Coldcard firmware flaw exposes even offline hardware wallets to key compromise

Hardware wallets sitting offline have long been considered among the safest custody methods available. That assumption now carries a significant caveat after Coinkite disclosed a critical entropy-generation vulnerability in Coldcard firmware.

The flaw reduced the randomness behind seeds generated on certain devices. Coinkite's advisory was direct: users must update to patched firmware, generate an entirely new seed, and migrate funds from anything created with the compromised version. A firmware patch corrects future key generation but cannot repair seeds already corrupted by weak randomness.

Security researcher 0xQuit detailed the mechanics, explaining how poor randomness in Coldcard's seed process enabled roughly 594 BTC to be swept from approximately 500 addresses in a short window. Critically, the device's PIN protection, air-gapped design, and secure element proved ineffective once the seed itself was compromised. 0xQuit recommended that holders of significant value move to multi-device multisig setups using at least two different vendors, writing seeds only on paper and splitting them geographically using Shamir secret sharing.

Block's technical investigation revealed the root cause: Mk2 and Mk3 firmware was supposed to use a hardware random number generator, but a firmware macro error forced the device to rely instead on a known device ID, timer state, and call history, making wallet generation deterministic rather than random. Newer models attempted compensation at boot, but a reseed process truncated that additional input to just 32 bits, still far below security standards.