OOF Size: Catastrophic – The Coldcard RNG Blunder

Apparently, the man responsible for the faulty firmware code resulting in over $100 million in Bitcoin to be stolen refers to himself as a "Wizard-level developer" on his LinkedIn profile. Can't make this shit up! 🤡

I was perusing Reddit, stumbled on this thread on /r/Bitcoin and the comments were popping off as can be expected.

Grok was used to shed more light on this most unfortunate yet very preventable situation. 🤦‍♂️

As the old saying goes, pride comes before the fall.

I am noticing buzz questioning the safety self-custody after this historic incident. People are concerned if their Trezor and other hardware wallets are safe. Many have decided to park their coins on exchanges which personally I do not recommend considering the many incidents of users losing funds on centralized exchanges (CEX) e.g. Mt Gox, FTX, Celsius etc.

This really brings the issue of code auditing to the forefront before consumers update their devices.

One problem I can see is often this code is proprietary rather than open source so it may not be publically accessible. In this case, the Coldcard code was on a public repository so technically an end user could review but having the technical expertise to identify vulnerabilities is another matter entirely.

Sure, maybe we could relegate the code analysis to an LLM but, on the other side of the spectrum, malicious actors aka "black hat hackers" could be very well using the same tools to exploit the same vulnerabilities.

Ultimately, I think the responsibility should belong to the development team if they did not exercise due diligence and due care to ensure their product is compliant with security best practices. We will likely hear about a class action lawsuit in the near future.

For shits and giggles, I had CoPilot help draft some supplemental information on this hack which should help illuminate the technical nuances:

TL;DR: A critical flaw in Coldcard’s randomness design turned a “secure” hardware wallet into a catastrophic liability, with potential exposure in the tens of millions of dollars.

• Device: Coldcard hardware wallet
• Issue: Broken RNG / PRNG replacing TRNG
• Impact: Predictable keys, compromised security assumptions

Background: Why RNG Matters in Bitcoin Wallets

• Key point: Private keys depend entirely on high‑quality entropy.
• Hardware TRNG vs software PRNG:
  • TRNG: Physical randomness source
  • PRNG: Algorithmic, must be seeded correctly and never be predictable

The Vulnerability: What Went Wrong

• Faulty commit / design change:
  • Who: (e.g., Peter D. Gray / Doc Hex, CTO & co‑founder)
  • What: Replacement or misuse of TRNG with a software PRNG path
• Core failure:
  • Unverified entropy path
  • Insufficient review / testing
  • Overconfidence in implementation

As an added bonus, including the "OOF SIZE = Catastrophic" meme I had Gemini and Copilot spin up after some initial struggles. Eventually Gemini got the dial right and then CoPilot finished up with the red glow and deep fry effects. Feel free to use and abuse this template

Thanks for stopping by ✌️

Posted Using INLEO