How to Protect Your Funds After the Coldcard Attack
On July 30, an attacker swept roughly 594 BTC, about $38 million, from around 500 single-signature wallets in under half an hour, later consolidating most of the funds into a single address. The attack targeted Coldcard hardware wallets. Coinkite believes the attacker may have used AI to discover the flaw in its open-source firmware, and admits its own AI review weeks earlier turned up nothing.
What happened in detail
A crypto wallet is only as safe as the randomness behind it. When a hardware wallet creates your recovery seed (the 12 or 24 words that control your money), it's supposed to pull those words from genuinely unpredictable numbers.
If the numbers are truly random, no one, not even someone holding an identical device, can reproduce your seed or guess your keys.
Coldcard was designed to get that randomness from a dedicated chip built for exactly this job. But a coding mistake meant the device never actually used that chip. Instead, it quietly fell back to a software substitute that built the "random" numbers out of data that isn't secret and isn't really random at all: the device's own serial number and the reading on its internal timer.
That's the problem. Those inputs are predictable, so the seeds the device produced were predictable too. On the Mk2 and Mk3, seed generation became effectively deterministic, meaning the outcome could be worked out rather than guessed.
Anyone who understood the flaw could regenerate the same pool of seeds, derive the matching private keys, and empty the wallets. That's what ended up happening.
The flawed code has been shipping since March 2021, in firmware version 4.0.0 (Mk2 and Mk3), so any seed created on an affected device since then is suspect. And updating the firmware now does not undo the damage: the weakness lives in the seed itself, so a seed made on a vulnerable Coldcard stays vulnerable even after you move it to a different wallet.
Mk4, Q, and Mk5 carry a smaller version of the same flaw. Dice-roll seeds and Mk2/Mk3 on older firmware are not affected.
If you don’t use a Coldcard, no action is needed. But if you own one, you should be concerned about your funds.
What to do tonight
Work carefully. A rushed migration can cost you more than the bug.
Step 1. Confirm where your seed was created
A Mk2 or Mk3 seed generated on firmware from March 2021 onward should be treated as compromised, even if you have since moved it elsewhere.
Step 2. Migrate to unaffected hardware
Generate a fresh seed, verify the backup, confirm a receive address on the device screen, and send a small test transaction before moving the rest. Keep the old backup until everything clears.
Which hardware wallet to choose? Read our article 10 Secure Crypto Wallets 2026, When Only You Have Access to Private Keys
Keep in mind: this guide was written before the Coldcard vulnerability came to light, and it features the Coldcard Q, which is itself affected by a milder version of this flaw. Treat it as general background on self-custody, not as a recommendation to buy any current Coldcard model right now.
Step 3. If an affected Coldcard is all you have tonight, use Coinkite's interim fix
Add a long, random, unique BIP-39 passphrase (not your PIN) directly on the device, back it up separately from your seed words, and move funds to that passphrase wallet. Test first; a single typo produces a different wallet. Follow Coinkite's steps exactly, and never type the passphrase into a computer, phone, or website.
Already using a passphrase with that seed? Coinkite says your risk is minimal, but plan a clean migration anyway.
A safe option you can use right now
Coin Wallet is not affected. This is a self-custodial wallet, so your private keys are generated and stored directly on your device and never leave it.
It also supports external hardware security keys that follow the FIDO U2F/FIDO2 standard. The wallet can be set to require a physical USB/NFC key to confirm transactions. With that enabled, sensitive actions such as sending a transaction, exporting private keys, or changing security settings require the hardware key in addition to your PIN. That makes wallet protection stronger and more reliable.
Read more about the setup process in our step-by-step guide: How to set up a hardware security key for your crypto wallet.
The bottom line
When you migrate, favor a device that supports dice-roll entropy, so your seed never rests on a single chip's randomness alone. For larger holdings, consider multisig across two or three devices from different manufacturers, so no single device is a point of failure.
We expect a wave of phishing to follow this news. So never enter your seed words into any website, app, or "checker" tool: no legitimate wallet or company will ever ask for them.