CATASTROPHIC COLDCARD BUG

0:02 If you're currently unaware, which I imagine many of you are not, but just in case, this is an emergency, rabbit hole recap because there is an emergency vulnerability disclosure from coin card pertaining to their cold card hardware wallets going back to version four point zero point one or four after four point zero point zero. The random number generator was used to create the entropy to create your private seed was not working properly. And so any private key that you produced with an m k three after that version or any version for that matter, any model is not safe. So move your Bitcoin off of cold card if you're securing it there. I know many of you are already aware of this, but just in case you aren't, get on it quickly.

0:57 Yeah. I I Yeah. Just real quick just real quick there. On the on on this absolutely catastrophic bug, the bug was introduced March 2021, I believe. Marty and I are running on very little sleep right now. It got discovered late Thursday night after last rabbit hole recap, and it's been straight chaos basically since that happened. So if you generated a seed on any cold card after March 2021 and you didn't add sufficient dice roll entropy, so dice roll randomness, over a 100 dice rolls, you have a compromised seed. Now if you have a passphrase that has probably protected you up until this point, M k fours also really fucked, but slightly less fucked might have protected you up until this point. If you did multisig, might have protected you. If you did multisig with two cold cards, like the threshold of cold cards, you're vulnerable.

2:13 If you did one, I you you're not you're technically not vulnerable. But I I I think there shouldn't be really much nuance here. If you're using a cold card and you've never and you you you still have funds on the cold card, whether it's in a multisig, whether it's a pass raise or dice rolls, straw like, you should you should take a deep breath and move your funds as soon as possible. And as far as I'm concerned, never use cold cards again. Just never use cold cards again. Move your funds. This is a fucking disaster. This is really, really bad. Yeah. I said it yesterday.

2:55 The best way to describe the feeling that I've had since Thursday afternoon is is horror, pure horror horror. This is a disaster. And I think a lot of what this episode is gonna focus on is accountability. I mean, we talk about it a lot on the show. We try to demand it of others and would be hypocritical of ourselves not to hold ourselves to account as two individuals who have advocated and recommended endorsed cold card for many years. And as you can imagine, this is this is as bad as it gets, literally fucking up the most important part of creating a private key to secure your Bitcoin.

3:42 So I'm yeah. I was gonna say we dished out a lot of shit. We've we've defended cold card many times in the past, and it is very obvious now in hindsight that that was that defense and the the endorsement was was on ill gotten confidence. To be clear, this is happening on August 3. The current time the current block height since we I see a comment in the chat, which is why I'm bringing it up. The current block height is nine six zero eight eight five. Like I said, the vulnerability, the bug came to our attention after the last RHR.

4:32 And and and the reason why the podcast is now instead of Friday is because as far as I'm concerned, getting this information to as many people as possible was most important, and I don't think the podcast actually is the way to do that. But, also, at the same time, we're not gonna sit here and, you know, wait till Thursday to discuss this. Like, we need to be on air now. And and so Marty and I have been content contacting people nonstop, tweeting out Noster posts, sending out emails, trying to notify as many people as possible to move.

5:13 And and look. Okay. So that's that's why the podcast is going on right now. I am so fucking sorry for ever recommending gold cards. I honestly, until Thursday night, thought they were the best, most secure hardware on the market. I like I've I've if if you've been a freak for a long time, you know that that I've like, recommending recommending how you how you cold store your Bitcoin is is a very sacred recommendation to me. Okay. Since 2019 since 2019 when we did our first cold card workshop in New York at Chaincode Labs, and we did it with Evan Kaludis and Beefsteak Josh and a bunch of other people. James O'Byrne was there.

6:07 I think that was December 2019, and we did it with m k twos and m k threes. We walked people through dice rolls and passphrases. And at that point, it was with Wasabi. I think it was pre Sparrow. Since then, I've been convinced that it is the best hardware on the market. And that's been seven years. Seven years of of me and Marty and many others recommending this thing. And I looked at it, and I always just like, I would look at the cold card and be like, this is, you know, our fortress of solitude.

