The truth behind Monero's surge? On-chain detective ZachXBT steps in, pointing to a $280 million crypto theft case

Hardware wallet social engineering scam outbreak, a single user loses $280 million, hackers turn to Monero for money laundering, triggering market and regulatory shocks, and setting a new record in crypto history safety alarms.

Monero $XMR surges, ZachXBT points to a theft case

The cryptocurrency industry experienced one of the largest personal asset thefts in history at the beginning of 2026. According to on-chain detective ZachXBT’s investigation, around 7:00 AM Taipei time on January 11, a cryptocurrency holder was targeted by a carefully crafted social engineering scam involving a hardware wallet, losing assets worth over $280 million.

Image source: X/@zachxbt ZachXBT’s investigation shows that a cryptocurrency holder was deceived by a meticulously designed social engineering scam involving a hardware wallet, resulting in a loss of over $280 million worth of assets.

The victim reportedly was misled by someone impersonating Trezor customer support, a hardware wallet brand, who tricked them into revealing their hardware wallet seed phrase, leading to complete control loss. After gaining control, the attacker immediately emptied the assets from the compromised address, including approximately 1,459 BTC and up to 2.05 million LTC.

Based on market value at the time, this loss is extremely staggering, highlighting that even with hardware wallets for cold storage, insufficient security awareness can still fall prey to social engineering threats. It also rings the alarm again for the crypto community regarding non-technical attacks. This incident is considered one of the largest thefts in crypto history targeting a single wallet holder, even surpassing the previous 243 million social engineering cases tracked by ZachXBT.

Privacy coins become the top choice for money laundering, attackers use instant exchange services to hide traces

After acquiring the assets, the attacker demonstrated highly skilled and rapid money laundering techniques, attempting to completely sever the funds’ traceability.

ZachXBT observed that the hackers quickly converted large amounts of BTC and LTC into highly anonymous privacy coins: Monero $XMR, via multiple no-KYC “Instant Exchange” platforms.

In addition, some of the stolen Bitcoin was cross-chain transferred via the decentralized cross-chain protocol THORChain to different blockchain networks. Data shows that the hackers dispersed 818 BTC (worth about $78 million) into 19,631 ETH, 3.15 million XRP, and approximately 77,000 LTC.

Despite the hackers’ sophisticated methods, cybersecurity firm ZeroShadow stated that within 20 minutes of the incident, they successfully identified and intercepted some of the flows, freezing about $700,000 of stolen funds before they were fully converted into privacy assets. Currently, several related wallet addresses are under surveillance, such as the consolidated address 0b4fc3e holding about 43.7 million BTC, and bc1qpsmh which has received over 1,108 BTC. These funds are continuously being split and transferred, making tracking exponentially more difficult.

Image source: ZeroShadow Cybersecurity firm ZeroShadow states that within 20 minutes of the incident, they successfully identified and intercepted some of the flows, freezing about $700,000 of stolen funds before they were fully converted into privacy assets.

Market liquidity impacted, Monero $XMR surges 80%, hitting new record high

This large-scale asset transfer caused a fierce chain reaction in the crypto market, especially affecting Monero, a primary channel for money laundering. The attacker injected hundreds of millions of dollars’ worth of buy orders into the market in a very short time, causing a “liquidity shock” amid limited liquidity.

According to CoinGecko data, Monero’s price skyrocketed from around $450 before the incident to a peak of $797.73 within days, an increase of nearly 80%, setting a new all-time high. Subsequently, although Monero retreated to around $600, its weekly gain remained over 20%.

Image source: CoinGecko Monero’s price surged from about $450 before the incident to over $797.73 in days, nearly 80% increase.

Market analysis indicates that this atypical price fluctuation was not driven by fundamental improvements but purely by the hackers’ forced exchange demands. Notably, Monero has recently faced regulatory pressure in Dubai and other regions, even being delisted in some areas. Yet, this “illegal demand” has instead propelled its price growth against the trend.

Legendary trader Peter Brandt also revealed that he profited handsomely from Monero during this volatility, further sparking discussions on privacy coins as wealth storage and trading tools.

Regulatory tightening vs. privacy needs, January wallet thefts raise security concerns

This astonishing $280 million theft is not an isolated incident but part of a series of wallet attack waves since January 2026. ZachXBT reports that hundreds of wallets have been emptied during widespread attack campaigns this year. Although most victims suffered smaller losses (usually under $2,000), the cumulative damage is rapidly expanding.

This contrasts sharply with the decline in crypto crime activities at the end of 2025 and reflects that hackers are launching more aggressive attacks targeting hardware wallet users. Meanwhile, the global regulatory environment is undergoing dramatic changes. The EU’s DAC8 directive officially took effect in January 2026, requiring service providers to report user transaction data, making public ledgers like Bitcoin’s more susceptible to government surveillance.

The US IRS is also fully implementing the 1099-DA form, further reducing user privacy. In this environment of “from pseudo-anonymity to full transparency,” the demand for privacy coins like Monero is increasing as an alternative for evading regulation or protecting financial security. However, the reality that privacy coins are used as major tools for criminal money laundering has deepened the policy dilemma for governments in balancing individual privacy and anti-money laundering efforts.