Coinkite Sued Over $140M Bitcoin Theft Linked to Coldcard Wallet Flaw

A class action lawsuit has been filed against Coinkite, the manufacturer of Coldcard hardware wallets, after a security flaw was exploited to steal approximately $140 million in Bitcoin. The lawsuit alleges that a firmware error, which was present for over five years, caused the devices to generate predictable recovery phrases, leaving users vulnerable to theft.

According to Crypto Economy, the vulnerability was introduced in 2021 and affected a significant number of Coldcard devices. The company reportedly released a fix in July 2026, but the damage had already been done. Cryptopolitan adds that the lawsuit claims Coinkite's co-founders were aware of the issue as early as May 2025 but failed to address it promptly.

The allegations are supported by the fact that multiple outlets, including Bitcoin.com and Crypto Economy, confirm the $140 million loss figure. This incident raises serious questions about the security practices of hardware wallet manufacturers and the potential consequences for consumers.

The Coldcard vulnerability is particularly concerning given the widespread use of hardware wallets in the crypto community. These devices are typically considered one of the most secure ways to store cryptocurrencies, and any flaw in their design could have far-reaching implications for user trust and the overall security of the ecosystem.

In the broader market context, Bitcoin's price has dropped by 4.25% in the past 24 hours, contributing to a decline in the total crypto market cap, which now stands at $2.78 trillion. The Fear & Greed Index remains in 'Greed' territory at 68, indicating that investors are still relatively optimistic despite the recent downturn.