Coldcard strengthens security after $112 million wallet hack

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21.08.2026

Coldcard strengthens security after $112 million wallet hack — Coldcard is trying to rebuild its reputation.

Coinkite has released a new security update for Coldcard hardware wallets. It is designed to strengthen seed phrase generation by adding extra randomness that must now be provided by the user.

According to the company’s website, it released firmware version 5.6.1 for Coldcard Mk4 and Mk5, as well as 1.5.1Q for Coldcard Q. When generating a new seed phrase, the device will now require at least 65 keypresses with unpredictable timing, 50 rolls of a six-sided die, or 128 coin flips.

This user-generated input is combined with random values from several internal Coldcard sources, including secure elements and a hardware random number generator. The approach is intended to keep private keys unpredictable even if one source of randomness fails.

Coinkite urged users to install the update as soon as possible. However, existing seed phrases do not become safer after the firmware is updated. Owners of potentially vulnerable wallets need to generate a new seed phrase and only then transfer their funds to it.

Coldcard strengthens transaction security

A previous update released on July 31 had already fixed the seed-generation issue for newly created wallets. Coinkite then conducted an additional three-week security review and introduced new safeguards for USB connections, transaction signing, and hardware random number generation.

In particular, the device now re-verifies transactions immediately before signing. This is intended to reduce the risk of a theoretical attack through a compromised computer USB port. The update also adds extra checks for the hardware random number generator and a test performed when the device boots.

The company has also restricted USB data transfers to the most recent file generated by the device and made encrypted sessions mandatory. Some Bitcoin transaction signature modes that allow outputs to be modified after signing are now blocked by default.

How Coldcard was hacked

The attack was linked to a Coldcard firmware bug dating back to March 2021. It reduced the randomness used to generate seed phrases on some devices. According to TRM Labs, the effective strength of the keys could fall from 128 bits to 40 bits, making some wallets vulnerable to brute-force attacks even without physical access to the device.

According to Galaxy Research, confirmed losses from exploitation of the Coldcard vulnerability had reached 1,778 BTC, worth about $112 million, as of August 14. DefiLlama data ranked the incident as the third-largest cryptocurrency hack of 2026.

As a reminder, losses linked to the Coldcard hardware wallet vulnerability could reach 2,000 BTC.

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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