Loopscale Recovers 50% of Stolen Funds Through Negotiations

Loopscale, a decentralized finance (DeFi) protocol, has successfully recovered nearly half of the funds stolen during a significant exploit that occurred over the weekend. The recovery efforts have been facilitated through negotiations with the attacker, which have shown promising progress.

In an update posted on April 29, Loopscale confirmed that approximately 19,463 Wrapped SOL (WSOL), valued at around $2.88 million, had been returned to its wallets since April 28. 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 expressed optimism about the ongoing negotiations, stating that their pursuit of an amicable resolution regarding the incident continues to make progress.

On April 27, Loopscale's 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 warned that if no agreement were reached within 24 hours, they would contact law enforcement. At 3:52 pm Eastern Time on April 28, Loopscale announced it had received a response from the exploiter, who indicated a willingness to negotiate a return in exchange for a bounty.

The exploit occurred on April 26 when manipulation of Loopscale’s RateX PT token pricing functions led to the theft of approximately $5.7 million in USDC and 1,200 Solana (SOL) from its 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.

While recoveries in decentralized finance are not very common, there have been more instances of successful fund returns as of late. On April 27, Ethereum-based lending protocol Term Finance announced 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 said 223 Ether (ETH) was recaptured internally, and another 333 ETH was recovered through negotiations.

This incident highlights the ongoing challenges and risks associated with DeFi platforms, as well as the potential for successful negotiations and recoveries in the aftermath of such exploits. The progress made by Loopscale in recovering stolen funds demonstrates the importance of proactive communication and negotiation strategies in mitigating the impact of security breaches.