Coinkite has released a firmware overhaul for its Coldcard hardware wallets after a seed-generation flaw let attackers steal more than $100 million in Bitcoin. The update adds mandatory randomness to new seed creation, checks transactions before signing, and follows a three-week security review.
Coinkite has released new firmware for its Coldcard hardware wallets after a flaw in how the devices generated wallet seeds exposed users to more than $100 million in Bitcoin thefts. The company urged Coldcard Mk4, Mk5, and Q users to install firmware 5.6.1 or 1.5.1Q.
Attackers began draining Bitcoin from the air-gapped devices in July, exploiting a firmware flaw dating to 2021 that generated some wallet seeds with too little randomness, making private keys easier to guess. The first attack drained 594 BTC, worth about $38 million, from roughly 500 wallets in 25 minutes.
By August 14, Galaxy Research said attackers had stolen more than 1,778 BTC, worth roughly $112 million at the time, across three major attack waves and dozens of smaller incidents. The exploit has since resulted in roughly $130 million in stolen Bitcoin.
Entropy flaw cut key security to 40 bits
On some affected devices, the flaw reduced security from 128 bits of entropy to roughly 40 bits, making seed phrases easier for attackers to guess without physical access to the device. Coinkite suggested the attackers may have used AI to examine older versions of its open-source firmware and uncover the flaw.
The updated firmware now requires users to add randomness when generating a new seed, using at least 65 key presses, 50 dice rolls, or 128 coin flips, which the device combines with its own randomness. Coinkite also replaced its Yasmarang backup random-number generator with SHA-256 Hash_DRBG and added checks meant to catch failures in the hardware random-number generator. Users who generated seeds on affected firmware versions between 2021 and July 2026 must create a new seed and move their Bitcoin, the company said.
Signing and USB protections tightened
Coldcard now checks a partially signed Bitcoin transaction immediately before signing it. Previously, a compromised computer connected over USB could theoretically alter a transaction after a user reviewed it but before the device signed it; Coinkite described the issue as theoretical and did not say it had been exploited. The updated firmware stops the signing process and shows a warning if the transaction has changed. Coinkite also tightened USB data access and hardened Delta Mode, its plausible-deniability feature.
Ledger CTO Charles Guillemet told Decrypt that cryptography is hard and implementing it securely is harder, following the incident. The investigation into the thefts remains ongoing, with affected customers still moving funds to new wallets. Coinkite said: "Law enforcement authorities continue investigating the thefts and are working to identify those responsible."
Source: Decrypt
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