Hardware wallet maker Coinkite is warning Coldcard users that a firmware flaw dating back to March 2021 allowed an attacker to drain roughly 594 BTC, worth about $38 million, from nearly 500 wallets in a single 25-minute window early Friday, July 31, 2026. The stolen coins were quickly consolidated into one address.
Coinkite says the likely cause is unsettling: it believes an attacker used artificial intelligence to comb through old versions of its open-source firmware and spot a weakness that had gone unnoticed for years, including in the company's own review.
A Coin-Flip Bug in the Random Number Generator
According to Coinkite's advisory, the firmware shipped with two separate implementations for generating randomness — one using the device's dedicated hardware generator, the other a MicroPython software fallback intended only as a backup. A preprocessor guard meant to confirm which mode was active failed to properly validate the setting, letting some builds silently fall through to the weaker software-based fallback instead of the secure hardware path.
The practical effect was a sharp cut in the effective randomness protecting each wallet's seed. On the older Mk3 model, the usable search space fell to roughly 40 bits versus an intended 128 bits — small enough for a well-resourced attacker to brute-force. Newer Mk4, Mk5, and Q devices fared better at around 72 bits thanks to additional entropy from onboard secure elements, but still fell short of the intended design. Coinkite's other products, including Tapsigner, Opendime, and Satscard, are not affected.
Even AI Review Missed It — Until It Didn't
Coinkite said it had run its own firmware through AI-assisted review weeks before the exploit using "one of the best available models" and turned up nothing significant. That makes the eventual discovery by an outside party, using what the company assumes was a similar approach, a stark illustration of how unevenly these tools can be applied.
“Attackers and defenders have the same tools, but this time it did not help us, and only helped the bad guys.”
The company published emergency advisories on July 30 and 31, along with patched firmware: version 5.6.0 for Mk4 and Mk5 devices, and 1.5.0Q for the Q model.
Patching the Firmware Isn't Enough
Critically, Coinkite stressed that updating firmware does not retroactively secure seeds already generated on vulnerable hardware. Anyone who created a wallet on an affected Coldcard before patching needs to generate an entirely new seed on updated firmware, ideally paired with a strong BIP-39 passphrase, at least 99 physical dice rolls for added entropy, or both. Seeds originally generated on a Coldcard and later restored onto a different wallet brand remain just as exposed.
Rival hardware maker Trezor confirmed its own devices are unaffected but reminded customers that a Coldcard-generated seed carries its weakness with it regardless of which wallet it's restored into. Block, the payments company behind its own hardware wallet line, said on July 31 that none of its products were compromised and urged any exposed users to move funds immediately.
Related: Celah Firmware Coldcard Bikin Penyerang Kuras 594 BTC dalam 25 Menit
For an industry that markets hardware wallets as the gold standard of self-custody, the incident is a reminder that even air-gapped, open-source devices depend on code review catching what determined attackers — now potentially AI-assisted ones — are looking for.
