Jameson Lopp, co-founder of Casa, said the Coldcard exploit exposes the practical limits of Bitcoin's "don't trust, verify" mantra, noting that artificial intelligence is reshaping wallet security by helping attackers uncover bugs and developers audit code faster.
The breach, traced to a firmware integration error present since March 2021, represents the largest confirmed hardware wallet hack in Bitcoin history. Galaxy Research estimates 1,367.05 BTC — roughly $88.6 million at current prices — was drained from 4,585 addresses across three coordinated attack waves. The first wave alone moved 1,082.65 BTC from 1,196 addresses in a 41-minute window on July 30, roughly 30 hours before Coinkite issued a public warning.
Block's Bitcoin Engineering and Security teams identified the root cause in Coldcard's libngu library. Coinkite had set the board configuration constant MICROPY_HW_ENABLE_RNG = 0 to disable MicroPython's built-in hardware randomness path, intending to use its own dedicated hardware true random number generator (TRNG) wrapper. However, libngu's guard checked only whether the macro was defined, not whether it was enabled. With the macro set to zero, MicroPython compiled out the STM32 hardware RNG call and fell back to Yasmarang, a deterministic software PRNG seeded from the MCU's unique ID and timer registers — yielding roughly 40 bits of effective entropy instead of the 128 bits expected for a BIP-39 seed phrase.