Coldcard Bitcoin wallet exploit losses exceed $100 million across multiple attack waves

Aug 2, 2026

A five-year-old firmware bug in Coldcard hardware wallets has led to over $100 million in Bitcoin being stolen across multiple attack waves. The flaw caused devices to use a weak random number generator, allowing attackers to reconstruct private keys. The exploit, affecting thousands of users, has prompted manufacturer Coinkite to issue patches and has triggered a market reaction not seen since the FTX collapse, reigniting debates on self-custody.

Coldcard vulnerability discovery

▪A firmware flaw in Coinkite's Coldcard hardware wallets, originating in a March 2021 build, allowed attackers to reconstruct Bitcoin private keys offline.
▪The vulnerability affects Coldcard's Mk2, Mk3, Mk4, Mk5, and Q devices with single-key seeds, but not multisignature setups.

Random number generator flaw

▪The firmware error caused devices to use a predictable software randomizer (MicroPython's Yasmarang) instead of the intended hardware random number generator (RNG).
▪The flaw reduced the effective entropy from a target of 128 bits to as low as 40-72 bits, allowing attackers to brute-force seed phrases.

Attack timeline

▪A fourth attack wave used Bitcoin's "replace-by-fee" feature, giving some victims a chance to outbid the attacker and save their funds.
▪The first attack wave began on July 30, 2026, with subsequent waves continuing through at least August 2, 2026.

Theft losses

▪The loss profile consists mainly of many small, individual self-custody accounts, not large institutional holdings.
▪Confirmed losses from the exploit have exceeded $100 million, with 1,596 BTC stolen from approximately 7,300 addresses across multiple incidents.
▪Including a suspected but unconfirmed fourth wave, Galaxy Research estimates total losses could reach 2,055 BTC, worth about $130 million.

Coinkite disclosure response

▪Coinkite, the maker of Coldcard, acknowledged the bug, released emergency firmware patches, and advised users to move funds to new wallets.
▪Coinkite initially understated the scope of the vulnerability, first claiming only Mk3 devices were affected before including Mk4, Mk5, and Q models.
▪Some users reported their devices "bricking" during the new firmware update process, complicating the recovery of funds.

Market reaction and investigation

▪As of August 4, 2026, 90% of the stolen Bitcoin remained unmoved from the initial attacker addresses.
▪In a reversal of the post-FTX trend, some users moved funds from self-custody onto centralized exchanges for perceived safety.
▪Attacker and victim addresses have been shared with US federal law enforcement, and blockchain analysis firms are monitoring the stolen funds.
▪The incident reignited a debate on the risks of self-custody, with some advocating for wallet diversification or the use of centralized platforms.
▪The exploit triggered a spike in small Bitcoin transfers to 39,600 BTC on July 31, a level not seen since the 2022 FTX collapse.