Key Takeaways
- A retiree lost $3 million in an XRP hack after mistakenly using a hot wallet instead of secure cold storage.
- Blockchain investigator ZachXBT traced the stolen coin to a sanctioned laundering network in Southeast Asia.
- The incident has sparked a warning that over 95% of crypto recovery firms are predatory.
Table of Contents
A Costly Misunderstanding in Self-Custody
In a catastrophic XRP hack, a U.S. retiree lost his entire life savings of $3 million. The victim, Brandon LaRoque, saved 1.2 million XRP over eight years for his retirement.
The incident occurred not due to a defect or bug in the Ellipal hardware wallet itself, but from a critical user error. How did it start? LaRoque had imported his cold wallet’s seed phrase into the Ellipal mobile app, inadvertently converting his secure offline storage into a vulnerable hot wallet connected to the internet.
Read also: Crypto Scammer Impersonates UK Police Officer, Steals $2.8M BTC in Sophisticated Cold Wallet Threat
The Sophisticated Laundering Trail
The aftermath of the XRP hack reveals a highly organized criminal operation. ZachXBT, a noted blockchain investigator, was able to meticulously follow the stolen funds, which were swiftly broken up and moved through more than 120 cross-chain swaps.
Within just three days, the $3 million was laundered through over-the-counter (OTC) desks linked to Huione, a Cambodian payments network that was recently sanctioned by the U.S. Treasury for facilitating billions in illicit transactions, meaning there is virtually no chance the money can be recovered.
Read also: Deepfake Crypto Scam Swindles Welsh Pensioner Out of £60,000
A Warning Against Predatory Help
Following the XRP hack, ZachXBT gave a clear warning about the secondary industry that exploits victims. He reported that over 95% of crypto recovery companies are scams and charge unconscionable fees for a simple blockchain report, plus give false hope to their victims.
This is a painful lesson in the need for a real understanding of self-custody mechanisms, and the harsh reality that in situations where crypto has been stolen, it is nearly always gone for good.
FAQs
How did the hacker actually gain access to the victim’s funds in this major XRP hack incident?
The victim of this XRP hack imported his cold wallet’s private seed phrase into the Ellipal mobile app. This action transformed what should have been an offline “cold” wallet into an internet-connected “hot” wallet, which was then compromised.
Can the stolen funds be recovered?
The prospects are extremely low. The funds were quickly laundered through a sophisticated, sanctioned network, and law enforcement often lacks the resources to pursue such cross-border crypto crimes effectively.
What is the biggest lesson from this hack?
Never enter a cold wallet’s seed phrase into any software or internet-connected app. The seed phrase should only ever be stored physically and offline. Furthermore, be highly skeptical of any firm that promises to recover stolen crypto.
For more crypto scam stories, read: Cambodian Pig Butchering Syndicate Loses $15B Bitcoin in Historic DOJ Seizure
