Coldcard hardware wallet flaw sees more than 1,367 BTC (~$89 million) drained across thousands of wallets

"Coldcard" in boxy red typeColdcard logo (attribution)
Thousands of users of a hardware wallet called Coldcard, a physical device developed by the Canadian Coinkite firm to allow bitcoin holders to store their bitcoin on a device that's not connected to the internet, have suffered more than 1,367 BTC (~$89 million) in combined losses after thieves began exploiting a flaw with the wallet firmware's seed phrase generation. A 2021 version of the device firmware, which affects a wide range of Coldcard devices, skipped the device's more secure hardware randomness generator and instead fell back to generating seed phrases with random numbers seeded from the device's serial number and clock registers. The resulting seed phrases are relatively trivially guessed, and hackers have been methodically draining vulnerable wallets as researchers warn that all vulnerable Coldcard devices will be drained soon if their owners do not move assets to secure wallets.

An estimated 1,367 BTC (~$89 million) and counting has been drained in the two days following the discovery of the attack, which began with an attack that saw 594 BTC ($38 million) drained from about 500 separate wallets. The first attack seemed to intentionally target higher-value wallets, with only wallets containing 0.15 BTC (~$9,500) or more impacted. Subsequent attacks have seen funds moved to around 600 attacker wallets, according to Galaxy Research, although the number of unique attackers is not clear at this point, and attackers regularly use multiple wallets to make tracing stolen funds more challenging.

Hardware wallets are often used by more security conscious users, or those with more significant sums of money at risk, because the lack of internet connection makes the devices less vulnerable to phishing or malware-based attacks. However, if a wallet seed phrase can be obtained by an attacker, the lack of internet connection is no barrier to theft. Coldcard describes itself as "ultra-secure", and its website is filled with reviews describing the product as "one of the most secure Bitcoin hardware wallets ever built".