Faulty RNG in Coldcard crypto wallets lets hackers drain $88.6M in bitcoin

Security firm Galaxy Research spotted the first wave of automated drains when 1,083 bitcoins vanished from 1,196 wallets in just 41 minutes. The attacker set a rigid transaction fee of 30 satoshis per vByte—roughly 30 to 75 times higher than normal network rates—making it clear that a relentless script was cleaning house while human owners were likely grabbing coffee.

Subsequent waves pushed the total haul to 1,367 bitcoins worth $88.6 million across 4,585 compromised wallets. Intelligence from Chainalysis revealed that the hackers spent weeks quietly index-matching targets offline, prioritising high-value wallets first to snatch $30 million in the first ten minutes alone.

Engineers at payments firm Block dissected the firmware and found that Coinkite's hardware random number generator failed silently due to a code integration bug. Instead of throwing an error, Coldcard devices silently defaulted to a predictable software pseudorandom generator built on basic chip IDs and system timestamps.

Because the fallback math was completely deterministic, attackers were able to pre-calculate seed phrases on their laptops, derive matching addresses, and monitor the public Bitcoin ledger for a match. Affected hardware includes legacy Coldcard Mk2 and Mk3 units running firmware 4.0.1 through 4.1.9, alongside unpatched Mk4, Mk5, and Q series devices.

While Coinkite released patched firmware, updating the software code cannot fix an already compromised seed phrase. Holders must flash the update, generate a fresh seed from scratch, and manually transfer their remaining funds.

Crypto maximalists spent a decade insisting that paper pieces and offline metal plates were impenetrable bastions against systemic collapse, only for a lazy fallback loop to turn physical security into a public charity drive for hackers.

Source: Coinkite