In the world of cryptocurrency, the shadows of security vulnerabilities and financial crimes have never dissipated. Recently, a massive theft case involving over $3 million in XRP has quickly unraveled the notorious money laundering network in Southeast Asia—Huione Group—leading to a run on withdrawals at its Cambodian branch. Even more shocking is the close connection between this series of events and the U.S. Department of Justice's previous seizure of $10 billion worth of Bitcoin from Chen Zhi, the main perpetrator of China's "pig butchering" scams. This complex chain reaction of cryptocurrency theft, money laundering, sanctions, and bank runs not only sounds the alarm on digital asset security once again but also profoundly reveals the covert operations of cross-border crypto crime networks and their potential threat to global financial stability.
- Massive XRP Theft: Ellipal Wallet Security Alarm Raised
An American investor recently suffered significant financial losses when their Ellipal hardware wallet was hacked, resulting in the loss of $3.05 million worth of Ripple (XRP). The victim released a video this week about the theft, highlighting the serious security risks currently present in the cryptocurrency field.
Money Laundering Pathway: The stolen funds were quickly transferred through active bridge operators and ultimately laundered through certain over-the-counter (OTC) channels, which are evidently closely related to the Huione Group. According to ZachXBT, the attackers created over 120 orders to swap XRP for TRON, completed through Bridgers (formerly SWFT), and these transactions can now be viewed on Binance's block explorer. By October 15, these funds had been completely drained.
Wallet Security Chaos: The victim in the video clearly lacked experience and did not provide sufficient details about the intrusion incident. There is widespread suspicion that this breach was due to user error, highlighting the frequent confusion between custodial and non-custodial products. The XRP victim mistakenly believed they were using a cold wallet, but in reality, it was a hot wallet, a misunderstanding that often leads to large-scale thefts. Experts are calling for product manufacturers to clarify these distinctions.
Lack of Victim Support: The victim stated that it was difficult to get U.S. law enforcement to keep up, and very few legal institutions are qualified to handle such complex cryptocurrency cases. The Ripple community currently lacks a comprehensive victim support system, while the Bitcoin and Ethereum ecosystems have provided more robust support.
- Huione Group: The "Transfer Station" of the Money Laundering Network and Sanction Storm
Huione Group, a large financial group based in Cambodia, operates various business segments, including cryptocurrency wallets, payments, trading guarantees, insurance, and cryptocurrency exchanges. However, it has long faced international regulatory pressure due to allegations of money laundering, online fraud (such as "pig butchering"), and illegal trading.
Connection to the Chen Zhi Case: The stolen funds were transferred to an OTC market near Huione. Historically, Huione has actively assisted in laundering billions of dollars in illegal funds, including those from "pig butchering" scams and human trafficking. U.S. regulators recently imposed sanctions on the platform, which are related to the seizure of $15 billion in assets from Prince Group Chairman Chen Zhi (actually $12 billion in Bitcoin).
Escalation of U.S. Sanctions: The U.S. Office of Foreign Assets Control (OFAC) has imposed comprehensive sanctions on 146 targets within the Prince Group transnational criminal organization, headquartered in Cambodia and led by Chen Zhi, which operates a transnational criminal empire through online investment scams targeting the U.S. and other global regions. Meanwhile, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has formally isolated Huione Group from the U.S. financial system under Section 311 of the USA PATRIOT Act, labeling it a major channel for laundering cryptocurrency fraud and related network crime proceeds.
Strict Controls by OKX: OKX CEO Star stated on X platform that, given the potential risks associated with Huione Group, OKX has implemented strict control measures for transactions involving the group. All cryptocurrency asset deposits or withdrawals related to Huione will undergo compliance investigations, and the platform may take measures such as freezing funds or terminating account services.
- Cambodia's "Bank Run" Doubts: Trust Crisis at Huione Branches
Closely related to the XRP theft case and U.S. sanctions is the phenomenon of withdrawal runs at Huione Group's branches in Cambodia.
Massive Queue for Withdrawals: On October 17, several Huione Group branches in Cambodia experienced large queues for withdrawals, with the number of people lining up at branches in Phnom Penh and Sihanoukville ranging from dozens to hundreds, extending outside the premises.
Sanctions Trigger Panic: This "bank run" stems from U.S. sanctions against Chen Zhi, Chairman of the Prince Group. Market rumors suggest that these sanctions will impact Huione's assets.
History Repeats: In March 2025, the banking license of its payment platform Huione Pay was revoked by the National Bank of Cambodia, leading to difficulties in user fund withdrawals and triggering a large-scale bank run.
- Huione's Compliance Transformation and Challenges: Can Money Laundering Risks Be Reduced?
In the face of widespread international attention and sanction pressure, Huione Group is also attempting to undergo a compliance transformation.
Clear Business Bottom Line: After being frozen $29.62 million in USDT by Tether for receiving funds from the stolen cases of cryptocurrency exchanges DMM and Poloniex in July this year, Huione Guarantee's official website added a special reminder, clearly stating that it does not guarantee any business related to serious criminal activities such as cryptocurrency theft, human trafficking, drug trading, arms trading, and terrorism, as well as any financial flows involving the U.S. and cross-chain mixing laundering activities.
Reduction in Risk Fund Proportion: Bitrace conducted a risk fund audit on six newly disclosed business addresses of Huione and found that the proportion of risk funds in the inflow had significantly decreased (from 7.70% to 2.70%). The inflow of black and gray market funds has noticeably improved, with significant reductions in high-risk funds from money laundering, online gambling, and fraud.
Compliance Challenges: Despite improvements, Bitrace pointed out that these new business addresses do not have a sufficiently long operational history, and the data currently available may not accurately reflect Huione Guarantee's compliance progress. The expansion of the cryptocurrency industry and the proliferation of risk funds have placed increasing compliance pressure on Web3 institutions, and the lack of ability to identify the risk of funds in user addresses may impact platform operations and even lead operators into the risk of being investigated.
Conclusion:
The massive XRP theft case, the bank run crisis at Huione Group, U.S. sanctions against Chen Zhi, and the recovery of billions of dollars in Bitcoin collectively reveal the complexity, concealment, and threat of cryptocurrency crime networks to global financial stability. This chain reaction event once again emphasizes the importance of strengthening KYC (Know Your Customer), KYT (Know Your Transaction), and international judicial cooperation in the cryptocurrency field. For investors, personal safety and wallet management are crucial; for regulatory agencies, it is essential to continuously improve the regulatory framework to sever criminal networks; for cryptocurrency platforms, compliance transformation and risk control are the cornerstones of survival and development.
Related Reading: "Financial Times": Chinese Tech Giants Suspend Hong Kong Stablecoin Plans Under Guidance from Central Bank and Cyberspace Administration
Original Article: “Huione Domino Collapse: Tied to Massive XRP Theft and Bank Run Crisis at Its Cambodia Branches”
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