Tech • IA • Crypto
This time it REALLY hurts!
9.4/10TL;DR
A flaw in Coldcard hardware wallets enabled attackers to derive weak private keys, leading to over $90 million in Bitcoin theft without breaching the devices.
KEY POINTS
Mass theft in hours
In the night of July 30, attackers drained more than 1,200 wallets in about 40 minutes, stealing roughly 1,000 BTC. Losses have since climbed past $90 million, with additional wallets still being emptied as exposed addresses are identified.
No device breach, no phishing
The attack did not involve malware, phishing, or breaking into hardware. Funds were taken using valid blockchain transactions after reconstructing private keys, making the incident highly atypical compared with common crypto hacks.
Root cause: weak randomness
A long-standing bug in the wallet’s software degraded cryptographic randomness. Instead of 128-bit entropy, a fallback mechanism produced keys with roughly 40 bits, drastically reducing the number of possible combinations to a range that can be computationally explored.
Deterministic inputs exploited
The fallback relied partly on predictable data such as device serial numbers and timestamp of wallet creation. By narrowing the search space, attackers could systematically test combinations and recover private keys associated with funded addresses.
Vulnerability present for years
The flaw had reportedly existed for over five years, affecting wallets generated during that period. Early isolated complaints about weak randomness did not trigger a comprehensive fix, leaving a large pool of at-risk addresses.
Concentration and movement of funds
Stolen Bitcoin was initially consolidated into four main addresses, which have remained largely inactive. A mix of small holders and mid-sized wallets—some holding 1 to 50 BTC—accounted for the bulk of losses.
Open-source paradox
The wallet software is open source, traditionally seen as a security advantage. In this case, publicly accessible code allowed a critical issue to persist unnoticed for years, then be exploited once discovered.
AI suspected as an accelerant
The discovery and exploitation may have been aided by advanced automated analysis, capable of scanning legacy code and testing vast keyspaces. The incident highlights how modern tooling can uncover overlooked vulnerabilities at scale.
Mitigation requires migration
Updating firmware is insufficient for affected users. Security guidance emphasizes creating a new wallet with strong entropy and transferring funds, since compromised keys remain vulnerable regardless of software updates.
CONCLUSION
The incident underscores how a subtle cryptographic weakness can bypass even hardware-based protections, and signals a broader shift as automated tools rapidly expose latent vulnerabilities across open systems.