$130 Million Gone Because the Randomness Was Predictable: Which Hardware Wallet You Can Still Buy

Users of the Coldcard hardware wallet discovered empty balances this week without any breach of their own security protocols. The Canadian-made device, long regarded as the gold standard for secure bitcoin storage, contained a critical defect in firmware version 4.0.0 that shipped from March 2021 onward.

The flaw caused the wallet to bypass its randomness chip when generating seed phrases, instead relying on predictable software-based substitution. For five years the vulnerability went undetected. Anyone who created a seed during this period now holds a computable sequence rather than a random one, meaning an attacker knowing the flaw could recalculate the private keys.

Since July 31, coordinated sweeps have extracted cryptocurrency from affected wallets. The first wave removed approximately 594 bitcoin from around 500 addresses within 25 minutes. By August 2 the total reached 1,367 bitcoin, with a fourth sweep on August 3 taking a further 449 bitcoin. The Mk2, Mk3, Mk4, Mk5 and Q models may all be affected depending on which firmware version was active when seeds were generated.

The compromised element is not the device itself but the randomness used to create keys. A firmware update cannot fix existing seeds; affected users must generate new seed phrases and move all holdings. The article notes that hardware wallet manufacturers typically advertise similar technical features—secure elements, open source code, air gaps, PIN protection—making these specifications less useful for comparison than a manufacturer's track record in responding to past security incidents.