XRP holders who use hardware wallets for long-term storage are facing renewed scrutiny over how securely their private keys are generated, following a major vulnerability in Coldcard wallets that recently enabled a large-scale Bitcoin theft.
Coldcard vulnerability exposes private key security risk
Ripple Bull Winkle, a known crypto researcher, drew attention to rising risks after hackers exploited a flaw in Coldcard wallet firmware to drain millions in Bitcoin. He referenced Galaxy Research data showing that approximately $89 million in Bitcoin was initially stolen from 4,585 addresses, with the total loss later increasing to about 1,816 BTC, valued at $114 million, across more than 5,200 wallets.
This theft stemmed from a firmware update Coldcard released in March 2021. That update shifted the wallet’s seed generation method from hardware-based randomness to software-based randomness, which allowed attackers to predict the keys and access the funds remotely. Public blockchain data, combined with the weak key generation, enabled hackers to offline-search for exposed keys and move funds to their own addresses without ever physically touching the affected devices.
According to technical investigators, the vulnerability made it possible to reconstruct wallet seeds using only addresses visible on the blockchain. The attackers did not require any form of physical contact with the compromised wallets, heightening concerns for users trusting cold storage solutions.
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The Coldcard incident showed that storing crypto offline is not enough—if a wallet’s key generation is flawed, private keys can still be targeted.
Galaxy Research, a blockchain analysis firm, tracked the development of the case and reported that the attack affected multiple waves of victims, with more addresses being compromised as investigations deepened.
| Incident Detail | Key Figure |
|---|---|
| First 3 waves lost BTC | $89 million |
| Total BTC lost (all waves) | $114 million |
| Wallets affected | 5,200+ |
| Year firmware vulnerability introduced | 2021 |
Ripple Bull Winkle offers Tangem as a security alternative
In response, Ripple Bull Winkle pointed XRP holders toward Tangem as an alternative hardware wallet option. Tangem is a company that produces smartcard-based hardware wallets, using a different approach to key generation and security.
According to Bull Winkle, Tangem wallets generate the private key directly on the card using hardware-based randomness certified by security authorities. The private key never leaves the physical smartcard, and the device does not generate a traditional seed phrase, which is often required in other wallets. He emphasized that Tangem’s process is comparable to the security technology used in modern biometric passports.
The primary distinction, Bull Winkle argued, lies in how and where the private key is created. Unlike standard hardware wallets that might have flaws in their software or firmware implementation, Tangem’s direct-on-card technology seeks to eliminate these risks by keeping the cryptographic process isolated from external systems.
Mini dictionary: Tangem, a Swiss fintech company, develops hardware wallets shaped like smartcards. These wallets generate and store private keys within secure chips, relying on certified hardware randomness for enhanced safety, and do not use traditional seed phrases.
Ripple Bull Winkle argued that Tangem’s card-based solution generates private keys using certified hardware randomness, ensuring the sensitive credentials remain safely on the card and never exposed to software vulnerabilities.
Key lessons for XRP holders
The Coldcard attack served as a real-world example that “offline” storage alone does not guarantee security. The critical factor, according to Ripple Bull Winkle, is not whether a device is connected to the internet but the method it uses to create and store private keys.
His message to XRP holders focuses on the process and standards behind wallet security, advising them to look beyond hardware labels and examine whether the system behind their wallet properly secures their keys.
As the threat landscape evolves, users maintaining significant holdings in $XRP and other cryptocurrencies are urged to stay alert to wallet security developments and scrutinize the technical foundations of any custody solution.
