Sunday 2 August 2026

The $70 Million Hardware Wallet Heist That Took 41 Minutes and Five Years to Pull Off

A five-year-old firmware bug in the Coldcard hardware wallet let an attacker sweep $70 million in Bitcoin in under an hour — and it was a bad random number generator the whole time.

Lead story

The $70 Million Hardware Wallet Heist That Took 41 Minutes and Five Years to Pull Off

On July 30, someone drained 1,196 Bitcoin addresses in 41 minutes flat, making off with 1,082 BTC — roughly $70.2 million at the time. Galaxy Research mapped the sweep and traced the root cause to a firmware bug in Coldcard, the Bitcoin-only hardware wallet made by Canadian firm Coinkite. The device is popular precisely because it's supposed to be one of the most secure ways to hold crypto. It wasn't.

The culprit was a firmware integration error introduced in March 2021. When generating seed phrases — the master keys that control a wallet — the firmware was routing that process through a deterministic software pseudorandom number generator (PRNG) instead of the hardware's dedicated true random number generator (TRNG). That's a critical distinction. A TRNG draws on physical entropy: electronic noise, thermal variation, things that can't be predicted. A software PRNG produces sequences that look random but can be reconstructed if you know the starting state.

Think of it this way: a TRNG is like rolling a real dice. A software PRNG is like rolling a dice in a video game — reproducible if you know the seed. Using a PRNG to generate the seed phrase itself is a circular catastrophe.

That flaw sat undetected for over four years. Any wallet created with affected firmware during that window would have generated a private key that was far weaker than it appeared. An attacker who could reverse-engineer or bruteforce the PRNG state could reconstruct private keys and drain wallets without ever physically touching the device.

The 41-minute sweep suggests this wasn't opportunistic. The attacker had almost certainly pre-computed the target addresses well in advance and was simply executing a prepared transaction set. The precision of it — 1,196 addresses in under an hour — points to automation and careful preparation.

What Coinkite has said: At time of publication, Coinkite had not issued a detailed public statement on the Galaxy Research findings. Users with wallets created during the affected firmware window are in an uncomfortable position — they may not know whether their device was affected without checking firmware version history.

The broader lesson cuts right to the heart of hardware security. Hardware wallets exist specifically to isolate key generation from software environments that can be compromised. When a hardware wallet silently falls back to software-based randomness, it defeats the entire point of the device. Users reasonably assume that "hardware wallet" means "hardware randomness." This incident shows that assumption needs to be verified, not trusted.

For anyone holding significant crypto on a Coldcard device: check which firmware version was running when you first set up your wallet. If it falls within the affected window (post-March 2021 firmware releases in the flagged range), the safest move is to generate a fresh seed on a verified clean device and transfer funds.

What to watch: Whether Coinkite publishes a full post-mortem and affected firmware version list, whether other hardware wallet vendors audit their own PRNG/TRNG integration paths, and whether this incident draws regulatory attention — particularly from ASIC in Australia, where crypto asset regulation under the revised financial services framework is still being bedded down.

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Sources consulted