Coldcard tells Mk3 users to seed-exit as experts chase 594 BTC entropy ghost 🪦

Coinkite has urged owners of its Coldcard Mk3 hardware wallet to move funds from any seed phrases generated on the device, warning that wallets created on firmware version 4.0.1, released in March 2021, through version 5.0.3 may be exposed to risk. The Canadian maker's early analysis indicated the issue is limited to the Mk3, while the Mk4, Q and Mk5 are not affected. "Out of an abundance of caution," the company told users to generate a new seed on an unaffected device, verify the backup and receive address, send a small test transaction, and only then sweep the remaining balance. Coinkite said it is continuing to investigate and will publish a formal technical review. Affected seeds used with a BIP-39 passphrase face minimal risk, the company added, clarifying that refers to a passphrase and not the Coldcard PIN.

The advisory follows attention around an unexplained sweep of 594.48 BTC, worth about $38.3 million at a Bitcoin price of $64,364.07 per CoinGecko, from single-signature addresses. AnchorWatch CEO Rob Hamilton wrote in a preliminary analysis posted on Friday that 1,324 unspent transaction outputs were drained across 500 transactions inside a three-block window. Hamilton noted that 562 BTC was later consolidated into another address, and wrote that "at a glance, this looks like there was flawed entropy in wallet generation somewhere along the way." Wizardsardine CEO Kevin Loaec said his working hypothesis is that a low-entropy random-number generator, potentially in a software library, secure element, device batch or firmware version, produced seeds with insufficient randomness. He suggested an attacker aware of the flaw may have used an AI-generated script to brute-force affected wallets, but searched only a limited range of BIP-84 derivation paths, which could explain the concentration of losses in native SegWit addresses and why some wallets were only partially drained.

The trail became public after a Reddit user reported funds were drained from a wallet whose seed was generated on a Coldcard Mk3 bought in May 2021 and later restored onto a Coldcard Mk4 in January 2026. The account is self-reported and does not, on its own, link the device to the broader sweep, and no definitive public evidence has yet established that the Mk3 firmware issue caused the transfers. Hamilton said all addresses involved were single-signature, and Coinkite said it is examining whether the firmware flaw could explain the pattern of losses.