Yusuke Kitagawa, an arts student studying under painter Ichiryusai Madarame, asks Ann to be the model for his next art piece. Meanwhile, student council president Makoto Niijima grows suspicious about Ren's group of friends. Noticing comments on the phansite about Madarame plagiarising artwork from his pupils, the gang go to Madarame's studio to talk with Yusuke, who shows nothing but admiration for him. Initially assuming they were mistaken, the gang discover that Madarame has his own Palace, where they learn he intends to plagiarise Yusuke's work just like his other pupils. While Yusuke claims he is letting Madarame use his work willingly, the gang learn the full extent of Madarame's crimes from one of his former disciples, along with Yusuke's true feelings.

As a mysterious hacker group known as Medjed issue a public warning to the Phantoms, Ren is contacted by someone known as Alibaba, who threatens to reveal the Phantoms' identities unless they can change the heart of someone named Futaba Sakura. When asked to meet in person, Alibaba suddenly calls off the request and asks the Phantoms not to look into Futaba any further. Learning that Futaba is a relative of Sojiro, who is under pressure from Sae concerning his parental authority of her, the gang, receiving a threat from Medjed that they will attack Japan if their identities are not revealed by 31st July, go to Sojiro's house and come face to face with Futaba.

Wanting to change Kunikazu's heart before she is forced to move in with Sugimaru, Haru decides to help the Phantoms progress further into his Palace, awakening the full power of her Persona, Milady. Upon locating the Treasure, the gang confront Kunikazu's Shadow and defeat his army of robotic employees. After the Phantoms are forced to leave the Palace before it collapses, a mysterious figure kills Kunikazu's Shadow. Unaware of this, the gang become shocked when Kunikazu suddenly dies of a mental shutdown during a press conference.