Coldcard exploit prompts bitcoin holders to move funds to exchanges
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IN SHORT
A security exploit affecting Coldcard hardware wallets has prompted a significant number of Bitcoin holders to move their funds to exchanges, reversing a trend seen after the FTX collapse. The exploit, attributed to a firmware flaw, is estimated to have resulted in the theft of over $90 million in Bitcoin from more than 1,100 wallets. This event has led to a notable increase in smaller Bitcoin transactions and contributed to a market downturn, with Bitcoin falling below $63,000 despite positive macroeconomic indicators.
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Key Numbers
$90 millionestimated Bitcoin stolen
1,100wallets affected by exploit
$63,000Bitcoin price on Monday
Who's Involved
Coldcard
hardware wallet manufacturer experiencing a security exploit
Bitcoin
cryptocurrency affected by a hardware wallet exploit
FTX
exchange whose collapse previously influenced fund movement trends
ether
cryptocurrency that also declined amid market weakness
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Key facts
A security exploit affected Coldcard hardware wallets.
Bitcoin holders are moving funds to exchanges following the exploit.
This is a reversal of the trend seen after the FTX collapse.
The exploit is attributed to a firmware flaw.
Over $90 million in Bitcoin has been stolen.
More than 1,100 wallets were affected by the exploit.
The exploit has led to a surge in small Bitcoin transactions.
Bitcoin dropped below $63,000 on Monday.
Ether also declined amid the exploit.
The market weakness contrasted with positive macroeconomic signals.
A security exploit targeting Coldcard hardware wallets has led to a significant outflow of Bitcoin, with holders moving funds to exchanges. This marks a reversal of the trend observed after the FTX collapse, where users were moving assets away from centralized platforms. The exploit is believed to stem from a firmware flaw within the Coldcard devices. Researchers estimate that over $90 million in Bitcoin has been stolen across more than 1,100 affected wallets. This incident has spurred a surge in small Bitcoin transactions, reaching levels not seen since the collapse of FTX. The security concerns raised by this exploit have impacted the broader cryptocurrency market, contributing to a price drop. Bitcoin fell below $63,000 on Monday, with ether also experiencing a decline. This market weakness occurred despite positive macroeconomic signals, such as falling oil prices and Treasury yields, which typically would support risk assets. The exploit has reignited discussions about the security of self-custody solutions versus the perceived safety of keeping assets on exchanges.
Frequently asked questions
A firmware bug in some Coldcard units caused them to use a predictable software random number generator instead of a hardware RNG when creating seed phrases, reducing randomness and making them easier to reconstruct.
On-chain analysts estimate losses of 1,000-1,300 BTC, valued at approximately $70-90 million.
There has been a significant increase in Bitcoin deposits to exchanges, particularly for smaller transactions, and a surge in daily active addresses.
No, the incident is specific to Coldcard. Most other hardware wallets and properly generated seeds are believed to remain unaffected.
What Happens Next
01Attacks may continue as of this writing.
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