A Coldcard customer has filed a proposed class-action lawsuit in Ontario against hardware wallet maker Coinkite Inc. and its co-founders, alleging that the company's leadership knew of a flaw in the Coldcard's seed-generation system as early as May 2025 and failed to act on it.

The lawsuit

Plaintiff Amir Reza Naderi filed a statement of claim in the Ontario Superior Court of Justice, naming Coinkite Inc., Rodolfo Novak and Peter D. Gray as defendants. The court file, CV-26-00018158, was issued electronically on September 11, 2026. According to the filing, Novak and Gray are described as co-founders, directors or officers who took part in managing Coinkite and its Coldcard products. The statement of claim is available through the Canadian Bar Association's class action database.

Naderi says he lost 1.22940052 BTC, roughly $79,800, on August 6. He alleges the defendants were aware of the vulnerability from May 2025 onward yet failed to warn customers, and he asks the court to rule that Coinkite violated Ontario's Consumer Protection Act, the province's statute governing consumer transactions.

Naderi is also seeking certification of the case as a class action. If it succeeds, he is asking for both compensatory and punitive damages, and for a litigation trust to distribute whatever money is awarded. In Ontario, a proposed class action must be certified by a judge before it can proceed, and the allegations in a statement of claim remain unproven until tested in court.

The alleged seed-generation flaw

Coldcard is a Canadian-made hardware wallet, a device category built to keep a user's private keys offline. It generates a recovery phrase — the series of words that gives access to a user's bitcoin — and was designed to do so with a special chip built for creating random numbers. In March 2021, a firmware update quietly moved that task from hardware to software.

Coldcard's settings had the chip's built-in random number generator switched off, since Coinkite used its own. A backup tool called Yasmarang, which relies on the chip's serial number and a timer to generate its numbers, was used to create each new seed. As a result, some Coldcard wallets ended up with recovery phrases that were much easier to guess than they should have been.

There were reportedly only about 40 bits of real randomness on the Mk2 and Mk3, far below the 128 bits that the BIP-39 standard assumes. Because each bit of entropy doubles the space of possible phrases, that shortfall leaves a far smaller universe of seeds than the standard contemplates. A technical write-up by Block's engineering team described a predictable RNG fallback and 32-bit reseed in the Coldcard firmware.

How much was stolen

The theft began on July 30, 2026, when an attacker reportedly stole roughly 594 bitcoin, about $38 million, from around 500 wallets in a 25-minute window. Reports from early August put losses above $88 million and more than 1,300 BTC.

A joint analysis by WeirFoulds LLP and Edmonds Marshall McMahon, published on Mondaq on August 7, estimated $116 million in losses across more than 5,200 victims. Cumulative losses are estimated to have passed $140 million. Much of the stolen bitcoin has since been gathered into a few addresses that have not recorded any activity.

Coinkite's response

Coinkite has denied the allegations that it knew about the vulnerability in May 2025. In a technical backgrounder published on July 30, 2026, the company wrote that it was “unaware of the bug until today” and suggested an outside party may have used AI to review its open-source firmware, whose code is publicly available for anyone to inspect, and find the flaw first. The company said its own AI-assisted code review weeks earlier had missed it.

Coinkite has released fixed firmware for all affected models, but it urged Coldcard owners to create new seeds and move their funds to them. The dispute over when Coinkite first learned of the flaw — May 2025, per the plaintiff, or July 30, 2026, per the company's backgrounder — sits at the center of the case.