A 2021 Firmware Flaw Drains 594 BTC From Coldcard Wallets

Coinkite published a security advisory for its Coldcard hardware wallets on July 30. Hours later an attacker began emptying them, and in a sweep of about 25 minutes early on July 31, 594 BTC — roughly $38 million at the time — left some 500 wallets, according to CoinDesk. The cause was a build-configuration error in Coldcard firmware 4.0.1, released in March 2021, that routed seed generation through a software random number generator instead of the dedicated hardware source the device was designed to use. The coins taken spanned 2021 to 2026, matching the age of the flaw. Bitcoin itself barely reacted, trading above $64,000 through the early Asian hours.

The Flaw: A Build Check That Tested the Wrong Thing

Entropy is the unpredictable randomness a wallet mixes into its seed, the master secret from which all of its addresses and signatures are derived. Coldcard was designed to take that randomness from a hardware source on the chip. A preprocessor guard in the build checked only whether a configuration setting was defined, not whether its value was correct, so affected devices fell back on a software generator seeded from the chip's serial number and clock registers, neither of which is secret. Effective key strength dropped from a designed 128 bits to about 40 bits, and 40 bits leaves a search space commodity hardware can work through, where 128 bits leaves one no machine can begin on. Coinkite has said it believes the attacker used AI to find the flaw, and that its own AI-assisted review weeks earlier turned up nothing.

Which devices are exposed is reported inconsistently, and the two accounts have to be read together. CoinDesk says Mk3 units running firmware 4.0.1 or later are vulnerable and that the Mk4, Q and Mk5 are unaffected. crypto.news reports that those three models also lost strength, falling to about 72 bits, which it described as "theoretically exploitable by well-funded adversaries."

The Sweep: 1,324 Chunks Inside a Three-Block Window

Some 1,324 bitcoin chunks moved across 500 transactions inside a three-block window, all of them out of single-signature wallets holding more than 0.15 BTC each. A total of 562 BTC was consolidated into one address that had not moved as of CoinDesk's reporting, and nothing has been recovered. The exact window is logged two ways: CoinDesk puts it at 01:31 to 01:56 UTC on July 31 and crypto.news at 02:14 to 02:39 UTC, both describing 25 minutes. The incident belongs to a category of losses that has grown through the year, one where the money leaves through key handling rather than a bug in a contract. Holders were reached through software they already trusted rather than through a service they had chosen to deposit with.

The Totals: Three Trackers, Three Different Numbers

The 594 BTC of the first sweep is the figure that can be anchored; the wider totals are not. PeckShield booked $70 million against July for Coldcard, while DefiLlama's estimate is $115 million and it flagged a wider public range of $100 million to $130 million. The theft did not stop with the first wave, so where a tracker cuts off the count moves the total by more than $100 million. The monthly tallies diverge for the same reason. PeckShield puts July losses at $210.3 million across 30 hacks, up 177.2% from $75.87 million in June, while DefiLlama reports $247.4 million, the second-worst month of 2026 behind April's $644 million. Immunefi's roughly $110 million is not directly comparable, because its figures are bounty-side.

What Is Unresolved: Seeds That Stay Broken Until the Coins Move

The patch repairs nothing that already exists. "Updating the firmware does not change or repair an existing seed," Coinkite said, so anyone whose seed was created between March 2021 and the patch has to generate a new one on patched hardware and migrate the funds. Until that happens the wallets stay exposed, and the attacker needs no further access to anything. The consolidated address sat still at month's end, with no sign of what its holder intends. Immunefi, in the same month-end report, priced the alternative: an average of $6,548 to find a critical bug through a competition, against $24.5 million when the attacker finds it first.