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A massive theft of Bitcoin and Litecoin, exceeding $282 million, has exposed vulnerabilities in the digital asset space and triggered a significant rally in the privacy coin Monero (XMR). The incident underscores a growing trend of sophisticated crypto scams leveraging social engineering tactics, rather than technical exploits, to defraud investors.
On January 16th, on-chain investigator ZachXBT revealed the scale of the theft, reporting that 2.05 million Litecoin (LTC) and 1,459 Bitcoin (BTC) were stolen from a single victim. The loss highlights the substantial financial risks inherent in the cryptocurrency market.
Hardware Wallet Impersonation Fuels Multi-Million Dollar Loss
The attack centered around a convincing impersonation of Trezor customer service, a leading provider of hardware wallets with over two million users. Cybersecurity firm ZeroShadow confirmed the attackers successfully tricked the victim into divulging their recovery phrase – the key to accessing their digital assets.
“The scammers were able to trick the victim into revealing their recovery phrase, giving the thief complete access to the coins,” a ZeroShadow representative explained. This demonstrates the critical importance of safeguarding recovery phrases and verifying the authenticity of support channels.
Stolen Funds Laundered Through Thorchain and Monero
Immediately following the theft, the perpetrator began laundering the stolen funds through various exchanges. ZachXBT’s investigation revealed a heavy reliance on the decentralized exchange (DEX) Thorchain, used to convert Bitcoin into Ethereum, Ripple, and Litecoin.
The attacker’s frequent use of Thorchain has drawn criticism, with some suggesting the platform is becoming a haven for illicit funds. ZachXBT noted that criminal groups have repeatedly utilized the infrastructure for similar purposes, indicating a persistent vulnerability.
A significant portion of the stolen cryptocurrency was then converted into Monero (XMR), a privacy-focused coin designed to obscure transaction details. ZeroShadow managed to freeze over $1 million before it could be exchanged for XMR, but transactions that proceeded through likely contributed to a substantial price increase.
Monero Price Jumps 36% Amidst Increased Demand
The surge in demand for Monero, driven by the laundering of stolen funds, has resulted in a dramatic price increase. Data from BeinCrypto shows the token rose more than 36 percent in seven days, briefly reaching almost $800 before settling around $621 at the time of writing. “The transactions that went through are likely to increase the price of XMR,” ZeroShadow stated.
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Rise in Identity Theft Fuels Crypto Crime Wave
This incident is not isolated. Blockchain analytics firm Chainalysis has documented a sharp increase in identity fraud within the cryptocurrency sector. The firm reported a 1,400 percent year-over-year increase in such cases, with the average financial damage per victim increasing by over 600 percent.
This trend signals a shift in tactics, with attackers increasingly prioritizing social engineering and brand impersonation over exploiting code vulnerabilities. The growing sophistication of these attacks poses a significant threat to investors and the broader digital asset ecosystem.
The original article, “A $280 million Bitcoin heist causes Monero price to rally” by Oluwapelumi Adejumo, can be found on de.beincrypto.com.
