Coldcard Mk3 Seed Vulnerability Leads to 594 BTC Theft

About 594 bitcoin, worth roughly $38 million, was swept out of some 500 separate wallets in a 25-minute window on July 30, according to multiple reports.

Coinkite, the Canadian maker of the Coldcard hardware wallet, published an advisory the same day on how its Mk3 model generates seeds. A seed is the master secret behind every key in a bitcoin wallet.

The warning covers Mk3 seeds made on firmware 4.0.1 or later, released in March 2021. Coinkite says Mk4, Mk5 and Q seeds made before its fixed releases hold about 72 bits of entropy, not 128.

A Build Setting Sends Key Generation to Software

Bitcoin engineering and security teams at Block published their analysis on July 30. A build setting told the device to skip its hardware random number generator. A check in a supporting library tested only whether that setting existed, not whether it was switched on.

Key generation then fell through to a software substitute seeded from the chip's serial number and clock registers. Block said it published before finishing its testing because exploitation was already underway.

Coinkite Tells Mk3 Owners Their Funds May Be at Risk

Out of an abundance of caution, Coinkite is warning all users who generated a seed using a Mk3 on version 4.0.1 (March 2021) or any subsequent version that their funds may be at risk.

The advisory says a strong, unique BIP-39 passphrase leaves funds at minimal risk. That passphrase derives a separate wallet from the same seed.

Neither company has established that the flaw caused the sweep. The drained wallets were single-signature and held more than 0.15 BTC each, according to on-chain analysis reported by multiple outlets. Many had been dormant for years.

Crypto casinos publish hashed server seeds so players can verify bets as provably fair; this failure sat inside the wallet instead.

Coinkite says its investigation is ongoing and a formal technical review will follow. Until it arrives, the sweep and the Mk3 warning are linked by timing rather than proven cause. 562 BTC of the swept coins remain consolidated in one address.

If you have a Coldcard Mk3 wallet and your funds remain untouched, it is advised to move them to another self-custodied wallet immediately.