The infamous Lubian hack saw $3.5 billion siphoned off from a Chinese mining pool.

That was just six years ago, and yet a company like ColdCard has learned nothing from the biggest heist in recent crypto history?

The Technical Cause: Weak Entropy
Independent cybersecurity teams, including Arkham Intelligence and the Milk Sad research team, revealed that the hack was not a complex network breach but rather an exploitation of weak cryptographic key generation.

The Flaw: LuBian utilized a flawed pseudo-random number generator algorithm (similar to vulnerabilities found in Libbitcoin Explorer software).

The Exploit: Instead of using a secure, uncrackable 256-bit random number, the wallet software used a highly vulnerable 32-bit seed to generate its private keys.

The Result: This severely lacked entropy, allowing hackers to easily brute-force and replicate LuBian's private keys within just a couple of hours, seamlessly draining the wallets.

So the 24 words is just like each word represents 11 bit arrangement right, and so when you start adding 11 x 24 and stack them together, to guess that exact arrangement is astronomical right?

So I thought, ok, the passphrase thing is one extra 11 bit. But I saw you can add like way more characters that no way 11 bits could be used to describe that.

So effectively what's happening, is that last 25th word (I'm saying effectively like all in all at the end of the day) being turned into just a longer than 11 bits and tacked on to the end of that long string of that (264 - checksum = )254 bits?

But I don't get it, someone said the 25th word can be up to 100 characters which is like at least 800 extra bits, so that would mean the entropy would be like 1054 bits? I just don't get it.

Thanks

I am new, but I have finally decided to get involved. During Covid I was strongly offered to buy a bitcoin but I didn't have $20k to lose neither did I have any trust in it back then. I'm thinking to give it a try and buy 1btc for a start. Any advice you could give to a newbie? Is it even a good time to buy it? I'm not looking to make a big spread unless I leave it for a few years.

ColdCard used a python library named "ngu" for "Number go up"
ngu.hash
ngu.secp256k1
ngu.random
ngu.codecs
ngu.hdnode
ngu.hmac

def generate_seed(): # Generate 32 bytes of best-quality high entropy TRNG bytes. seed = ngu.random.bytes(32) assert len(set(seed)) > 4 # TRNG failure # hash to mitigate any possible bias in TRNG return ngu.hash.sha256d(seed) 

The funny and sad irony is that all of these users actually saw "Number go zero"...

They (ColdCard/CoinKite) need to go belly up and liquidate all of their holdings... and distribute them back to victims.

WHITE HAT DRAINS OF COLDCARD WALLETS BEGIN

The white hat wallet drains of exploitable COLDCARD wallets are now underway, according to @coinjoined

If your COLDCARD was compromised, do not destroy the device. It could be needed if a recovery process is established.

If a white hat secures your coins before you move them yourself, any future claim may depend on proving ownership with your device and KYC records.

Users without a way to verify ownership could face a much harder path to recovery.

Link: https://www.ledger.com/blog-coldcard-incident

TL;DR
Ledger explains that the recent Coldcard incident was caused by a firmware bug that weakened the randomness used to generate recovery seeds, making some seed phrases predictable to attackers.

Updating the firmware alone is not enough if your wallet was initialized with affected firmware. Users must generate a brand-new seed phrase and move their funds to a new wallet. Reusing the old seed on another device does not fix the issue.
Ledger says this vulnerability is specific to the affected Coldcard firmware and does not affect Ledger devices.

The incident is a reminder that secure seed generation is critical for any hardware wallet, and users should keep firmware up to date and follow good security practices.