An alarming vulnerability in Coldcard hardware wallets, manufactured by Canadian company Coinkite, has been linked to a massive Bitcoin theft amounting to $70.2 million. On July 30, a hacker managed to siphon off 1,082.65 BTC from 1,196 addresses in less than an hour, exploiting a firmware flaw identified by Galaxy Research.
Coldcard Firmware Vulnerability
The security breach stems from a firmware integration error dating back to March 2021. This error rerouted seed generation to a deterministic software pseudorandom number generator (PRNG) instead of utilizing the STM32 hardware random number generator (RNG). According to Block’s analysis, an attacker could replicate the potential output streams by determining certain device parameters and comparing derived addresses with public blockchain data.
In response, Coinkite issued an emergency firmware update on July 31 for all impacted models. However, merely updating the firmware does not resolve the compromised seed issue. Users with exposed seeds are advised to generate a new seed using the updated firmware and transfer their funds accordingly.
Technical Insight and Vulnerability Impact
The flaw was traced back to Coldcard’s production configuration, which disabled the MICROPY_HW_ENABLE_RNG macro, inadvertently defaulting to MicroPython’s Yasmarang fallback. This fallback, initialized from the chip’s unique ID and timer registers, lacked fresh entropy post-initialization. Coinkite’s estimates suggest that the effective entropy was significantly lower than required for robust security, particularly on older models.
The exposure risk is linked to the firmware version present during seed creation. Notably, models Mk2 and Mk3 running versions before 4.2.0, and Mk4, Mk5, and Q running older firmware versions, were vulnerable. Coinkite advises users to ensure their seed’s security by employing at least 50 independent dice rolls or migrating to a new seed if any uncertainty exists.
Preventive Measures and Current Status
Coinkite emphasizes that multisig arrangements only offer protection if they are not solely reliant on affected devices. Other products like TAPSIGNER, OPENDIME, and SATSCARD remain unaffected due to different codebases. While the attacker’s identity remains unknown, the transaction pattern discovered by Galaxy Research provides clues to the method but not the perpetrator.
The disclosure of this vulnerability coincides with earlier findings by Coinspect regarding similar weak-PRNG issues in older software wallets. This ongoing saga highlights the critical importance of robust cryptographic security measures in safeguarding digital assets against potential threats.
As the cryptocurrency community grapples with these revelations, the focus remains on reinforcing security protocols and ensuring the integrity of wallet systems to prevent future incidents.
