# Block Discovers Critical Coldcard Firmware Flaw as $38 Million in Bitcoin Vanishes From 500 Wallets

**Source:** https://glitchwire.com/news/block-discovers-critical-coldcard-firmware-flaw-as-38-million-in-bitcoin-vanishe/  
**Published:** 2026-07-31T10:58:07.728Z  
**Author:** Security Desk · Glitchwire  
**Categories:** Security, Crypto

## Summary

A macro error dating back to March 2021 caused Coldcard hardware wallets to generate deterministic keys instead of random ones. Attackers have already exploited it.

## Article

About 594 bitcoin, worth roughly $38 million, was [swept from around 500 single-signature wallets](https://www.coindesk.com/tech/2026/07/31/major-bitcoin-wallet-flaw-drains-594-btc-in-25-minute-sweep) in a 25-minute window early Friday morning. The theft has been traced to a firmware vulnerability in [Coldcard hardware wallets](https://coldcard.com/) made by Canadian company Coinkite. Block's security and Bitcoin engineering teams discovered the root cause after noticing reports of users losing funds.

## What Went Wrong

The vulnerability stems from a macro error in Coldcard's firmware. According to [Block's technical report](https://engineering.block.xyz/blog/predictable-rng-fallback-and-32-bit-reseed-in-coldcard-firmware), the production board configuration defines MICROPY_HW_ENABLE_RNG as zero because Coldcard intended to use a separate hardware random number generator. But a supporting library called libngu checked whether that macro was *defined* rather than whether it was *enabled*.

The result: wallet generation fell back to MicroPython's Yasmarang software generator, which was seeded by the chip's unique identifier and timer registers. Neither of those values is secret. For Mk2 and Mk3 devices running firmware version 4.0.0 or later, wallet generation was functionally deterministic.

The flawed code path has existed since March 2021 when firmware 4.0.0 shipped.

## Which Devices Are Affected

Max Guise, who leads development on Block's Bitkey wallet, posted the findings in a thread on X. The severity varies by device generation:

- Mk2 and Mk3 running firmware 4.0.0 through 5.0.3 are the most exposed. No cryptographic entropy was added to the random number generator during key creation.
- Mk4, Q, and Mk5 attempt to compensate at boot by adding secure-element entropy, but the reseed function truncates it to 32 bits. That limits the number of possible output streams to roughly 2^32, far below the 2^128 target for a 12-word seed phrase.

Seeds exported from a vulnerable Coldcard and later imported into another wallet remain at risk. The flaw is in the seed, not the device where it currently resides.

Coinkite's own products Tapsigner, Opendime, and Satscard use different codebases and are not affected.

## Mitigations and Next Steps

Users who added a strong BIP-39 passphrase or used at least 50 independent dice rolls during seed creation face substantially reduced risk. Those who did not should treat their seeds as potentially compromised. Guise personally recommended moving funds as soon as safely possible to a new wallet that does not rely on affected hardware.

Coinkite issued its own advisory within hours of the on-chain activity. The company says Mk4, Q, and Mk5 appear unaffected based on early analysis, though [independent verification](/news/india-orders-github-to-remove-bitchat-source-code-good-luck-with-that/) from Bitcoin Core developer instagibbs confirmed Mk2 and Mk3 are vulnerable and expressed uncertainty about Mk4.

Block stated explicitly that no Block products, including Bitkey, are affected. The company disclosed its findings to Coinkite before publishing and says Coinkite acknowledged the report.

The 562 BTC consolidated into a single address after the sweep has not moved. Whether additional wallets will be drained depends on how many vulnerable seeds remain on-chain with funds. Block's assessment is that the attack is likely ongoing.

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