Coinkite disclosed an entropy-generation flaw in its Coldcard hardware wallets, and researchers at Galaxy Digital say attackers have since drained more than 1,596 Bitcoin worth at least $100 million from affected devices. The flaw sits in weak randomness behind private-key generation, not in Bitcoin's own cryptography. Rival makers Ledger, Trezor and Foundation say their layered entropy designs are built to avoid the same failure.
Coinkite confirmed an entropy-generation flaw had affected multiple Coldcard devices on July 31, weakening the randomness behind each wallet's private key. Researchers at Galaxy Digital say attackers have since drained more than 1,596 Bitcoin worth at least $100 million from affected wallets in coordinated attacks. Coinkite has released firmware fixes and told customers to migrate funds to newly generated wallets.
What caused the entropy failure
One theory, floated by Core Lightning developer Dustin Dettmer, points to a change made to Coldcard's firmware in 2021: code meant to hook into the hardware's random number generator instead switched it off, leaving wallet creation to rely on MicroPython's weaker Yasmarang generator. Coinkite has not confirmed that account and says a full technical postmortem is still coming. Wallets whose owners supplied their own entropy, through dice rolls or similar manual methods, were not affected by the fallback.
Manufacturers defend their entropy designs
Ledger says its hardware wallets generate seed randomness inside a Secure Element certified to the AIS-31 PTG.2 standard, an architecture it argues cannot silently fall back to software-based randomness.
Trezor blends randomness generated on the device with randomness from the host computer and runs checks confirming the device contributed genuine entropy during setup. Trezor chief technical officer Tomáš Sušánka tells Magazine: "randomness cannot depend on a single source or a single line of code being correct."
Foundation's Passport pulls entropy from several separate hardware components and ships its firmware as open-source code with reproducible builds.
Industry calls for stronger standards
Kraken chief security officer Nick Percoco calls the episode a wake-up call for the hardware wallet industry, arguing that existing certification schemes often check individual components without confirming that shipped firmware actually calls them correctly. He has proposed an industry standard requiring independent validation of entropy sources and certification tied to specific hardware and firmware versions.
Onramp Bitcoin head of product Michael Tanguma argues the sturdier fix is architectural: multisig setups built on independently generated entropy, so that no single device, vendor or institution being wrong can lose the funds.
Source: Cointelegraph
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