Solana wXRP Faces $290 Million Security Scare... "My Coins Might Get Stolen Too"

▲ Hacking. Cryptocurrency trading/ChatGPT generated image

A warning has been issued that wrapped XRP (wXRP) issued on the Solana network could be exposed to structural vulnerabilities similar to a recent large-scale hacking incident.

According to virtual asset specialized media outlet Coingape on April 20 (local time), XRP Ledger (XRP Ledger) validator VET pointed out that wXRP circulating in the Solana (SOL) ecosystem inherently carries security risks as it relies on an intermediary structure and cross-chain infrastructure. VET emphasized via X (formerly Twitter) that “as demonstrated by the KelpDAO hacking incident utilizing LayerZero, issued assets inevitably carry counterparty risk.”

This warning was raised immediately after the KelpDAO hacking incident on April 18. At that time, the attacker unauthorizedly minted approximately 116,500 rsETH, a liquid restaking token, and then used it as collateral to borrow and exfiltrate Ethereum (ETH) and WETH from DeFi lending platforms such as AAVE V3. The stolen amount reached $292 million, and the funds were reportedly laundered through Tornado Cash.

While VET positively evaluated wXRP's ability to provide XRP exposure opportunities in Solana-based applications, he also pointed out its fundamental limitations in terms of security. He explained, “wXRP is merely an issued asset, and compared to native XRP held directly, the level of risk is significantly higher.” He further warned, “Investors must clearly understand the structure and risks of the assets they hold.”

Following the KelpDAO incident, cross-chain related protocols immediately took action. The Flare network temporarily suspended FXRP transfers between major networks such as Ethereum and Base. This is a proactive measure to halt bridge functionality until the investigation is complete, and currently, users holding FXRP on networks other than Flare are restricted from redeeming their assets.

This incident has brought the security of wrapped assets and cross-chain bridges to the forefront as a key risk across the entire market. Concerns are also being raised that potential defaults related to KelpDAO could spread to major DeFi protocols like Aave, leading to a contraction in investor sentiment. As the awareness that asset custody safety should take precedence over technical convenience grows, wXRP security measures within Solana and the resolution process of the KelpDAO incident are emerging as variables that will determine the future direction of the market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*