Coldcard Wallet Hack Exposes Flaw in Seed Phrase Generation Process

A security breach linked to Coldcard hardware wallets has triggered alarm across the cryptocurrency community. Investigators estimate that attackers exploited a flaw in the wallet's seed phrase generation process, resulting in the theft of 1,367.05 Bitcoin (BTC). This is valued at approximately $1.6 million, or around Rs 15 crore based on exchange rates as of August 3, 2026.

Users have shared accounts online claiming they lost years' worth of Bitcoin holdings after discovering the exploit. Canadian entrepreneur Jonathan Goodman reported losing 18.25245043 BTC, which he had stored in cold storage using a Coldcard device. He claimed that his hardware wallet was kept offline and never exposed to the internet, but the seed phrase flaw allowed hackers to access his funds.

Goodman stated that all of his Bitcoin was transferred out between 9:36 pm and 9:43 pm on July 29, emptying every wallet under his control in less than seven minutes. He alleged that attackers used artificial intelligence-assisted brute-force techniques to recover wallet seed phrases and access users' funds.

Other Reddit users have reported similar experiences, with one user claiming to have lost over 3 BTC after years of disciplined investing using a Coldcard wallet. The incident has renewed discussions around hardware wallet security and the risks associated with self-custody, even for users who believed their Bitcoin was protected by keeping it permanently offline.