Theft of 1,816 Bitcoin from Coldcard wallets exposes flaw in seed generation
Key Facts
Withdrawals linked to a flaw in seed generation on some Coldcard wallets began on July 30, 2026, and totaled an estimated 1,816 Bitcoin across more than 5,200 addresses, according to TRM Labs. The firm valued the coins at about $116 million when it prepared its report, published on August 5, making that figure the cumulative total for the incident rather than a new transfer on November 12. TRM attributed the quantity estimate to Galaxy Research, while presenting the dollar valuation as it stood at the time of the report. The withdrawals took place in four waves, the firm said. The incident involved a flaw in the seed-generation process on some devices, not a device breach or remote takeover, according to Coinkite.
The flaw is linked, according to Coinkite, to a build and linking error that entered the seed-generation process with the migration to the libNgU library in March 2021. This led the devices to use the Yasmarang software random-number generator instead of relying exclusively on the intended hardware random-number generator. TRM said the flaw reduced effective key strength on some devices from the designed 128 bits to as little as 40 bits. The weak seeds allowed attackers to regenerate the corresponding private keys off-device, without physical access, according to TRM. Coinkite said the Coldcard devices themselves were not breached, accessed or remotely controlled. The risk therefore applies to seeds created through an affected process, not to a device simply because a user owns it.
Coinkite said a firmware update corrects seed generation going forward but does not make an existing affected seed safe. The company recommends installing the corrected version before creating a new seed, then moving funds if the seed was created on affected firmware. The official status page gives the same guidance, confirming that the update alone does not fix an existing seed. As of October 1, 2026, the recommended standard releases were 5.6.3 for Mk4 and Mk5 devices, and 1.5.3Q for Q devices, according to the page. This means updating the device is necessary to secure the creation of future seeds, but does not remove the need to move funds from an affected seed. According to Coinkite, these steps depend on the seed and the firmware on which it was created.
TRM said most victims’ funds were consolidated into a small number of attacker addresses, and it tracked a deposit of 64.9 Bitcoin to Wasabi and 200 Ethereum to Tornado Cash on August 4. The firm said the transaction pattern could indicate the involvement of more than one attacker, but did not attribute the theft to a specific party at the time of its report. It described the incident as the third-largest cryptocurrency attack of 2026 as of the report date. TRM estimated that more than $1.2 billion had been stolen in cryptocurrency incidents across 276 cases through August 5. That estimate places the Coldcard incident within a broader wave of losses the firm tracked during the year. The $116 million figure for the Coldcard incident remains an estimate from the time the report was prepared, not an updated valuation at November 12 prices.
In secondary coverage dated November 10, Coinkite CEO Novak was quoted as saying that an AI model discovered the flaw after human reviewers failed to spot it. No open primary-source statement confirming this account was available, so it remains attributed to that coverage. The account comes against the backdrop of a software flaw dating to the March 2021 migration, according to Coinkite’s published technical explanation. The practical steps announced by the company focus on updating the firmware, creating a new seed and moving funds from any affected seed. Its guidance also clearly distinguishes between fixing the generation process for the future and addressing seeds created previously. Details of attribution to any particular attacker remain unresolved in TRM’s August report.