Randomness Risk in Cold Wall – CoolWallet

The Short Version

On some Coldcard models, the firmware did not actually use the hardware random number generator when creating a wallet, which means an outsider can work backwards to the recovery phrase. More than $111 million in bitcoin has been confirmed stolen so far.
This is specific to certain Coldcard firmware versions, and the flaw has been there since 2021 — it was only found this year. There is currently no evidence that wallets from other brands are affected.
CoolWallet is not affected by this issue. When you create a wallet on the card, the random number behind your recovery phrase comes straight from the hardware generator built into the Secure Element. There is no “fall back to software if the hardware is unavailable” mechanism in the design.

What Actually Happened

On July 30, 2026, Coinkite — the manufacturer of Coldcard — issued a security advisory acknowledging that certain firmware versions had a flaw in the way the seed was generated during wallet creation.

The situation turned out to be far worse than it first appeared. In a tracking report published on August 7, blockchain research firm Galaxy Research said 1,719 BTC — worth roughly $111 million — have been confirmed stolen with high confidence. More cases are still being verified, and they estimate the final figure could exceed 2,300 BTC.

Galaxy Research is also tracking more than 25 distinct attack patterns, which means several separate groups of attackers are already using this vulnerability to sweep funds on-chain. More than 250 victims have come forward so far, and most of them are not whales — they are ordinary people who had simply held bitcoin for a long time.

The most unsettling part is that the victims did nothing wrong. No phishing link clicked, no strange approval signed, and the device never left their hands. The problem was already there the moment the wallet was created.

Where It Went Wrong: The Private Key Was Never Random Enough

Start with a basic idea that is easy to overlook.

There is ultimately only one reason your private key is safe: it is random enough. Random enough that even all the computing power in the world combined could never guess it. That is why a hardware wallet, when creating a wallet, uses the hardware random number generator (Hardware RNG) inside the chip to produce a random number, and derives the recovery phrase and private keys from it. That random number is the foundation of the entire wallet.

Once the foundation is loose, nothing you build on top of it matters.

And according to the technical analysis published so far, this is exactly where certain Coldcard firmware went wrong:

A build setting in the firmware caused the device to skip the built-in hardware random number generator
The library responsible for checking only confirmed that this setting existed, never that it was actually enabled
As a result, seed generation fell back to a software approach that relied on just two things: the chip’s product serial number and the system time

Serial numbers and timestamps are both things that can be calculated and tried one by one. In other words, once an attacker works out the pattern, they can reconstruct the recovery phrase of an affected wallet and move the coins straight out — without ever touching your device.

Galaxy Research’s tracking also draws a clear line: for every stolen bitcoin, the address first appeared on-chain no earlier than March 17, 2021, exactly the release date of the affected firmware. For the models and versions actually affected, check Coinkite’s advisory directly. As for wallets from other brands, there is currently no evidence that any are affected.

The worst part is that this problem happens at the moment the wallet is born. A firmware update cannot save a wallet that has already been generated. Affected users have to create a new one and move everything across.

If You Are Using a Coldcard

Whether or not you have noticed anything unusual, work through this in order:

Confirm your model and firmware version first, against the affected range listed in Coinkite’s official advisory.
Do not generate a new seed on an affected device before the firmware update is complete. Un-updated firmware will still produce a flawed seed, so rushing into a new wallet may just repeat the mistake.
Even after updating the firmware, you still need to create a brand-new wallet and move all your assets across. The update itself cannot fix the old seed.
Treat your original recovery phrase as leaked — do not reuse it on any other device or software wallet.
Do not trust any “recovery assistance” that comes to you unprompted. Events like this are always followed by a flood of fake support agents and fake recovery tools. Verify through official channels only.

How CoolWallet Does It

What this incident really points to is that whether a hardware wallet “has” a hardware random number generator is not the point at all. The point is whether it actually uses it at the moment the wallet is created — or whether, under certain conditions, it quietly switches to something weaker without you ever knowing.

Coldcard’s problem was the latter. The chip has a hardware random number generator, but the process went around it.

One Path, No Way Out

CoolWallet’s approach here is to leave no other path to take.

When you create a wallet on the card, the random number that determines your recovery phrase is generated inside a CC EAL6+ certified Secure Element, taken directly from the chip’s own True Random Number Generator (TRNG). From start to finish it is a single line:

Create wallet → generate random number → the Secure Element’s TRNG

Nowhere on this path is there a “if the hardware is unavailable, switch to software” fallback. That is the key difference — the Coldcard situation, where work that should have been done by hardware was handed to software and nobody noticed for five years, has no room to happen in this architecture.

CoolWallet Pro, S, and Go all use a CC EAL6+ certified Secure Element. Their firmware is independent of one another, but the core logic that produces the recovery phrase is the same across all three and follows the path above.

You Don’t Have to Take Our Word for It

Security should not rest on blind trust. The Secure Element firmware and SDK for CoolWallet Pro are fully public, so any engineer or security researcher can read the code directly and confirm whether seed generation works the way we describe:

Open Source Does Not Equal Secure

But there is something we should be honest about here: Coldcard’s firmware is open source too.

This flaw was sitting in fully public source code, and it still took this long to find.

So “open source or not” has never been the line between secure and insecure. Open source makes verification possible, but it does not guarantee that anyone actually looks, nor that whoever looks happens to come at it from the right angle.

What sets the ceiling on risk is the architecture: whether the critical seed generation logic is locked inside a path you cannot go around, or whether there is a side road that can be configured, downgraded, or replaced. In the first case, even if few people ever review it, only so much can go wrong. In the second, a single mis-written condition can go unnoticed for years.

Something Easy to Overlook: Risk Is Inherited

If you are reading this and thinking about moving your assets to CoolWallet, there is something we need to be clear about first.

CoolWallet supports importing an existing recovery phrase, for convenience. But that also means that if the phrase was originally generated by a device with this flaw, the underlying risk moves across with it.

The reason is what we described above: the core of the vulnerability is that the recovery phrase itself is not random enough. Keeping it in a more secure hardware wallet does not make that phrase any safer. What the attacker is targeting is the phrase, not the physical card.

So if you have ever created a recovery phrase on an affected device, the right move is not to import it into CoolWallet. It is to generate a completely new recovery phrase with CoolWallet and move your assets to the new addresses.

If you want to protect your assets one level further, these are worth doing:

Generate a brand-new recovery phrase with CoolWallet; do not carry over a phrase of unknown origin, or one that was ever generated on an affected device
Keep both the CoolWallet App and your phone’s operating system updated to the latest official versions
Back up your recovery phrase offline and store it carefully. Never type it into any website or application, and never give it to a third party

Security has no finish line. CoolWallet will keep watching security research and emerging threats worldwide, and will keep strengthening the security of our products — that is the most basic responsibility we owe our users.

If you have any questions about CoolWallet’s security design, please get in touch through our official website.

The data in this article is cited from the tracking report published by Galaxy Research on August 7, 2026. The investigation is ongoing and the actual losses may continue to be updated.

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