Incident Overview
Starting July 30, 2026, Bitcoin hardware wallet manufacturer Coldcard (by Coinkite) disclosed a critical firmware entropy defect that enabled attackers to systematically brute-force and drain user funds offline, resulting in cumulative losses estimated between $85 million and $130 million+ (~1,900 to 2,055+ BTC) across multiple organized attack waves.
The vulnerability originated from a firmware code refactoring introduced in version 4.0.1 (March 2021), where seed phrase generation calls were migrated from ckcc.rng_bytes() to ngu.random.bytes(). This migration unintentionally caused the underlying rng_get() function to resolve to MicroPython's software Pseudo-Random Number Generator (PRNG) fallback instead of Coldcard's dedicated True Hardware Random Number Generator (TRNG). Consequently, generated wallet seeds possessed severely degraded entropy, approximately 40 bits on Mk3 devices and ~72 bits on newer models, down from the intended 128/256 bits.
Attackers leveraged this reduced search space to pre-compute and offline brute-force the predictable private keys for affected single-signature addresses, executing sweeping transactions across four distinct waves without requiring physical access to the hardware devices. Coinkite issued security advisories across affected models (Mk3, Mk4, Q, Mk5) while security researchers worked with victims to perform Replace-By-Fee (RBF) cancellations for pending mempool sweeps.
Incident Report
Protocol Information
Market Context at Time of Hack
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to Coldcard, these are the critical security checks that could have prevented this incident (July 2026).
- Verify all logic paths related to Other are guarded by proper access controls and input validation
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
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