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Coldcard vulnerability may have led to $130 million Bitcoin theft
Galaxy Research estimated that losses linked to a vulnerability in Coldcard hardware wallets could reach 2,000 BTC, or about $130 million. In a post on X, the firm said it had already identified the theft of 1,596 BTC from 7,300 addresses.
The issue was linked to a vulnerability affecting seed phrases generated on Coldcard Mk3, Mk4, Mk5 and Coldcard Q devices running certain firmware versions. Manufacturer Coinkite released emergency updates for all affected models and said it had destroyed the remaining vulnerable devices in its inventory.
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The vulnerability became public on July 30, when the first reports of large-scale thefts emerged. Preliminary findings suggest that the attackers used an automated program to identify vulnerable wallets and transfer funds. Galaxy Research also said large language models may have been used to help prepare the attack.
Fourth wave
Galaxy Research believes the final losses could be even higher. The firm has identified signs of a fourth wave of attacks, although it has not yet received confirmation from specific victims.
If those transactions are included, the total amount stolen would rise to 2,055 BTC, or about $130 million.
Analysts said with medium-high confidence that a substantial part of the fourth wave may be linked to a single attacker. The transaction patterns match those seen in earlier waves. However, there is still not enough confirmation from affected wallet owners to reach a final conclusion.
Galaxy Research is working with U.S. federal law enforcement agencies, crypto exchanges and cyber investigation firms. It has provided them with confirmed addresses linked to both attackers and victims.
According to the firm, about 90% of the stolen Bitcoin has not moved. All funds taken in the first three waves also remain untouched.
Galaxy Research warned that the attack is still ongoing. Coldcard users have been advised to move their funds to a secure address as soon as possible and generate a new seed phrase on a trusted device.
Once considered the best
Before the vulnerability was discovered, Coldcard devices were widely regarded as some of the most secure hardware wallets for storing Bitcoin. They supported Bitcoin only, which reduced the number of software components and potential attack surfaces. The wallets also offered fully air-gapped transaction signing, open-source firmware and multiple secure chips for storing private keys.
This design made Coldcard especially popular among experienced users who preferred to hold large amounts themselves rather than rely on crypto exchanges. The ability to operate without connecting the device to the internet, use memory cards and inspect the firmware code helped build its reputation as a product for highly security-conscious Bitcoin owners. That is why the large-scale theft dealt such a serious blow to the brand: the problem was not caused by user error, but by the way seed phrases were generated inside the devices.
Earlier estimates suggested that losses from the Coldcard vulnerability could reach $114 million.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.
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