6:48 And it was it was a piece of shit. The thing was completely insecure. And I know we preach about don't trust, verify all the time, about self custody. I still think self custody is extremely important. I think it's more important than ever. And that was one of the reasons why I loved cold cards was because you could add dice rolls. Right? You couldn't add dice rolls to other most other hardware wallets. That why we we talked about pass raises all the time, why we talked about multisig. But over the years, there was a level of complacency that happened My with my myself, I'll speak for myself. There was a level of complacency that happened.

7:33 And I I I believed that someone just generating with a cold card without adding dice rolls, without using a pass raise, without using multisay because that was the defaults of treasurer and ledger was better than nothing, and it was a good first step. And I was completely fucking wrong. And we talked about don't trust, verify, but I I I trust it. I put way too much trust in NVK and Peter and CoinKite, more trust than I put in pretty much anyone except for family members, and they completely betrayed that trust. I'm I'm I'm I'm angry. I'm angry at myself. I'm angry at them.

8:14 I'm I'm I'm I I have a bit of a crisis of confidence. Like, all the all all these people are asking me where do they move to next. I don't, you know, I don't want to recommend something bad, but you need to move. You need to move. Never use cold cards again. I I it's it's this this bug has been there for five years. There's been a ticking time bomb for five years that at any point, all of our funds could get removed if you didn't have a passphrase, dice rolls, multisig, any of those. And like I said, even if you know, maybe you did maybe like, Coldcard has this feature where it's, okay, you can add dice rolls on top of their randomness.

9:00 Right? They they're supposed to generate secure randomness themselves, which they weren't. That's the bug. And then you could add dice rolls on top. So some people just did, like, 12 dice rolls on top, 14 dice rolls on top. That's not enough to protect you long term, but it might be enough to protect you right now. You might still have funds on there. You don't remember how many dice rolls you did. Move it. Regardless, I would move it. Yeah. I I don't know. I'm I'm sad. I'm fucking broken. I've I've this fucking sucks. I'm I'm sorry, freaks. This really, really fucking sucks. Yeah.

9:43 And just reflecting over the weekend is a lot of that. And I think, again, holding ourselves to account, like, the don't trust verify definitely lapsed on that. And there's so many social psychological aspects of this to group think in groups sort of catering. And it's obvious if we're being objective to that. That those types of actions, that psychology was certainly a play too. I'm I'm sorry for playing into that too. It's a it's a hard game. And to your point too, like, I I don't think I'll ever recommend the custody solution directly for people. I mean, layout options.

10:38 So do your own research, figure out what works best for you. Yeah. It's a it's a sad day in there, and many good people have lost their loss. That's their life savings. That's the the biggest gut punch. And it just feels okay. Again, horror is the only word I can use to describe it. I don't think I could feel any worse. And to Matt's point, like, if you have a cold card, any version, any model after March 2021. Don't risk it. And that's that's the other thing that I learned over the weekend, trying to help people migrate as many people don't don't have the confidence of what they did originally. They don't know. They said, I rolled dice, I remember, but I don't know how many. And if if you're in that that boat, just move. Figure out ways to to move fast. It's a ticking time bomb.

11:48 If you're just hearing this for the first time, basically, the the alarm bell has gone off, and now people who understand the vulnerability are are spinning up GPUs to to grind through seed phrases and pass phrases. And it's only a matter of time before yours gets exposed if if you don't have sufficient entropy from additional dice rolls and and passphrase.

12:36 I think one one phrase that's been in my mind since Thursday night is is pride comes before the fall. And I think if you know how Coldcard has been antagonistic in the market, very prideful, exuding a ton of confidence in their technical prowess, it was all hot air. And incredibly fucked up. Yeah. Yeah. I mean, look. I I linked in the show notes. I like I said, especially now, but, you know, I don't I I don't know, like, where it's safe to move. I don't feel comfortable telling people how to move, where to move.

13:35 The one positive note is the the Bitcoin community has really rallied together over this past weekend. People have been up all night talking to people, moving people through, being active on acts and noster with guides, and that's been really amazing to see. So I linked to a very extensive guide by Rob Hamilton on who's vulnerable, how you're vulnerable, what are your options, where to move. So definitely go to that link. And if you're listening to this live and, you know, we won't probably have it up on our podcast feeds for, you know, like, another hour or so. Just go to Rob one ham on x, and you can see the I think he has it pinned.

