Investor Reports Multi-Million Dollar XRP Theft

An XRP holder has claimed to have lost 3 million dollars worth of tokens in what was initially believed to be a cold wallet breach.

The incident immediately drew attention from the crypto community as users questioned how funds stored offline could be compromised.

The investor stated that the assets were kept in a self-custody wallet known for offline security features.

After an internal review, however, the wallet manufacturer clarified that the affected wallet had been re-imported using its seed phrase into an online interface, effectively converting it into a hot wallet.

Cold vs Hot Wallet Confusion

Cold wallets are designed to remain disconnected from the internet, making them nearly impossible to hack remotely.

Once a user imports the seed phrase into an internet-connected app or device, the wallet becomes “hot,” meaning private keys can be accessed online.

In this case, the wallet maker emphasized that the loss was not caused by a breach of its hardware or encryption. Instead, the user’s action of importing the seed phrase exposed the funds to potential phishing or malware-based theft.

Security Experts Weigh In

Blockchain investigators tracking the stolen funds confirmed that the XRP was quickly split into multiple addresses and routed through decentralized exchanges.

This pattern matches recent high-value crypto thefts involving phishing attacks or compromised browser extensions.

Experts warn that this type of incident highlights user behavior as the main vulnerability, rather than flaws in cold storage hardware itself.

Even secure wallets can become compromised if users import private keys or connect devices to online interfaces without strong security protocols.

Lessons for Crypto Holders

Security specialists recommend that investors never import cold wallet seed phrases into any software wallets, websites, or mobile apps.

Instead, users should treat cold storage as permanent offline vaults and only transfer small test amounts when needed.

In addition, keeping operating systems clean, using hardware firewalls, and verifying URLs before interacting with wallet interfaces can drastically reduce the risk of phishing or malware compromise.

Outlook

As the investigation continues, the stolen XRP remains traceable on the blockchain, though recovery is unlikely. The case serves as a critical reminder that seed phrases must remain offline to ensure genuine cold storage protection.

Even the best hardware wallets cannot defend against user errors that inadvertently expose private keys to the internet.