Ellipal Hardware Wallet Breach: User Loses $3M in XRP to Criminal Launderers

Ellipal Hardware Wallet Breach: User Loses $3M in XRP to Criminal Launderers

A cryptocurrency holder in the United States lost $3.05 million in XRP after their Ellipal wallet was hacked. The stolen funds were traced to money laundering networks associated with Huione, a Southeast Asian criminal marketplace. An investigation by blockchain analyst ZachXBT unveiled that the assailant had executed numerous Ripple-to-Tron conversions before laundering the funds.

Key Takeaways

A US user lost $3.05 million in XRP after their Ellipal wallet was hacked.
The breach involved fraudulent transactions linked to Huione, a sanctioned criminal marketplace.
The victim mistakenly believed they were using a cold wallet instead of a riskier hot wallet.
Recovery efforts are complicated by the lack of timely reporting and effective law enforcement response.
Huione has laundered significant sums, emphasizing the need for better user understanding of wallet security.

Understanding the Incident

A US cryptocurrency holder recently lost a staggering $3.05 million worth of XRP when their Ellipal wallet was compromised. Investigations by blockchain analyst ZachXBT tracked the stolen funds to money laundering operations connected with Huione, a criminal marketplace under international sanctions in Southeast Asia.

After analyzing the breach, ZachXBT reported that the attacker executed more than 120 Ripple-to-Tron conversion transactions via the Bridgers exchange on October 12, 2025, and by October 15, the funds had been completely laundered through over-the-counter transactions in proximity to Huione's illicit operations.

The victim's wallet address, identified as r3cf5***Jjkzc, was cross-referenced with data from a viral YouTube video discussing the theft. Unfortunately, the victim lacked experience and could not provide sufficient information on how their wallet was compromised, only indicating user error.

ZachXBT shared the news on social media, highlighting the critical lessons from this unfortunate event for others in the crypto community.

Confusion Surrounding Wallet Types

The victim mistakenly thought they were using Ellipal's cold wallet, enabling a greater risk exposure because they were, in fact, operating a hot wallet. ZachXBT pointed out that this common confusion about custodial and non-custodial wallets often leads to substantial thefts in the industry. He frequently comes across situations where victims, after falling for scams, mistakenly transfer funds from exchanges to compromised wallets due to social engineering tactics, sometimes not realizing the risks involved.

Additionally, the victim faced challenges in rapidly contacting US law enforcement regarding the incident. With few agencies equipped to handle such cases, many reports by victims fall through the cracks. Regions such as the US, Netherlands, Singapore, and France generally offer better support, but the success of recovery efforts is contingent upon case assignments.

ZachXBT noted that recovery chances remain slim due to delayed reporting to competent private sector entities. He urged potential victims to report theft addresses to knowledgeable individuals as soon as possible, as this expedites the detection of such illicit activities. Unlike Bitcoin, Ethereum, Solana, and major EVM chains, XRP lacks a robust support system for victims. Due to the volume of daily inquiries he receives, ZachXBT emphasizes that "self-custody is not the right solution for the vast majority of users."

Huione's Extensive Crime Network

According to blockchain analytics firm Elliptic, Huione Guarantee and its merchant network have processed over $27 billion in cryptocurrency since 2021, mostly in Tether’s USDT stablecoin. This Chinese-language marketplace operates through numerous Telegram channels, where Huione acts as an intermediary for merchants engaged in money laundering, providing stolen data, fake documents, and dubious services.

Elliptic's research revealed that Huione successfully launders proceeds from various scams, including pig butchering scams, investment fraud, human trafficking, and crypto hacks across Southeast Asia. Recently, the US Treasury implemented additional restrictions against Huione related to a $15 billion seizure linked to the Prince Group.

Despite previous crackdowns, the Huione network has shown remarkable resilience, as competitors experienced a 400% increase in transaction volume after Huione’s shutdown. Coinciding with this, a take-over of new platforms like Tudou Guarantee evidenced an immediate absorption of Huione's activity.

ZachXBT cautions victims about the prevalence of predatory recovery firms that exploit despair, charging exorbitant fees for minimal assistance. He highlights the importance of understanding the risks associated with cryptocurrency transactions to avoid falling victim in the future.