14:22 But that's really good to see. And, also, on the topic of Rob Hamilton, him and, like, a bunch of crack devs are currently running frontier open source models, k three. And, also, it seems like they've they got access to OpenAI's, you know, walled garden, Cypher program, and they've just been just burning through AI tokens to hit every major Bitcoin project. I think it's a 100 and plus open source Bitcoin projects right now. OpenSats will be funding that, but up until this point, it's been funding it out of pocket.

15:05 Pretty amazing to see the community come together like that. I don't I don't think self custody is dead. I think the idea of, like, a magic bullet for beginners, for high value self custody is is definitely dead. Like, I think people should be way more paranoid. Think a lot of and that that's the key lesson here. You know? Multi vendor, multisig, passphrases, a lot of things that could cause foot guns. If you can't handle that, then maybe self custody is not for you. I just don't I question. I need time to reflect. I question if I should be involved in that process of of helping people self custody anymore. Like, I feel I'm I'm I'm grateful that we've recommended many times in the past dice rolls and pass raises and multisig and trusted third parties or security holes.

16:05 But, yes, also mistakes were made in terms of thinking that CoinKite was producing a secure project. Like, I trust I I trusted them that they were making a very secure hardware, and and they they weren't. And, yeah, so I just seven years, man, and the bug has been sitting there for five years. Like, I just I really need to I I really need to reflect on on on that. And I think we all do as an as an industry in a big way too. Yeah. And this is by no means a way to cover for Coincite.

16:52 No. Fluff that. Mistake was so, like, mistake was all theirs. But it it is undeniable, like, with the age of AI. You need to prepare for this if you're running a company that is securing people's Bitcoin. And so that's that has been very encouraging to see over the weekend. I mean, again, I don't want it to come off as AI discovery. This bug was gonna be found regardless at some point. It was a fucking ticking time bomb, but it does seem like AI might have found it. I mean, NVK rightfully deserves a lot of shit for his license change.

17:36 And, I mean, I know there's thousands of hours of us talking about things, so people are finding clips everywhere. There are also clips of me giving him shit about it publicly, but the source was viewable. And so there was a lot of people that could have looked at it if they wanted to. Obviously, it was way above our fucking pay grade. And we don't know exactly when it got discovered. It does seem like it might have gotten discovered this week with like, when the attack when the attacker really discovered it with AI with the help of AI. But, I mean, I remember, like, Ledger attacking it with fucking space lasers and shit, and they were just looking in the wrong place.

18:19 You know? If you're I don't know. I just, yeah. I just it's it's it's brutal. It's fucking brutal, and it was literally and this one of the scariest things here, by the way, is, like, if a good guy had found it first before the attacker, it would have been really hard, if not impossible, to fix it, I think, because people needed to regenerate seeds. So it would have been a race regardless. It would have been strictly better. Don't get me wrong. But it would have been a race race altogether.

19:02 And I don't know. This just fucking sucks. Like, I was on the phone with friends and family. I recommended Coldheart to so many fucking people. People lost every some people lost everything. Fortune like, the a lot more people could have lost money if it wasn't for the dice rolls and the multisig and the pass raises, but please move. Like, you might not be safe. You might just have bought yourself time. And it yeah. It's ongoing. This isn't this isn't going to end until every public ash address associated with one of those private keys that was generated on the cold card has been attempted to be brute force. The private key of that public address is attempted to be brute force. And it's hard to know exactly how many are out there.

20:01 I'm seeing a comment in the in Noster from Aldoka. This is was the worst weekend of my life. I'm fucking destroyed, man. What a fucking mess. Yeah. I see a comment about MBK saying they did an LLM audit on their code and didn't find the bug. I don't you know? He's, the last person I trust right now. But I know from other people that they did as well, and and they didn't find anything up until this point. And there is definitely some piece of it, by the way, that's, like, once one finds it and people know where to look, then that's when they start finding it in, eight minutes or whatever.

20:50 I saw the frost the frostnap team, like, seven weeks ago used Opus four eight, and it didn't find it. I don't think I found the exact bug, but it did highlight that entropy was insufficient. No. I don't even think it did. Right? He said he was close, but it wasn't. And, yes, technically, if you roll a 100 dice correctly on your own, you will have good entropy. I I mean, I saw people trying to call me calling me out of next because by by the way, my guides have always been open source, and I'm not trying to hide anything. I've left the GitHub the GitHubs are up on on on when I change things and and how they've how they've been modified over time. And in 2025, I removed my dice roll recommendation.

