An attacker exploited a firmware flaw in Coinkite's Coldcard hardware wallet to sweep roughly 594 BTC, worth about $38 million, from approximately 500 single-signature wallets in a 25-minute window between 01:31 and 01:56 UTC on July 31, 2026. The funds moved in 1,324 separate chunks across 500 transactions confined to a three-block span, with 562 BTC ultimately consolidated into a single address that has since remained stationary.
The root cause traces back to a commit dated March 1, 2021, which shipped in Coldcard firmware version 4.0.1. The build included a setting meant to bypass the device's hardware random-number generator under specific conditions, but a faulty library check only verified that the setting existed rather than confirming whether it was actually active. That gap caused affected devices to default to a software-based key-generation routine instead of true hardware randomness.
How the Randomness Failed
Rather than drawing entropy from the chip's dedicated randomness source, the compromised code seeded key generation using the device's serial number and internal clock registers. Neither value is secret: a serial number is fixed factory metadata, and clock values can be measured or narrowed down by anyone with knowledge of when a device was provisioned. In practice, that turned what should have been cryptographically unguessable seeds into something an attacker could reconstruct.
The exposure wasn't limited to standard wallet seeds. Block's Bitcoin engineering and security teams, who published the technical analysis that surfaced the flaw, found the same weak generator had also been used for paper wallet private keys, seed-splitting masks, device-cloning keys, and Key Teleport transfers on affected units.
Which Devices Are Affected
The bug applies specifically to Coldcard Mk3 devices running firmware 4.0.1 or later. Coinkite, the Canadian manufacturer behind Coldcard, said its newer Mk4, Q, and Mk5 models are not affected, though it characterized that assessment as preliminary. In a statement, the company said: “Mk4, Q and Mk5 are not affected based on our early analysis.”
Block disclosed its findings before fully confirming the extent of exploitability, explaining that it did so because “exploitation was already under way.” The wallets targeted in the sweep shared common traits: all were single-signature setups, each held more than 0.15 BTC, many had sat dormant for years, and their holdings dated back as far as 2021 — aligning with the window during which the flawed firmware was in circulation.
Market Reaction
Bitcoin traded above $64,000 during early Asian trading hours as news of the theft spread, and the sweep appeared to have little discernible effect on the broader market. That muted reaction stands in contrast to the scale of the individual loss, underscoring how a single firmware-level bug can inflict tens of millions of dollars in damage on affected holders without moving the market as a whole.
Coinkite has urged users who generated wallet seeds on Mk3 devices running firmware 4.0.1 or later to treat those keys as compromised. The incident is a reminder that hardware wallets are only as trustworthy as the firmware running on them, and that a single overlooked check in a five-year-old commit can quietly undermine the randomness guarantees the entire security model depends on.
