XRP Holders Alerted After $3M Loss Tied to Ellipal Wallet Setup

TLDR

• A crypto teacher warned XRP holders after a user reported losing $3 million worth of XRP.
• The loss happened after the user imported a recovery seed into the Ellipal mobile app.
• This action changed the wallet from cold storage to a hot wallet connected to the internet.
• Ellipal confirmed that the device remained air-gapped and was not the source of the breach.
• Experts reminded XRP holders always to keep recovery seeds offline and never use them in internet-connected apps.

A prominent XRP community voice has issued a direct warning to XRP holders after a user reported losing $3 million in XRP. The case has raised new concerns over wallet usage, configuration, and understanding the difference between cold and hot wallets. The situation now draws widespread attention across crypto forums and security channels.

Ellipal Wallet Interface Prompts Security Debate

XRP community member James Rule shared an image from the Ellipal app showing a “Hot Wallet” creation option. He emphasized that XRP holders should never import seed phrases into hot wallets within the same mobile app. “DO NOT create a HOT WALLET in the @ellipalwallet APP with SEED/RECOVERY Phrases,” Rule wrote on X.

His post included an arrow pointing at the “Add Hot Wallet” option, stirring widespread discussion among XRP holders and wallet users. Many began questioning how an air-gapped cold wallet could be compromised so easily. Soon, Rule linked the victim to a new YouTube channel focused on gold and silver topics.

The claim gained traction as speculation grew about the wallet’s actual configuration. Ellipal responded, stating its wallets remain “100% air-gapped and never connect to the internet.” This prompted more XRP holders to reevaluate their wallet practices and app setups.

Seed Phrase Use Converted Cold Wallet to Hot

The investor, identified as Brandon, reportedly imported his recovery phrase into the Ellipal app on a mobile device. This act effectively changed the cold wallet into a hot wallet, exposing private keys to online risks. Crypto experts agreed that once a seed is on an internet-connected device, it loses cold storage status.

Ellipal clarified that the issue “came from a hot wallet setup, not from the cold wallet itself.” The firm urged users always to keep recovery seeds offline and out of internet-enabled apps. Many XRP holders echoed the advice across online discussions and chat groups.

Because Brandon used a mobile app with an internet connection, attackers were able to remotely access his XRP funds. The theft occurred after this setup change, not through the air-gapped hardware. Ellipal maintained that their device security remained uncompromised throughout the incident.

XRP Holders Urged to Avoid Seed Imports in Mobile Apps

XRP holders have increased scrutiny over mobile apps that manage both hot and cold wallets within the same interface. Experts noted that importing recovery phrases into apps can easily mislead users about the level of security. Thus, they emphasized keeping cold wallets truly offline and isolated.

Users must avoid mixing cold storage principles with internet-enabled applications, especially when handling large XRP holdings. Any such mistake could compromise security, regardless of hardware protections. “Stay safe and always keep your keys offline,” Ellipal concluded in their statement.

XRP holders continue to discuss the event as the case remains under investigation. The warning from James Rule has since circulated widely in the XRP community.

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