Block flags Coldcard flaw that may be fueling ongoing wallet drains
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Block reports vulnerabilities in multiple Coldcard hardware wallets that may have produced low-entropy seeds, potentially enabling ongoing remote drains and leaving affected wallets permanently compromised even if imported elsewhere. While Block says Bitkey is unaffected, the disclosure elevates operational and custody risk perceptions for self-custody users. Near-term market impact is likely via broader security headlines, heightened caution, and potential shifts in wallet and custody behavior.
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Block said it began probing reports that cryptocurrency wallets outside its Bitkey product were being drained remotely and traced the activity to two vulnerabilities affecting certain Coldcard hardware wallets. The issues span Coldcard Mk2, Mk3, Mk4, Q and Mk5 models to varying degrees.
According to Block, vulnerable firmware produced wallet seed phrases with significantly less randomness than intended, potentially leaving some seeds predictable to attackers. Block warned the exploitation may still be underway and said moving an affected seed into a different wallet does not remove the danger because the underlying seed remains compromised.
Block said Bitkey and other Block products are not impacted, and that it shared its findings with Coinkite before publishing the report.