The Bitcoin hardware wallet Coldcard, long regarded as a "geek's choice," is now under scrutiny in the Ontario Superior Court of Canada. The plaintiffs have filed a class action lawsuit against the manufacturer Coinkite Inc. and its co-founders Rodolfo Novak and Peter D. Gray, alleging that the standard firmware of Coldcard has had fundamental flaws in random number and seed generation design since around March 2021 — insufficiently relying on hardware true random sources and instead using or depending on pseudo-random number implementations including Yasmarang in MicroPython, thereby undermining the unpredictability of the mnemonic phrases. The lawsuit further claims that this defect has resulted in total Bitcoin asset losses for users exceeding $140 million, although this figure currently stands as a unilateral assertion by the plaintiffs. Around October 22, various crypto media outlets concentrated their reporting on this class action lawsuit, quickly shaking the long-standing narrative of "cold wallets are safer" and forcing the entire hardware wallet industry to confront a sharp question: when the security myth is put to the test in court, who is responsible for that string of seeds?

The Myth of Cold Wallets Cracks: Why Coinkite is Being Sued

Before this case emerged, Coldcard had been synonymous with "paranoid security" among Bitcoin geeks and self-custody users. Launched by Coinkite, it featured Bitcoin exclusivity, air-gapped operations, and open-source firmware design; it has long been regarded as the representative brand of a cold wallet "doing one thing and doing it to perfection." In the narratives of many heavy users, entrusting the seed to Coldcard meant minimizing risk — and due to this high level of trust, when it was accused of having fundamental flaws in its firmware, the impact went beyond just a single product, shaking the foundational consensus of "cold wallets are more reliable."

This time, bringing Coinkite to court is a plaintiff reported to be a Coldcard user, Amir Reza Naderi. He has filed a class action suit in the Ontario Superior Court of Canada, naming the defendants as the manufacturer Coinkite Inc. behind Coldcard, along with its co-founders Rodolfo Novak and Peter D. Gray. The case is being processed under class action procedures, but publicly available documents do not indicate whether it has passed the class certification stage. Currently, the technical allegations and loss figures visible to the public come almost entirely from the lawsuit filed by the plaintiffs; as of the time of public reporting, the court has not made substantive rulings on these allegations, nor has Coinkite or its co-founders issued a detailed response, meaning that the case remains in the "display of allegations" phase with considerable uncertainty about how responsibility will be divided.

Random Number Reefs: Yasmarang Allegations Undermining Overall Security

To understand the technical focus of this lawsuit, one must first return to a seemingly abstract issue: random numbers. For any hardware wallet, private keys and seed phrases do not simply emerge out of thin air; they derive from a series of "dice rolls" conducted internally by the device. True random number generators (TRNG) rely on physical entropy sources in the hardware, such as electronic noise or other minute physical fluctuations, providing unpredictable results for each roll; whereas pseudo-random number generators (PRNG) are software algorithms that, if the "seed" or entropy source used at startup is guessed, can theoretically allow an attacker to reconstruct the entire output sequence, thus deducing the user's keys and seeds.

The lawsuit captures this point, alleging that Coldcard's standard firmware design does not employ a hardware TRNG but instead uses or relies on a software PRNG, specifically naming the pseudo-random number implementation Yasmarang in MicroPython, claiming that the relevant random number flaw has existed in firmware versions since around March 2021. For the plaintiffs, if the seed generation process primarily depends on this software pseudo-random scheme, it equates to engineering a hole in the final line of defense for self-custody. However, as of now, publicly available materials show that no independent third party has made a technical ruling on the specifics of Yasmarang's implementation or the overall random number scheme of the Coldcard firmware, indicating that the so-called "random number reef" remains a contested point at the level of accusations, not yet established as a fact by court or security audit.

$140 Million Allegation: Amplifying Panic with Loss Figures

If the random number dispute remains in the realm of technical debate among engineers, the statement in the lawsuit claiming "total losses exceed $140 million" instantly ignites a broader emotional response. The lawsuit asserts that this enormous loss stems from the firmware's random number defect, and media reports around October 22 almost universally placed this figure in headlines and leads, condensing technical details into background information, making $140 million the most immediate and memorable tag for readers.

