CoinKite Warns Users of Potential Security Flaw in Coldcard Mk3 Devices

Canadian hardware wallet maker CoinKite has issued an urgent warning to users of its Coldcard Mk3 devices. A potential security flaw in seed phrase generation may have allowed attackers to drain nearly $40 million from over 500 wallets.

The affected firmware versions are 4.0.1 through 5.0.3, while newer models such as the Mk4, Q, and Mk5 are not believed to be at risk. CoinKite has advised users to transfer their Bitcoin to new wallets as a precautionary measure, despite acknowledging that it has not confirmed a direct link between the flaw and the theft.

Security researchers suspect that a weakness in the firmware may have produced predictable seed phrases that attackers could exploit. The coordinated sweep of nearly 600 BTC from over 500 wallets occurred within under 30 minutes, with 562 BTC later consolidated into one address.