Bitcoin Hardware Wallet Maker Coinkite publishes Coldcard 's new hardware, requesting Mk4, Mk5 and Q-type users to upgrade as soon as possible. This update, which originated in a three-week security review cycle, focused on the issue of the lack of randomity in repairing seed generation. The loophole has been used to steal bitcoin on a large scale, with a cumulative loss of approximately $130 million.
The loophole dates back to 2021
The attack took place this July. Using defects in the old version of the solid, the attackers initiated a bulk transfer against the Coldcard wallet, which was partially used offline. The problem is that some devices are not random enough to generate wallet seeds, making it easier to guess the private key.
According to the report, the first round of the attack was transferred from approximately 500 wallets in 25 minutes, 594 bitcoin, valued at approximately $38 million at the time. Galaxy Research subsequently tracked that, by early August, the relevant stolen funds had been expanded to approximately $88.6 million, involving 4,585 addresses. By 14 August, the cumulative amount of theft had risen to 1,778 bitcoins, which amounted to approximately $112 million at that time.
Today, the cost of the incident is approximately $130 million in bitcoin, according to the latest statistics. Reports indicate that the safety intensity of the equipment affected was reduced in part from 128 to about 40 bits, making it easier for the attackers to speculate about wallet seeds even if they did not have access to the equipment.
New Solids Adjust Feed Generation
COinkite states that the new solid has repaired several problems with transaction signatures, USB data processing, solidware verification, Delta Mode and wallet backup. The most important change is that the user must voluntarily add additional randomity to the new wallet seed.
- Key input at least 65 times
- At least 50 times.
- At least 128 times.
The new version of the mechanism will feed these people into a random combination of the device ' s own source to generate the seeds. The company also replaced the pseudo-random generator used in the back-up process with SHA-256 Hash DRBG and added detection of hardware random number generator anomalies.
COinkite cautions that any user who uses an affected version to generate a seed during the period 2021 to 2026 should, after upgrading, create a new seed and transfer bitcoin to a new wallet.
Add check before transaction signature
In addition to seed generation, Coldcard modified the PSBT pre-signature check process. Previously, if a computer connected to USB had been breached, it would theoretically have been possible to alter the content of the transaction before the user confirmed the transaction and the equipment signed.
Upon updating, the equipment will check the transaction again before signing. Once a change in content is detected, the signing process will be discontinued and a warning sent to the user. Coinkite describes the problem as a theoretical risk and does not indicate that it has been used in practice.
The company also tightened USB data access and enhanced Delta Mode and backup processing logic. Coinkite also stated that law enforcement agencies were still investigating the theft and that the company would continue to assist affected users in completing their relocation.
AI is at both ends of the attack.
Coinkite states that external security researchers and the AI model, including Kimi, participated in the review. The company also mentioned that the attackers might also use AI to analyse their historical open-source solids and thus identify loopholes.
Charles Guillermot, Chief Technical Officer of Ledger, stated to the outside world that the incident once again demonstrated that the security of the hardware wallet was highly dependent on random design, and that the correct implementation of encryption systems was often more difficult than the algorithm itself. It was also mentioned that earlier this month, the exchange service Boltz had been suspended because of the faster detection of loopholes by AI auxiliary assailants, and that a number of potential problems had been identified in various projects by the Bitcoin Safety Volunteer Team using AI agents.