However, from the publicly available materials, this figure currently exists only in the lawsuit and its reported reiterations, representing a unilateral assertion by the plaintiffs rather than a fact established by the court. The reports did not disclose the specific calculation method for this amount, nor did they provide clear numbers on the affected user count; pending evidence review, it more resembles an unpaid bill awaiting validation. The problem is that such a large loss narrative naturally amplifies user anxiety about "whether self-custody is really safe": on one side, the creed of "holding coins in one's own hands," and on the other, the shadow of "hardware wallets might also have issues". In a situation where there is no substantive court ruling yet, although the legal significance of the $140 million number has not been established, it has psychologically reshaped many people's perceptions of the risk boundaries associated with hardware wallets.

Open Source and Responsibility: Hardware Wallet Manufacturers in the Spotlight

Prior to this lawsuit, Coldcard had positioned "air-gapped isolation" and "open-source firmware" as its trademarks: the standard firmware was available in repositories, claiming anyone could view the code and conduct independent reviews, with even the random number scheme and seed generation logic not hidden. For many self-custody users, this transparency was equated with "greater safety" — as long as the community could see it, it seemed that someone was checking it for them. However, the lawsuit directly targets the random number design, naming the Yasmarang pseudo-random number implementation in MicroPython, claiming a "fundamental flaw" has existed since around March 2021, which pushes what was originally an engineering discussion into the realm of judicial scrutiny, revealing an awkward question: open source does not automatically equate to thorough auditing, nor does it necessarily mean "absolute safety" in the minds of users.

From the perspective of manufacturer responsibility, this case transforms a topic that had previously been discussed mainly at technical conferences into a legal question: to what extent should additional safety audits and risk disclosures be required when choosing between hardware true random number generators and software pseudo-random numbers in firmware design, and who should bear the consequences? The lawsuit claims that Coldcard's standard firmware relies on a software pseudo-random number scheme for random number and seed generation, leading to over $140 million in Bitcoin losses; this assertion currently exists only in the plaintiffs' materials, and the court has yet to rule on facts and responsibilities. The case is advancing through class action procedures in Ontario, and publicly available documents do not show whether the court has completed class certification; if it ultimately enters the substantive hearing stage, the court's specific determination of "whether the firmware defect is established and whether the manufacturer bears responsibility" will likely be viewed as an important reference for safety standards and legal liability boundaries across the entire hardware wallet industry.

How This Lawsuit Will Rewrite Trust in Self-Custody

This class action lawsuit targeting Coldcard's random number and seed generation design has torn open a long-simplified belief: that the so-called "cold wallets" and "air-gapped isolation" do not automatically equate to "absolute safety." When the plaintiffs allege that firmware defects existing since around March 2021 may be related to losses of over $140 million in Bitcoin (a figure that currently only stands as a unilateral claim), self-custody devices are no longer just a mysterious black box; instead, they are drawn back to specific random number schemes, firmware implementations, and auditing processes. For ordinary users, the real focus of learning is shifting from brand reputation to the more "boring" signals of technology and compliance: whether manufacturers clearly disclose their random number design philosophy, whether firmware has undergone independent security audits and published results, and whether responsibility boundaries and emergency mechanisms were defined in advance when risks occurred. For the entire hardware wallet industry, this case is seen as potentially redrawing the standards for firmware security and boundaries of manufacturer responsibility. However, as of now, publicly available materials show no substantive rulings from the court, nor any detailed and widely disclosed technical explanations from Coinkite. All conclusions remain to be verified by subsequent developments; the next steps to watch will be the progress of court procedures in Ontario, possible third-party technical audit reports, and whether Coinkite provides a systematic, formal response that can be verified by the technical community. These public signals will determine whether this dispute about trust in self-custody is ultimately cemented as an industry precedent or merely left as a costly cautionary tale.

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