Coinkite, a Canadian Bitcoin hardware manufacturer, has warned users of its Coldcard Mk3 signing device to move funds from wallets whose seed phrases were generated on affected firmware. The company stated that seeds created on a Coldcard Mk3 running firmware version 4.0.1, released in March 2021, or any later Mk3 version may put funds at risk. This issue extends through firmware version 5.0.3, the final firmware supporting the Mk3.
The warning coincides with an unexplained, coordinated sweep involving 594.48 BTC from single-signature addresses, which Bitcoin security specialists are currently examining. AnchorWatch CEO and co-founder Rob Hamilton reported that 1,324 unspent transaction outputs were swept across 500 transactions within a three-block window. Hamilton noted that all addresses involved in the sweep were single-signature and that 562 BTC was later consolidated into another address.
No definitive public evidence has established that the Coldcard Mk3 issue caused the 594.48 BTC transfers. However, a Reddit user claimed that funds had been drained from a wallet whose seed was generated on a Coldcard Mk3 bought in May 2021. The user stated the seed was later restored onto a Coldcard Mk4 in January 2026, meaning it had subsequently been entered into a second device. This account is self-reported and does not establish a connection between Coldcard and the broader sweep.
Wizardsardine CEO Kevin Loaec offered a hypothesis that a low-entropy random-number generator, potentially in a software library, secure element, or particular device batch, produced wallet seeds with insufficient randomness. Loaec suggested that an attacker who knew 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. He stressed that this hypothesis remains unconfirmed.
According to Loaec, the limited BIP-84 derivation path range could explain why the sweep appears concentrated in native SegWit addresses and why some wallets were only partially drained. He warned that wallets that were only partially drained may remain at risk of further theft if his hypothesis is correct. Loaec also noted that funds held in other address types could be exposed if the attacker expands the scan to include them.
Coinkite’s early analysis indicates that the Coldcard Mk4, Q, and Mk5 are not affected by the seed-generation issue. The company also stated that affected seeds used with a BIP-39 passphrase face minimal risk. Coinkite stressed that the BIP-39 passphrase refers to a passphrase rather than the Coldcard PIN. Consistent with this finding, Coinkite recommends that Mk3 users create a strong, unique BIP-39 passphrase on the device and move funds to the resulting wallet.
For those moving funds, Coinkite urged affected users to generate a new seed on an unaffected device, verify its backup and receive address, send a small test transaction, and only then move the remaining funds. The company said its investigation into the Coldcard Mk3 seed-generation issue is ongoing and promised a formal technical review.