DeFi's Decentralized Defense Thwarts North Korean Hackers in 12-Hour Race

Venus Protocol, a decentralized finance (DeFi) lending platform on the BNB Chain, successfully recovered $13.5 million in stolen cryptocurrency following a phishing attack. The incident, which initially raised concerns about a potential protocol breach, was later attributed to a malicious Zoom client that tricked a user into granting control over their account. This allowed the attackers to drain millions in stablecoins and wrapped assets through unauthorized borrowing and redemption actions.

In response, Venus Protocol immediately paused its operations as a precautionary measure, halting further fund movements. Smart contract and frontend audits confirmed that the platform’s code remained uncompromised. An emergency governance vote was conducted, enabling the forced liquidation of the attacker’s wallet and allowing the recovery of the stolen assets. The process unfolded within 12 hours, with funds successfully transferred to a designated recovery address [1].

The phishing attack was later linked to the Lazarus Group, a North Korea-backed hacking collective known for several high-profile crypto heists, including the $600 million Ronin bridge exploit and the $1.5 billion Bybit hack. SlowMist, one of the security firms involved in the investigation, was among the first to identify the group’s involvement. Venus credited its security partners, including HExagate, Hypernative, PeckShield, Binance, and SlowMist, for their rapid response in flagging the suspicious activity and facilitating the recovery [1].

The attack highlighted vulnerabilities in user-side security, as the breach did not result from a flaw in the platform’s infrastructure but rather from the victim approving a malicious transaction. PeckShield reported that the victim had unknowingly granted token access to an attacker’s address, enabling the theft. Venus emphasized that the pause was necessary to prevent further exploitation and to conduct a thorough security review [2].

Community governance played a critical role in the response, with users participating in a “lightning vote” to authorize partial service restoration and facilitate the forced liquidation of the attacker’s position. Binance founder Changpeng Zhao praised the swift and collaborative response, noting the importance of community engagement in defending against such incidents [3].

However, the event has sparked a broader debate within the DeFi community regarding the balance between decentralization and security. While the recovery was seen as a success, some critics argue that the use of emergency governance mechanisms undermines the core principles of decentralization. Others contend that such actions are necessary to protect users and maintain trust in the ecosystem [4].

The attack also underscored the growing threat of phishing in the crypto space. CertiK reported that phishing attacks accounted for over $410 million in losses across 132 incidents in the first half of 2025. In this context, the Venus incident is not an isolated case but part of a larger trend where attackers exploit user trust and technical inexperience to bypass security measures.

Venus Protocol has since resumed full operations, with no further issues reported. The platform’s native token, XVS, initially dropped by 5% following the news but has since recovered some ground, trading at $6.16 as of the latest data [3]. The total value locked (TVL) in the protocol stands at $1.86 billion, down from a 2021 peak of over $6.5 billion [4].

The incident serves as a cautionary tale for DeFi users and platforms alike, emphasizing the need for stronger user education, improved transaction verification processes, and robust security measures. Venus has pledged to release a detailed post-mortem report to provide further insights and prevent similar incidents in the future [5].

Source: [1] Venus Protocol Recovers $13.5M in Phishing Attack (https://cointelegraph.com/news/venus-protocol-recovers-13-5m-stolen-phishing-attack) [2] Crypto Phishing Strikes Venus Protocol User, Funds ... (https://www.cointribune.com/en/crypto-phishing-strikes-venus-protocol-user-funds-recovered/) [3] Venus Protocol restores services after recovering $27M from ... (https://finance.yahoo.com/news/venus-protocol-restores-services-recovering-131016140.html) [4] Venus Protocol Restores Services, Recovers Stolen Funds ... (https://www.coindesk.com/business/2025/09/03/venus-protocol-restores-services-recovers-stolen-funds-after-usd27m-exploit) [5] Venus Protocol Phishing Attack – A Cautionary Tale for ... (https://www.onesafe.io/blog/venus-protocol-phishing-attack-lessons-learned)