DeFi's 12-Hour Heist: How Governance Stopped a Lazarus Hack

Venus Protocol, a decentralized finance (DeFi) lending platform, has successfully recovered $13.5 million in stolen cryptocurrency after a phishing attack attributed to North Korea-linked hacking group Lazarus. The incident occurred on September 2, 2025, when a major user, later identified as Kuan Sun, fell victim to a scam involving a malicious Zoom client. This allowed attackers to gain delegated control of the user’s account, enabling them to borrow and redeem assets on his behalf. The attackers drained stablecoins, wrapped Bitcoin, and other tokens, though the total amount recovered by Venus was lower than initial estimates due to existing debts owed by the victim [2].

Upon detecting suspicious activity, Venus Protocol’s security partners, HExagate and Hypernative, flagged the transaction within minutes, prompting an emergency platform pause. This measure prevented further movement of funds and allowed Venus to investigate the incident. Audits confirmed that the platform’s smart contracts and front end were not compromised. A subsequent emergency governance vote authorized the forced liquidation of the attacker’s wallet, enabling the recovery of stolen assets and their transfer to a secure recovery address. The entire process took less than 12 hours, marking the first major successful fund recovery in DeFi history using emergency governance powers [2].

The attack was identified as a sophisticated operation by the Lazarus Group, a North Korea-backed collective known for large-scale cryptocurrency heists, including the $600 million Ronin bridge exploit and the $1.5 billion Bybit breach. Security firm SlowMist played a key role in tracing the attack back to the group and highlighted their rapid response in identifying the threat. This case underscores the ongoing vulnerability of DeFi platforms to cyberattacks and the importance of robust security infrastructure [1].

The incident had a noticeable impact on the DeFi market. The XVS governance token dropped by 10% when the attack was first reported, as investors reacted to the perceived risk to platform security. However, the token quickly rebounded after Venus confirmed the successful recovery of the funds, signaling renewed confidence in the platform’s governance and emergency response mechanisms. Kuan Sun publicly thanked the teams involved in the recovery, describing the effort as a “battle we actually won” and acknowledging the collaborative response from security partners such as PeckShield, Binance, and SlowMist [1].

The successful recovery highlights the potential of decentralized governance models in mitigating financial losses in the event of cyberattacks. By enabling community-driven decisions during critical incidents, Venus demonstrated that decentralized systems can respond effectively to security threats when properly designed. The 12-hour recovery timeline also sets a new benchmark for DeFi crisis response, outperforming many traditional financial systems that often take days or weeks to address similar breaches. The case raises broader questions about the balance between decentralization and security, suggesting that some degree of centralized control may be necessary in emergency scenarios [2].

Moving forward, the incident serves as a cautionary example for both DeFi platforms and users. The attack method—using fake software to trick users into granting control—underscores the growing sophistication of cybercriminals in the crypto space. Venus and other DeFi platforms are expected to continue refining their security frameworks and user education strategies to prevent similar incidents in the future. As the industry evolves, the ability to respond quickly to threats will likely become a defining factor in the success and adoption of decentralized financial systems [1].

Source: [1] Venus Protocol Recovers $13.5M in Phishing Attack (https://cointelegraph.com/news/venus-protocol-recovers-13-5m-stolen-phishing-attack) [2] Venus Protocol Recovers $13.5 Million From Hackers (https://bravenewcoin.com/insights/venus-protocol-recovers-13-5-million-from-hackers)