Blockstream's Jade team details firmware hardening as Coldcard losses pass $115 million

The Jade firmware team at Blockstream published its response to the Coldcard failure on Tuesday, describing what it changed in firmware 1.0.41 and how it tested its own key generation. The release upgrades the device runtime, increases stack protection, updates dependencies and audits the clearing of sensitive memory regions. The team says it has received dozens of automated scans of the Jade codebase generated by artificial-intelligence tools, plus additional human reviews, and that analysis of deep scans by the open-weight model Kimi K3 found the Jade entropy design unaffected by the defect that hit its competitor.

The underlying incident remains one of the largest self-custody failures of the year. Coinkite, the maker of Coldcard, warned on July 30 that recovery phrases created on a Coldcard Mk3 running firmware 4.0.1 or later could be at risk. The root cause was not a smart-contract bug or a phishing campaign. The firmware did not draw from the device's hardware random number generator during seed creation and fell back to a weaker software source, so some devices produced recovery phrases with far less randomness than the standard requires. An attacker who can enumerate that reduced space can reconstruct private keys directly and sign valid transactions.

Loss estimates have grown as researchers traced more addresses. Galaxy Research tallied more than $115 million in confirmed Coldcard-linked losses using data through August 13, verifying 1,596 bitcoin taken from roughly 7,300 addresses across three waves and identifying a suspected fourth wave. Rekt News, which catalogues on-chain thefts, lists the incident alongside the year's protocol exploits. No funds have been recovered and no attacker has been publicly identified. Patched firmware protects only seeds generated after the update, so affected users must create a new seed and move their coins.

The wider point the Jade team makes is about method rather than product. Cheap automated code review now points at the same open-source firmware repositories that wallet vendors, node operators and signing devices share, and defects that sat undiscovered for five years are being surfaced by whoever runs the scan first. Vendors and attackers are now working with the same tooling to find these flaws, and whoever finds one first determines whether it becomes a patch or an exploit.