Crypto Quill

Ripple, the company behind the XRP ledger, has been hit by a massive cyberattack that resulted in the theft of $112.5 million worth of XRP from the personal wallet of its co-founder and chairman, Chris Larsen. The incident, which occurred on January 31, 2024, has raised questions about the security practices and protocols at Ripple, as a blockchain analytics firm has uncovered potential connections between the hacker and an authorized XRP wallet.

How the Hack Happened

According to a report by Hacken, a blockchain auditing platform, the hacker exploited Larsen’s personal wallets and transferred 213 million XRP, worth $112.5 million at the time of the attack, to eight separate wallets. The hacker then used a series of intermediate wallets to launder the stolen funds, eventually depositing some of them to a Binance account.

Hacken claims that the hacker’s strategy was deliberate and complex, suggesting possible inside links to the incident. The firm said that it was “too early for conclusions” but that “two wallets connected to XRP’s authorized wallet played key roles” in the attack.

The Suspicious Wallets

Hacken identified two wallets that had previous transactions with Larsen and were also involved in the subsequent money laundering of the stolen funds. One of them, with an address starting with “rU1bPM4”, had sent $64.6 million in XRP to Larsen in the past. It also sent $37,500 worth of XRP to one of the intermediate wallets used by the hacker.

This wallet also had a connection to a Kraken deposit address, which it had sent nearly $2 million in XRP in 2020. The hacker also used this same Kraken account to divert funds from the attack, Hacken claimed.

The other wallet, with an address starting with “rHyqB”, had received $70.9 million worth of XRP from six of the eight wallets that the hacker had split the stolen funds into. It then sent the funds to another wallet, which eventually deposited some of them to a Binance account.

Hacken said that these two wallets were linked to an official XRP wallet, which could imply a possible inside job or a breach of Ripple’s security systems.

The Implications of the Hack

The hack of Larsen’s personal wallet is one of the largest thefts of XRP in history, and it has shaken the confidence of the XRP community and the cryptocurrency industry at large. Larsen is one of the most influential figures in the crypto space, as he co-founded Ripple, the company that aims to revolutionize cross-border payments with its XRP ledger.

The hack also comes at a time when Ripple is facing a lawsuit from the U.S. Securities and Exchange Commission (SEC), which alleges that the company and its executives, including Larsen, sold unregistered securities in the form of XRP. The legal battle has caused many exchanges and platforms to delist or suspend XRP trading, affecting its price and liquidity.

The hack also raises questions about the security and transparency of Ripple and its XRP ledger, which claims to be fast, cheap, and secure. If the hacker had access to an authorized XRP wallet, it could mean that Ripple has a centralized control over the network, which contradicts its claim of being a decentralized and open system.

The hack also exposes the risks and challenges of storing and managing large amounts of cryptocurrencies, especially for high-profile individuals and entities. The hacker may have targeted Larsen’s personal wallet because of his public exposure and wealth, or because of his involvement in the ongoing SEC lawsuit.

The Response from Ripple and Binance

Ripple has not issued an official statement about the hack, but Larsen confirmed the incident on his Twitter account on February 1, 2024. He said that some of his personal wallets had been compromised and that he was working with law enforcement and security experts to recover the funds and catch the hacker.

He also thanked Binance and its CEO, Richard Teng, for freezing $4.2 million worth of XRP that the hacker had deposited to the exchange. Teng had announced the freeze on his Twitter account on February 2, 2024, saying that Binance was cooperating with Ripple and other authorities to investigate the hack.

Hacken said that it had also contacted Ripple and Binance to share its findings and offer its assistance in the ongoing investigation. The firm said that it hoped that its report would help shed some light on the incident and prevent similar attacks in the future.