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News/XRP Slumps After Hack Hits Ripple Co-Founder's Accounts

XRP Slumps After Hack Hits Ripple Co-Founder's Accounts

Van Thanh Le

Feb 1 2024

4 months ago3 minutes read
Cubic-styled robot as a digital detective in a cyberpunk VR office, investigating the XRP hack

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Millions in XRP Swiped from Ripple Co-founder, But Price Weathers Storm

Cryptocurrency markets reeled after news broke that hackers accessed and drained millions of XRP from the personal accounts of Ripple co-founder Chris Larsen. Crypto detective ZachXBT first brought this to light, initially mistaking it for a Ripple-wide breach. The scale of the heist was staggering, with hackers siphoning off about 213 million XRP tokens, roughly equating to $112.5 million.

Larsen's quick thinking led to an immediate response. He alerted various exchanges to freeze the compromised addresses, a move that brought law enforcement into the fray. 

The stolen funds traced a complex path across multiple exchanges, including MEXC, Gate, BinanceKrakenOKXHTX, and HitBTC, revealing the intricate nature of the crypto world. The market reacted swiftly and sharply to the news, with XRP's value taking a 4.1% hit, dropping to $0.50. 

This downturn triggered a cascade of liquidations in leveraged XRP positions, predominantly longs, culminating in over $4 million worth of XRP positions being wiped out, inflicting about $3.8 million in losses.

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This breach not only exposed vulnerabilities in personal cryptocurrency accounts but also spotlighted the potential for significant unauthorized transfers. It marked one of the most notable security breaches in the cryptocurrency realm in 2024, underscoring the persistent challenges in safeguarding digital assets.

However, in a remarkable display of resilience, XRP's price demonstrated a quick recovery, stabilizing soon after the initial shockwave. The ongoing investigation seeks to recover the stolen assets and bolster defenses against future unauthorized access, highlighting the dynamic and ever-evolving landscape of cryptocurrency security.

Ripple CEO Assures Users After $112.5 Million Theft: "No Company Wallets Compromised"

Ripple CEO Brad Garlinghouse tackled rumors head-on with a clear-cut statement: "NO Ripple-managed wallets were compromised. Full stop." This response came amidst swirling speculations following a significant breach of Ripple co-founder Chris Larsen's personal XRP accounts.

In a swift move to quell anxieties, Ripple's leadership stepped in to assure investors and users of the platform's robust security. Larsen himself clarified that the breach was restricted to his personal accounts, leaving Ripple’s managed wallets unscathed.

Further clarifying the situation, a community note disseminated on social platforms asserted Ripple’s infrastructure remained secure, aiming to dispel any myths about the breach’s reach.

The situation got muddied by the misattribution of Larsen’s compromised account to Ripple in XRP block explorers. A notable absence of Larsen's co-founder status in the community note fueled discussions around accuracy and transparency in blockchain reporting.

This hack, a record-breaker for the year, underscores the ever-present challenge of securing digital assets. It unfolded against a backdrop of about $2 billion in cryptocurrency thefts the previous year, spotlighting the unending war against cyber threats in the crypto world.

In a silver lining, efforts by the XRP Ledger Foundation (XRPLF) managed to freeze some funds, staving off further drops in XRP's price. On January 31, a record was set with 217 million $1M+ transactions, marking a first since the July ruling declaring XRP not a security. Notably, major wallet holders held back from selling off their XRP, signaling trust in its future value despite the recent dip. However, following the broader market movement, XRP still fell to as low as $0.49.

XRP-Ledger-XRP-1m -txs.png
 On January 31, a record of 217 million transactions worth $1 million or more was set. Source: Santiment

Ripple's reaction post-breach focused on bolstering confidence in its security measures and the resilience of the larger crypto market. The episode underscores the necessity for stringent security protocols and vigilant management of cryptocurrency accounts.

Updated February 2nd, 2024: A significant portion of the hacked funds, about 212.68 million XRP ($105 million), was traced to various cryptocurrency exchanges, while 25 million XRP ($12.35 million) was moved to a new wallet. Binance CEO Richard Teng announced that $4.2 million worth of the stolen XRP was frozen on Binance, a small fraction of the total stolen amount but at least it helped. 

Meanwhile, Ripple has returned 800 million XRP, worth $404.86 million, to its accounts following an unusual transfer activity. This move comes after a substantial unlock of XRP from Ripple's escrow accounts, which has led to discussions about its impact on the XRP market price. Ripple plans to conclude its XRP escrow transactions by April 2027. 

Conclusion

The Ripple hack exposed individual vulnerabilities but also showcased the community's swift response and the resilience of the XRP ecosystem. While millions were stolen, the swift action to freeze funds and Ripple's clear communication helped stabilize the market. This incident serves as a stark reminder of the need for robust security measures in the ever-evolving world of cryptocurrency.

FAQs

1. Was Ripple itself hacked?

No, Ripple's company wallets were not compromised. The hack targeted Ripple co-founder Chris Larsen's personal accounts, highlighting the importance of individual security practices.

2. How did the XRP price react to the hack?

The price initially dipped 4.1% but quickly recovered, demonstrating the market's confidence in Ripple's security and the broader XRP ecosystem.

3. What steps are being taken to prevent future hacks?

The XRP Ledger Foundation is working to improve security protocols and raise awareness about individual account protection measures. Law enforcement is also investigating to recover stolen funds.

4. What does this mean for the future of XRP?

Despite the hack, major XRP holders remain confident in its future value. The swift response and resilience shown by the community suggest a positive outlook for XRP's continued growth and development.

This article has been refined and enhanced by ChatGPT.

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