first wave caused the loss of 1,082.65 bitcoin from 1,196 addresses on July 30, worth about $70.2 million. Coinkite said attackers exploited weak seeds externally to regenerate keys and steal funds.
The attacks began no later than the morning of July 30, according to Galaxy Research, which said no further attack waves or highly confirmed effects had emerged after August 6. Galaxy’s analysis, published on August 14, estimated that at least 1,778 bitcoin had been stolen, of which 1,531 bitcoin remained in addresses controlled by the attackers and had not moved. It said about 246 bitcoin had moved after the theft, with 65% of the moved amount entering CoinJoin transactions, while 35% continued moving on-chain. Victim reports later helped confirm additional losses. These figures put successive monitoring stages in chronological context, from the initial wave estimate to Galaxy’s later update.
Coinkite identified the affected versions by device model and release track. Seeds created on Mk2 and Mk3 were affected on versions 4.0.1 to 4.1.9, while Mk4 and Mk5 devices were affected before standard release 5.6.0 or Edge release 6.6.0X. For the Q model, seeds were affected before standard release 1.5.0Q or Edge release 6.6.0QX. The company said affected seeds on Mk4, Q and Mk5 contained about 72 bits of entropy, compared with the expected level of 128 bits. It described the flaw’s impact on these models as less severe than on Mk2 and Mk3, but still serious.
Coinkite Chief Executive Rodolfo Novak apologized and said the company took full responsibility for the firmware flaw, acknowledging that its reviews had not detected it. The Block quoted him as saying he considered it possible that the vulnerability had been discovered with the help of artificial intelligence, but he did not establish that a particular model was behind the initial discovery. The coverage presented this possibility as a likelihood, not a confirmed fact. Jameson Lopp, a Bitcoin security researcher and co-founder of Casa, said verifying complex software and hardware was practically impossible for 99.9% of the population. The incident highlights the difficulty of individually verifying self-custody tools, as well as their developers’ responsibility for secure key generation.
Coinkite recommends that users who created affected seeds move their funds to a new seed, because the firmware update fixes the generation of new seeds but does not fix an existing seed. The company says a seed generated from at least 50 fair, independent dice rolls is not vulnerable to this flaw alone, provided the rolls were not recorded or disclosed to others. In a security update issued on August 20, it said generating each new seed now requires a user-provided source of randomness, such as 50 rolls of a physical six-sided die or 128 flips of a physical coin, or at least 65 key presses at unpredictable intervals. Coinkite confirmed that the devices were not remotely hacked; attackers exploited weak seeds to recreate keys without taking control of the devices. The company said law enforcement authorities are continuing to investigate the thefts and that it is ready to help.
Galaxy data showed an impact on multisignature custody services after the incident: Casa said registrations rose and clients moved large amounts of bitcoin into its vaults. Anchorwatch also said inflows recorded its largest single week since the service launched. Galaxy said these moves reflected greater demand for custody arrangements requiring more than one signature. Meanwhile, Coinkite said migration steps are separate from installing the new software, because an old affected seed still requires separate remediation. The company is leaving the ongoing investigations to the authorities while continuing to urge holders of potentially affected seeds to move their funds.