21:46 And it was because my understanding was people were footgunning themselves by rolling too few dice, and I felt horrible by people losing money. In hindsight, I feel like a fucking idiot. I mean, I feel like a fucking idiot forever recommending cold card. I can't believe I thought this thing I can't believe I thought this thing was the most secure hardware on the market. I'm I'm I'm what the fuck? But here we are. No. We will get through this. We have to get through this. Yeah. I'm reflecting. Just trying to think of other things.

22:32 Yeah. I mean, one one positive note, I guess, is a block. So I also linked the best write up, I think, is by the team at block, specifically, like, Bitkey team, which also who knows what kind of AI they have available to them, like like, top top, like, closed US models. But they did a great write up that's linked in the show notes. But they believe they figured out that the attacker was pinging a centralized API provider to look up addresses, and they've reported that to the authorities. So there is an investigation going on with thief. So that's happening.

23:19 Yeah. And it's just getting messy too because now there's white hat hackers beginning to sweep coins. So it's hard to know at this point after the initial wave what what is what is actually being swept by nefarious or white hat hackers. And this is literally a worst case scenario, Chernobyl event within Bitcoin. And if you that that that was one of the most distressing things over the weekend, literally just going through my contact list and trying to think of anybody that I know that either recommended cold card to our nose in the Bitcoin.

24:00 And they may have sent to the show and I'm not aware of. It's like, hey. And they're like, and the it's fucking first week of August, which is, like, peak vacation season. Like, I think at least three people that I was helping move stuff over the weekend were on the other side of the planet away from their private keys. Yeah. I mean, geographically distributed multisig really makes you start to think too. Right? I mean, we were scrambling to make sure open such funds were safe. They are. I see one question. Do you have brick devices? I'm seeing reports that people are their devices might be getting bricked by the new firmware that's getting released. I do not have confirmation on that. But just don't Don't update the firmware. Yeah. I've been consistent since this news broke on Thursday.

24:55 Fuck this shit. Do not upgrade your firmware. Do not stay with CoinKite. Transfer your funds off. Just transfer your funds off to another wallet. And if you can't get hardware in time, Rob Hamilton has has his own advice that, like I said, we link to in the meantime, but just transfer off ahead of time. I I I I I cannot support this company at all. This is anything they're doing right now is I fuck all of that shit. Move your funds to a a secure place. I also see another comment here. Is ten thirty one cutting off VC funding for CoinKite?

25:36 The the investment was years ago where a minority investor, less than 10%, the majority of the company is owned and controlled by MBK and Peter, and we fucked up. We just completely fucked up. We we it was misplaced trust. Way, way, way too much trust, and and and and and we got fucked. And I'm I'm incredibly sorry to to both ten thirty one investors and to any users who were affected. And, you know, anyone to even if you didn't lose your funds, anyone I recommended this shit to that has been scrambling for the last three days to fucking move your shit in a panic It's horrible.

26:24 Yeah. I mean, beyond Block and Rob, I mean, just to give props to to people like Wicked, BTC, mister Huddl, Shinobi, many others who had seen Kevin Loak of Liana? Yeah. Yeah. Kevin There's too many to mention. Yeah. There's there's too many to mention, but it's it's been pretty wonderful seeing the community come together at the very least, like a tiny bright spot here.

27:12 Yep. Let's I see Jack Mitchell. If we did a 100 plus dice rolls and entered them, is that correct? Yeah. Theoretically. Like, if you fucked it up, though, it's not. So be aware. You know? I I wouldn't even use this thing with sufficient dice rolls. Like, every like, keep getting so many questions. Like, if I did this and that, blah blah blah. It's like, if you still have your funds and they're still on a cold card, you should move them. But, also, you know, been giving bad advice on using cold card in the first place for seven years, so take it with a fucking grain of salt.

28:09 Shout out to Dumbder on Twitter. He says, I look like I'm watching the ghost of Lindsey Graham sucking off my dad. That was an interesting one on Twitter. We got the best supporters. Yeah. It's yeah. I mean, we've dished out a lot of shit in the years over the years. I mean, the people you know, when Block five blew up, danced on some graves there when other companies have made decisions, made comments, and it's just I mean, again, going back to reflecting all weekend, I think.

