Coinkite Hack Exposes Hardware Wallet Flaw, Causing $130 Million in Losses
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A firmware vulnerability in a hardware wallet used to store Bitcoin was exploited in a hack that caused about $130 million in losses.
Bloomberg reported on August 6 that hackers exploited a firmware flaw in Coldcard devices made by Canadian hardware wallet maker Coinkite Inc.
The attackers took advantage of a bug in certain firmware versions that reduced the randomness of seed phrases. That allowed them to infer users' private keys and steal Bitcoin without physically accessing the Coldcard devices.
Coinkite said it had used artificial intelligence to review its core codebase but did not detect the vulnerability in advance.
One victim, UK resident Tim Lamb, lost two Bitcoin worth about $130,000. He said the theft was especially shocking because he believed he had followed every security procedure properly.
Christian McClure, who runs a restaurant in Colorado, also lost about $6,000 of Bitcoin accumulated over six years. He said the incident felt like a betrayal after taking what he believed were all the necessary precautions.
The episode is fueling a broader debate over the safety of self-custody in digital assets. Security expert David Schwed said users who simply want exposure to crypto may have better options than self-custody.
Vincent Boudon, head of product security at Ledger, disputed that view. He said the incident did not reflect a problem with cold storage itself and that cold storage remains the safest method if encryption is properly implemented.
According to TRM Labs, crypto hacking losses totaled $972 million in the first half of this year, down from $2.3 billion a year earlier. The number of hacking incidents, however, reached a record 207 for any first-half period.
