Ellipal Hardware Wallet Breach: $3M XRP Vanishes into Sanctioned Money Laundering Networks
Cold storage just got hot—and not in a good way.
The Unbreakable Myth Shatters
Another hardware wallet manufacturer faces the music as Ellipal's security claims crumble under real-world pressure. When users trust metal boxes to protect digital gold, they expect fortress-level security—not screen doors.
$3 Million Disappearing Act
That's not theoretical loss territory—that's life-changing money vanishing into thin air. The XRP didn't just evaporate—it traveled straight into wallets controlled by sanctioned laundering operations. Because nothing says 'secure storage' like funding criminal enterprises.
The Irony of 'Air-Gapped' Security
Ellipal marketed isolation as protection. Turns out the isolation worked better for the thieves than the users. The company's air-gapped technology apparently created a perfect environment—for someone else to walk away with the assets.
Hardware wallets: because sometimes you need to pay extra to learn that 'trustless' still requires trusting someone. Usually the marketing department.
Wallet Confusion and Recovery Challenges Expose Industry Gaps
The XRP victim believed they were using Ellipal’s cold wallet product when actually operating a hot wallet, exposing funds to significantly greater risk.
ZachXBT noted this confusion between custodial and non-custodial products is a widespread industry problem, enabling large-scale thefts.
He frequently observes Coinbase support impersonation scams where victims transfer funds from exchange accounts to compromised wallets after social engineering, with some later stating they didn’t understand the difference.
The victim struggled to quickly contact US law enforcement about the theft.
According to the investigator, few agencies possess the qualifications to handle such cases, and endless victim reports mean incidents get overlooked.
Jurisdictions like the US, Netherlands, Singapore, and France generally provide better support, though outcomes depend on case assignments.
7/ The XRP victim mentioned in a later video how they could not quickly get in touch with US law enforcement for a $3M theft.
There’s few LE qualified to handle such cases and endless victim reports so naturally incidents are overlooked.
In general US, Netherlands,…
Recovery prospects remain extremely low due to delayed reporting to competent private sector parties.
ZachXBT recommends that victims report theft addresses to knowledgeable parties immediately, as otherwise, detecting theft becomes difficult.
Ripple lacks the robust victim support system existing within Bitcoin, Ethereum, Solana, and major EVM chain communities.
ZachXBT attempts to reply to verified thefts, but due to the large volume of over 30 daily requests he receives, he believes that “.”
Huione Network Processes $27 Billion Despite Enforcement Actions
Blockchain analytics firm Elliptic revealed Huione Guarantee and its merchant network received over $27 billion in crypto since 2021, primarily in Tether’s USDT stablecoin.
The Chinese-language marketplace operates through thousands of Telegram channels, with Huione acting as an escrow provider for merchants offering money laundering services, stolen personal data, fake documents, and torture equipment for scam compound workers.
Merchants explicitly advertise willingness to launder proceeds from specific fraud types based on perceived freezing risk.
Telegram shuts down $27 billion Huione crypto scam marketplace but rivals surge 400% volume as criminal networks quickly migrate to successor platforms like Tudou Guarantee.#Telegram #CryptoScamhttps://t.co/xjpxGw5SSo
Huione Guarantee is operated by Huione Group, a Cambodian conglomerate with ties to Cambodia’s ruling Hun family.
One Huione Pay director is Hun To, the cousin of current Prime Minister Hun Manet, who has reportedly been suspected of heroin trafficking and money laundering by Australian police.
Elliptic’s investigation indicates Huione International Payments actively launders scam proceeds globally, with representatives discussing handling $2 million from fraud for 10.5% fees.
Telegram banned thousands of Huione-linked channels and accounts back in May, following Elliptic’s investigation.
However, the criminal ecosystem has shown resilience as Tudou Guarantee immediately absorbed displaced activity after Huione acquired a 30% stake in December 2024.
Tudou’s transaction volumes surged from negligible levels to over 300,000 by mid-June, while smaller platforms like Shuangying tripled to 110,000 transactions.
Chainalysis confirmed Huione’s Core crypto processing infrastructure remained operational despite surface disruptions, with the platform migrating to new domains and resuming Telegram presence within weeks.
Elliptic now tracks over 30 active guarantee marketplaces across Southeast Asia, continuing identical criminal services.
For the benefit of victims, ZachXBT has warned that over 95% of recovery companies are predatory operations charging desperate victims large amounts for basic reports with few actionable insights.
