Coldcard entropy bug: Is the entire hardware wallet ecosystem at risk

On July 31st, Coldcard, a manufacturer of cold storage devices, disclosed an entropy generation flaw that affects multiple cold card devices. According to researchers at Galaxy Digital, it is estimated that at least 1,596 BTC, equivalent to approximately $100 million, has been stolen through coordinated attacks exploiting this vulnerability. Coldcard warned that wallets created with affected firmware should be considered compromised and urged users to transfer their funds to newly created wallets. The core of the flaw lies in the entropy, or randomness, which is a fundamental step in Bitcoin wallet creation. Private keys are generated from sufficiently unpredictable random data, and if this randomness is weakened, attackers can significantly narrow down the possible key combinations and reproduce them. Core Lightning developer Dustin Duthweiler suggested that the code, which was intended to interface with a hardware random number generator (RNG) during a firmware update in 2021, may have inadvertently disabled it and instead reverted to a less secure pseudorandom number generator (PRNG) in MicroPython. While Coldcard has not confirmed this specific sequence of events, they acknowledged that a fallback path existed in certain firmware versions that could generate weak entropy, and they stated that devices that generated entropy manually, such as by rolling dice, were not affected. Coldcard stated that they would release a complete technical post-mortem report "soon." This incident has sparked a debate about the security design practices within the entire hardware wallet industry. Vincent Bolzon, the Head of Product Security at Ledger, explained that Ledger devices use a true random number generator within a secure element that has been certified according to the AIS-31 PTG.2 standard and the Common Criteria,