Coldcard seed-generation bug: $100m+ BTC drained from thousands of wallets

The Coldcard seed-generation bug went unnoticed for years, even though users could inspect public firmware. Later research traced the issue to a March 2021 firmware change (v4.0.0) that used a weaker randomness generator during seed phrase creation, instead of the intended dedicated hardware entropy source. Investigators report thefts of about 1,596–1,816 BTC (over $100m) from roughly 5,200–7,300 addresses. Coinkite says some affected models had an estimated ~72 bits of entropy versus the intended 128 bits, shrinking the seed search space dramatically. Block’s security team states the affected randomness path delivered no secure randomness. Coinkite has released fixed firmware for affected Coldcard models, but the update does not “upgrade” existing recovery phrases. Impacted users must install the patch, generate a brand-new seed, and move funds to addresses derived from the corrected seed. James O’Beirne flagged the randomness problem after an audit in May 2025, tracing it to libngu. For traders, the Coldcard seed generation flaw reinforces self-custody counterparty/manufacturer risk at the key-creation stage. It’s a reputational and operational hit for hardware-wallet trust, but the event is unlikely to shift BTC’s core fundamentals.