PANews reported on October 20th that, according to Cryptopolitan, Brandon Laroque, a retired American in North Carolina, discovered that over $3 million worth of XRP had disappeared while checking his balance on the Ellipal mobile app on October 15th. Laroque admitted that he didn't expect to recover the funds, but hoped the story would serve as a reminder to others to keep cold wallets offline. He subsequently reported the incident to the FBI and other authorities, but faced difficulties in quickly contacting professional investigators.

On October 18th, Ellipal released a statement stating that an internal review discovered that Laroque had entered the seed phrase of a hardware wallet into the app, turning cold storage into a hot wallet. The app also uses a blue background to represent cold wallets and an orange background to represent hot wallets. The company emphasized that it had never experienced a theft and insisted that this incident was user error. While unable to prove the technical details of the theft, it confirmed that entering the seed phrase eliminated all protections. Chainalysis investigator ZachXBT analyzed that the stolen XRP, after being aggregated on the Tron network, was sent to multiple over-the-counter brokers associated with Huione. The funds have been dispersed across numerous addresses, making recovery virtually impossible.