Coldcard Drains Keep Piling Up as AI Audit Flags 85 More Critical Bitcoin Bugs

Coldcard losses are still being tallied, so the risk is not behind us

This is still an active risk story, not a finished headline. Galaxy traced an initial wave of 1,082.65 BTC worth about $70.2 million in a 41-minute attack, then later identified second and third waves that brought the total to 1,367.05 BTC worth about $88.6 million across 4,585 addresses. Even with a patch released, the incident is still being measured in live losses and exposed wallets.

Why the attacks look automated

Galaxy said every transaction in the first wave used an identical fee rate and left no change output. That pattern suggests an automated tool spending keys it already held, rather than users deciding when to move funds. If that is still happening, the tool could keep hunting for the same weakness.

Why the story spread beyond Coldcard

What began as a hardware-wallet breach also triggered a wider code review. The Bitcoin Red Team's audit sprint started after the Coldcard exploit and uncovered 85 critical vulnerabilities and 635 high-severity issues across roughly 390 open-source Bitcoin-related projects. That does not prove all of those flaws are actively being exploited, but it does show how much weak code may still sit in front of real funds.

Coldcard's flaw was a randomness mistake, and the patch does not fix old seeds

The root cause was a firmware routing error

The damage traced back to a March 2021 firmware integration error that routed seed generation to a deterministic software pseudorandom number generator instead of the STM32 hardware random number generator. In practice, that made the output less random and easier to narrow if an attacker can bound the inputs.

Why an offline check can still lead to real losses

The vulnerability can be tested without touching the victim device. Block said an attacker who can determine or sufficiently constrain the device UID, timer state, and prior RNG-call history can reproduce candidate output streams offline. From there, they can derive candidate seeds, generate addresses, and compare them with public blockchain data. That is why a flaw can stay hidden for a long time and still matter later.

A patch stops new leaks, not past damage

Coinkite pushed emergency firmware the day after the first drain, but installing it does not repair an existing seed. Block's analysis also noted that no public report has yet reconstructed a victim's seed and matched it to a drained address. For now, the practical advice remains to generate a new seed on patched firmware and move funds rather than restore a vulnerable seed elsewhere.

The bigger takeaway is verification, not discovery

The AI-assisted audit found 85 critical flaws across 390 projects in just over 24 hours, at roughly one critical bug per person each hour and about $10,000 daily in compute costs. The bigger signal is what developers themselves raised: as AI lowers the cost of finding flaws, verification and routing become the harder problems.

That cuts both ways. It means attackers could use the same approach to find issues faster, but it also means known problems can be surfaced and reviewed faster. The gap between discovery and verification is where risk usually stays hidden.

What would show whether this is still expanding

One key boundary still matters: the damage chain traces to a firmware vulnerability in Coldcard hardware wallets, not a break in Bitcoin's base protocol. That keeps this a self-custody routing problem, not evidence that Bitcoin itself is broken.

Watch for fresh drained addresses

If Galaxy finds another wave of drained addresses, the story is still expanding. The clearest signal would be the same automated spending pattern seen earlier: identical fee rates and no change output.

Watch for confirmation in other projects

The audit is still reviewing nearly 390 open-source Bitcoin projects, and project owners quickly confirmed most critical reports. That makes the next few days important for understanding whether Coldcard was a isolated failure or the first major symptom of broader ecosystem weakness.

Key areas to watch include wallet apps and firmware paths, QR code and export tooling, and cryptographic libraries or other key-handling code. If those areas stay quiet, it would suggest Coldcard remains the main confirmed exploit path rather than the start of a wider live-attack cascade.