Coldcard Bug Exposes Critical Flaw in Hardware Wallet Audits

A critical flaw in Coldcard's random number generator has been exposed after nearly five years of operation, compromising around $90 million in Bitcoin.

The bug was introduced in March 2021 during the integration of a new cryptographic library and was discovered to redirect the wallet creation process towards a MicroPython pseudorandom generator instead of the true random number generator (TRNG) designed for that function.

Coinkite, the manufacturer of Coldcard, halted all device shipments and destroyed units with affected firmware but advised users not to discard compromised devices as they may be needed if fund recovery becomes possible.

Nick Percoco, chief security officer at Kraken, noted that auditors verified the correct generator existed, but not that it was the one the firmware actually executed. He stated that consumers must trust the manufacturer's implementation of the system's most critical function, with no independent verification that the approved entropy path is the one actually executed.