Coldcard hardware wallet thefts have slowed significantly, but cumulative losses from the exploited devices could exceed $150 million, according to Galaxy Research analysis. The firm attributes the decline in new incidents to vulnerable users either migrating their assets off affected devices or having already been drained by attackers.
Coldcard hardware wallets faced a critical vulnerability that exposed private keys to extraction attacks. The issue emerged when researchers discovered that certain firmware versions allowed attackers to access seed phrases through side-channel attacks, particularly targeting devices that hadn't been updated. Bad actors systematically exploited this gap over several months, draining wallets of significant bitcoin holdings.
The initial wave of thefts triggered rapid response from Coldcard developers, who released patched firmware versions and advised users to transfer funds immediately. Major exchanges and custodians flagged compromised addresses, adding friction for attackers trying to move stolen bitcoin on-chain. This combination of defensive measures likely accelerated migration away from vulnerable firmware.
Galaxy's assessment reflects on-chain monitoring data showing theft velocity declining sharply as the attack window narrowed. The $150 million estimate suggests this ranks among the larger hardware wallet compromises in crypto history. The actual number of affected devices remains unclear, but the damage scope indicates thousands of wallets faced exposure.
The slowdown reveals how cryptocurrency security operates in practice. Once vulnerability details circulate widely, motivated users move quickly. Those who remain stationary on vulnerable versions either lack technical knowledge, monitor their accounts infrequently, or operate smaller holdings below theft thresholds. Some may have already had funds stolen before the vulnerability became public knowledge.
Coldcard's reputation took a hit despite the relatively quick patch deployment. Hardware wallets maintain trust through perceived air-gap security and resistance to online compromise. When that fundamental promise breaks down, adoption questions follow. Users faced uncomfortable choices between trusting updated firmware or abandoning the device entirely.
The incident underscores recurring patterns in hardware wallet security. Firmware updates fail to reach all users simultaneously. Legacy devices linger in circulation longer than developers expect. Supply chain visibility and update delivery remain weak points across the entire hardware wallet ecosystem.