Bitcoin News

Story: Coldcard Users Urged to Replace Seed Phrases After $112 Million Bitcoin Loss

By Pankaj K

1 / 15

What the New Firmware Actually Does. Generating a fresh seed under the new firmware isn't a one-click process.

2 / 15

A $112 Million Exploit Ranked Third-Largest of 2026. The 1,778 BTC loss ranks as the third-largest cryptocurrency exploit of 2026.

3 / 15

Coinspect's Free Detection Tool. Coinkite isn't the only one moving. Blockchain security firm Coinspect launched a free tool called…

4 / 15

Coinkite wants every Coldcard user to ditch their old seed phrase. Not update it. Replace it entirely.

5 / 15

The company pushed out firmware version 5.6.1 for Coldcard Mk4 and Mk5 devices, plus version 1.5.1Q for the Coldcard Q. But here's the thing — the update alone isn't enough.

6 / 15

Generating a fresh seed under the new firmware isn't a one-click process. Users have to supply their own entropy — 65 keypresses with random timing, or 50 dice rolls, or 128 coin…

7 / 15

The update also tightens a lot of other things. USB data handling got reworked — downloads are now restricted to recent outputs only, and encrypted sessions are required.

8 / 15

There are also new hardware RNG checks and a boot-time test. That test verifies the wallet is running along its intended hardware path from startup — basically a sanity check…

9 / 15

The 1,778 BTC loss ranks as the third-largest cryptocurrency exploit of 2026. That's a brutal number, and it puts Coldcard in uncomfortable company.

10 / 15

It's worth sitting with that timeline for a second. The bug apparently sat in the codebase from March 2021. Years passed. Wallets were created. Bitcoin was stored.

11 / 15

See also: FCA Issues Urgent Warning on Mini-Bonds After Woodville Consultants Collapse

12 / 15

Coinkite isn't the only one moving. Blockchain security firm Coinspect launched a free tool called Unlukey, built specifically to identify wallet addresses created from weak seed…

13 / 15

It's a smart move. Not everyone can assess their own exposure, and a free tool lowers the barrier considerably. Whether enough users actually run it is another question entirely.

14 / 15

The broader picture here isn't great for hardware wallet confidence. Coldcard has long been positioned as one of the more security-conscious options in the self-custody space —…

15 / 15

Coinkite's message is clear enough: generate new seeds, use the new entropy process, don't assume the firmware update covers everything.

The Currency Analytics

Want the full story?