CoinKite Warns Users of Potential Bitcoin Exposure Due to Device Weakness

CoinKite, a cryptocurrency wallet maker, has issued an advisory warning users of potential exposure to Bitcoin due to a weakness in the random-number generator used by some of its devices. The issue affects Coldcard Mk3 wallets running firmware version 4.0.1 or later, which may have generated seeds with weaker randomness.

Around 594 BTC (approximately $38.3 million) was moved out of about 500 single-signature addresses between July 30 and August 1. The company has not confirmed a link between the sweep and its advisory, but experts believe it could be related to an entropy flaw in how the devices generated seed phrases.

Users who generated seeds on affected Mk3 devices with firmware version 4.0.1 or later may be at risk of having their Bitcoin compromised. However, Coinkite emphasizes that only seeds generated on these devices are vulnerable, and newer hardware such as Mk4, Q, and Mk5 is unaffected.

To mitigate the issue, users can generate a new seed on an unaffected device and transfer their funds to it. Alternatively, they can apply a BIP-39 passphrase or use the 'dice rolls' method to create a new seed. Coinkite advises users to proceed calmly and verify their funds before migrating.