28:54 It's one thing I'm gonna come away with is it's just this shit is hard. No one is perfect, and just be mindful of that. Be graceful. I'm praying a lot too. The people lost funds for people are losing confidence. It's again, this is I can't it's it's hard. I'm sleepless, speechless, and it's can't think of anything worse, literally.

29:40 The whole point of Bitcoin and is the ability to have confidence that you can secure your own funds. And to be clear, like, that ability has not changed. Securing your own funds on cold card is not possible after March 2021 without sufficient dice rolls. But, again, how can you have confidence? You need there's that introduction of the doubt of your ability to do that in the past is a a reason to move. No. And that was there was a couple people I helped this weekend that had a 100 dice rolls and that and that. It's like, I I don't know if it is. Like, I can't trust that you put that in perfectly.

30:32 Yeah. Where do we go from here? Forward. I mean, I still think Bitcoin is needed now more than ever. You know, this is this is one company making a a a a really, really bad mistake. I think people will it will reflect on Bitcoin, but it shouldn't in long term. I I I hope it won't.

31:16 But fuck, man. I'm there look. There's like I said, there's a lot of good people working out there on both trying to diagnose more bugs and make self custody more secure and easier. There's clearly no shortcuts, and I will say one of my mistakes was thinking maybe maybe there was a shortcut where you just had this really secure hardware wallet. And you could take a little bit less personal responsibility, you could be a little less technically competent and fucked up, man. Just fucked up.

31:58 I trust put I trusted. I trusted I I shouldn't I shouldn't have trusted NVK, Peter, and CoinKite. I fucked up big time. Yeah. And I'm seeing a a comment here. You can verify dice roll. I think he's trying to say dice rolls, but you can, but you you can only verify when you're doing it if you didn't do that and have confidence. No. You can't. His point is there's two features on cold card, which is part of the reason that like, it was it was good from, like, a positive from, like, a features point of view, but it created an additional foot gun situation because people confuse the two features. But there's one that was supposed to add device entropy plus dice rolls. So dice rolls were additive.

32:45 And my understanding is that's not verifiable. But if you do dice rolls only, then that is verifiable. But if you did dice plus entropy, even though the entropy was fucking horrible, you're still you you're you're you're still safer than the people that didn't, but you have to move funds as soon as fucking possible. But like I said, I I just if you have to ask the question, you should move funds. Just don't use this product. It's a horrible fucking product. It failed at the one thing it was it needed to do.

33:39 Yeah. A lot of interesting discussion about the future of Bitcoin custody. I think multivendor multisig is a theme that many people are pointing out as maybe a minimum viable requirement to have confidence along long term storage. Just a lot of interesting discussion around BIP 39 and whether or not that is that is actually a standard that people should have that that people should be organizing around. So, yeah, I think I think there's gonna be a lot of introspection and, hopefully, debates and conversation about about what we're actually doing here, getting back to focusing on securing this stuff. It's goddamn shame.

34:29 It took something like this to to push the conversation in this direction. I mean, yeah, the other like, passphrases use passphrases. Even if even if it's, like, theoretically a insecure passphrase, it buys you time in this type of situation because an attacker has to then manually grind out every passphrase combination. Yeah. We'll get through this, freaks. I'm sorry.

35:16 I think we should wrap and publish this. There's you know? There's If you if you if if you have friends or family that are interested in Bitcoin, call them. Make sure they're not on a cold card. Try and get the word out as much as possible. There's still a bunch of users out there that maybe don't even know and haven't been swept yet. And if you can save even just one more person from losing their money, then it's huge. It's worth it. If you have email lists or anything, email people. Text people. Call them. Call them. If you're away on travel if you're away on travel and you don't have access, call someone who's who's, you know, relatively trusted and have them go sweep it for you. If they and and and you already have an attacker trying to take it.

36:11 Like, you that you should at least and, you know, just just send someone over. Walk them through it. There's a level of urgency here. Yeah. Complacency kills. We were complacent. I'm terribly, deeply sorry for that, Chris.

37:01 I guess we'll wrap here. Yeah. Would just also say, like, I just love you all. Hug your families. Yeah. Alright.