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Coldcard hardware wallet flaw drains about 594 BTC, or $38M

Seeds generated on certain Coldcard Mk3 devices after firmware 4.0.1 may be at risk, and Coinkite says a hotfix will not restore seeds already created.

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Coinkite said a vulnerability in its Coldcard hardware wallets allowed attackers to generate seeds that were far more guessable than intended, leading to an estimated 594 BTC drained from roughly 500 wallets in about 25 minutes. The company estimates the losses at around $38 million.

According to Decrypt, the issue stems from a build error that caused seed generation on the Coldcard Mk3 to draw randomness from a software fallback rather than the hardware generator. Coinkite believes an attacker used AI to review earlier versions of its open source firmware to uncover the flaw, even though the company says its own AI review of the same code weeks earlier found nothing serious.

The advisory covers Mk3 wallets that generated seeds after firmware 4.0.1, with the exploitation starting early Friday. Coinkite said updating firmware does not repair seeds already created, and it estimates the effective search space for an Mk3 seed at about 40 bits, versus the 128 bits it is meant to have.

Coinkite published the technical breakdown for its Mk3, and it also described mitigations for newer models. It said emergency hotfixes are available, including firmware version 5.6.0 for the Mk4 and Mk5 and 1.5.0 for the Q, while it said Tapsigner, Opendime, and Satscard use different code and are unaffected.

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