Ledger CTO Charles Guillemet pointed out that randomness is the foundation of self-custody. The recent Coldcard incident is highly similar to the 2023 Trust Wallet vulnerability, with weak seed generation being the real risk.

Since March 2021, Coldcard firmware has had a build error, reverting seed generation to a software pseudo-random number generator instead of a hardware RNG, causing effective entropy to drop from 128 bits to about 32 to 40 bits, making private keys vulnerable to brute force enumeration.

Attackers do not need to access the device; they can derive private keys solely from public addresses. Around July 31, during several waves of attacks, over 1,000 BTC was transferred from approximately 500 to over 1,000 affected wallets, with losses estimated at tens of millions to over 100 million USD.

The Ledger Donjon team discovered a similar issue in the Trust Wallet browser extension at the end of 2022: using the Mersenne Twister with only 32 bits of entropy to generate seeds, attackers could directly recover private keys from addresses. The vulnerability was fixed after responsible disclosure by the team.

Ledger devices use a secure element with a built-in certified true random number generator, providing complete 256 bits of entropy for each 24-word recovery phrase, with no software fallback path, confirming they are not affected by this incident.

In market mechanisms, funds rapidly flow from weak entropy hardware wallets to products with stronger randomness or multi-signature solutions, driven by long-unnoticed implementation flaws in open-source code and AI-assisted vulnerability discovery; beneficiaries are vendors and users using certified hardware entropy sources, while those under pressure are hardware wallet holders relying on software fallback or low-entropy generation.

Source: Public Information