Flaw ‘Ill Bloom’ endangers thousands of crypto wallets

Blockchain security firm Coinspect warned on Sunday that a flaw it calls “Ill Bloom” could expose thousands of crypto wallets across Bitcoin, Ethereum, Polygon, Rootstock, Tron and Solana. The firm reported at least $5 million has been drained from exploited addresses since May 27 and released a wallet-checking tool while noting hardware wallets appear unaffected.

Coinspect traced the problem to weak randomness in recovery phrase generation in some software wallets, identifying an insecure pseudorandom number generator used when creating seed phrases. The firm said vulnerable addresses include wallets generated as early as 2018 and that the issue is more common in lesser-known mobile software wallets.

Coinspect’s data shows an attack on May 27 affected 431 wallets out of 2,114 flagged as vulnerable, draining roughly $3.1 million. Another $2 million was moved from exposed wallets on Sunday. The company cautioned that additional exploits on other networks and addresses may not yet be identified.

The firm is withholding technical details of the active exploit to limit further harm but provided a wallet-checking tool so users can verify whether specific addresses are potentially exposed. Current evidence indicates seeds generated with hardware wallets are not affected, and most mainstream software wallets do not appear vulnerable.

Security firm SlowMist reported it is monitoring the Ill Bloom alert. Similar weaknesses in seed entropy have occurred before: in 2023 a browser-extension version of a mobile wallet produced limited entropy that reduced mnemonic combinations to about four billion and was patched before funds were taken, and a separate 2023 flaw in a wallet implementation allowed roughly $900,000 to be taken through private-key brute forcing.

Coinspect urged users to run the checking tool and to review recent transactions for any unauthorized moves.