Loopscale Recovers 50% of $5.7M Stolen in DeFi Hack

Loopscale, a decentralized finance (DeFi) protocol, recently experienced a significant security breach over the weekend. The exploit, which took place on April 26, involved the manipulation of Loopscale’s RateX PT token pricing functions. This manipulation allowed attackers to steal approximately $5.7 million in USDC and 1,200 Solana (SOL) from the platform’s USDC and SOL vaults. The stolen amount represented about 12% of the platform’s total funds and impacted only vault depositors, not borrowers or loopers.

In response to the incident, Loopscale took immediate action to recover the stolen funds. On April 27, the team sent an onchain message to the exploiter, offering a 10% bounty and a full release of liability in exchange for the return of 90% of the stolen funds. The team also warned that if no agreement were reached within 24 hours, they would contact law enforcement. This proactive approach appears to have yielded positive results, as negotiations with the attacker have shown signs of progress.

By April 29, Loopscale had successfully recovered nearly half of the stolen funds. Approximately 19,463 Wrapped SOL (WSOL), worth roughly $2.88 million, were returned to the platform’s wallets. The first two returns included 10,000 WSOL (~$1.48 million) and 4,463 WSOL (~$660,000), following an earlier recovery of 5,000 WSOL (~$740,000). The team confirmed that their pursuit of an amicable resolution regarding the incident continues to make progress.

The recovery of funds in this case is notable, as successful fund returns in the DeFi space are not very common. However, there have been more instances of successful recoveries as of late. For example, on April 27, Ethereum-based lending protocol Term Finance announced that it had recovered $1 million of the $1.6 million lost in an incident involving a misconfigured oracle on its Treehouse (tETH) market. The team recaptured 223 Ether (ETH) internally and another 333 ETH through negotiations.

The incident highlights the ongoing challenges faced by DeFi platforms in securing their systems against exploits and hacks. While the recovery of funds is a positive development, it underscores the need for continued vigilance and improvement in security measures within the DeFi ecosystem. Loopscale’s proactive approach to negotiations and their willingness to offer a bounty for the return of funds demonstrate a commitment to resolving the issue and protecting the interests of their users.