Blockchain payments firm Ripple has reportedly fallen victim to a security breach, resulting in a loss of a substantial amount of its native XRP token. News of the hack has called into question the security measures employed by major crypto entities.
Hacker Laundered 213 Million XRP Through Various Exchanges in Separate Transactions
According to on-chain sleuth ZachXBT, who uncovered the hack, Ripple lost approximately 213 million XRP, valued at over $112 million, in the hack.
The source address that orchestrated the hack on January 30, laundered the stolen funds through a series of cryptocurrency exchanges, including MEXC, Gate.io, Binance, Kraken, OKX, HTX, HitBTC, and others. On-chain data revealed that the culprit conducted eight transactions to move the funds to different addresses.
Ripple Co-Founder Chris Larsen Revealed that the Hacked Wallet Belonged to Him
Following initial reports suggesting that the Ripple protocol was hacked, company executives later clarified that the compromised wallet belonged to its co-founder Chris Larsen.
Larsen came out on X to state that an “unauthorized access” had occurred on several of his personal XRP accounts on Tuesday. The executive chairman said that he acted swiftly by notifying exchanges to freeze the affected addresses. He also added that law enforcement is already investigating the matter.
As per data from XRPScan, the hacked wallet called ‘Ripple (50)’ was activated by another wallet named ‘FundingWallet1’ on November 5, 2018. The latter was activated for the first time by Larson’s Ripple account on February 6, 2013, about a month after his main account was created.
Ripple CEO Brad Garlinghouse also weighed in to provide further clarity on the ongoing situation. “Given some irresponsible speculation and reporting, I want to reiterate that NO Ripple-managed wallets were compromised. Full stop”, wrote Garlinghouse in an X post.
The company’s executives have promised to address the security breach. However, it remains unclear how the team will rectify the issue.
XRP Drop by 5% Following News of the Hack
The news led to XRP experiencing a steep decline, dropping by more than 5% and trading at approximately $0.50 on Wednesday.
Now, the Ripple community is calling for the project’s co-founders to disclose their crypto wallets and XRP holdings to improve transparency. Meanwhile, Tony Edward, the host of Thinking Crypto podcast has urged Larsen to “distance himself” from Ripple “as much as possible”.
Based on reports by Rekt, a website that tracks Web3 and crypto hacks, this was the largest cryptocurrency theft so far in 2024, and the 20th largest cryptocurrency hack in history.
Last year, hackers were responsible for stealing around $2 billion in cryptocurrencies through various security breaches on crypto platforms.
Major Crypto Exchanges Have Frozen Addresses Linked to the Hack
A spokesperson for Binance said that the exchange is aware of the event and is “actively supporting the investigation”. Kraken also confirmed its knowledge of the hack and said the company has undertaken a “proactive review of open source” to identify similar incidents, engage with victims, and prevent the exchange from being used for illicit activities like money laundering.
Ripple is a decentralized network that specializes in cross-border remittances. Ripple Labs, the company behind the blockchain operates a protocol called RippleNet, which is focused on serving banks and other financial institutions.
Ripple vs SEC
In 2020, the US Securities and Exchange Commission (SEC) sued Ripple Labs over claims that it violated federal securities laws by selling XRP tokens without registering them as securities with the regulator. Larsen was directly named in the lawsuit.
However, Ripple secured a major victory over the financial watchdog after a judge ruled in July 2023 that XRP did not fall under the category of securities and that the company had not committed any fraud in the sale of the tokens as they were distributed to investors through crypto exchanges. The court determined the transaction to be legitimate as Ripple Labs did not sell XRP directly to investors, in which case the tokens would be considered securities.
At the time of writing, Ripple (XRP) is trading at $0.4961 – down 3% in the last 24 hours.
The XRP hack story is still developing and there will be further updates.