Loopscale Suspends Lending After $5.8M Exploit

Loopscale, a decentralized finance (DeFi) protocol built on Solana, has suspended its lending operations following a $5.8 million exploit. The incident occurred on April 26, when a hacker drained 5.7 million USDC and 1,200 SOL by executing a series of undercollateralized loans. In response, Loopscale has partially restored platform functions, allowing users to repay loans, add collateral, and close existing loops. However, key features, including vault withdrawals, remain disabled as the team continues its investigation.

The exploit was limited to the protocol’s USDC and SOL vaults, representing about 12% of Loopscale’s total value locked (TVL). The team is fully mobilized to investigate, recover funds, and ensure users are protected. The attack adds to a growing list of crypto exploits in 2025, with blockchain security firms reporting significant thefts during the first quarter.

Launched publicly on April 10 after a six-month beta, Loopscale introduced a unique DeFi lending model aimed at improving capital efficiency. Unlike protocols such as Aave, which rely on pooled liquidity, Loopscale uses an order book system to directly match lenders and borrowers. It also offers specialized markets for structured credit, receivables financing, and undercollateralized loans. Before the exploit, Loopscale managed around $40 million in TVL and had attracted over 7,000 lenders. Its USDC and SOL vaults were offering attractive yields of over 5% and 10% APR, respectively. The platform also supported lending for tokens like JitoSOL and BONK, along with looping strategies across 40 token pairs. Investigations into the breach remain ongoing.