Loopscale,Term Finance Lose $7M in DeFi Breaches

Loopscale and Term Finance, two prominent decentralized finance (DeFi) platforms, have suffered significant financial losses due to security breaches, totaling over $7 million. These incidents have raised concerns about the security vulnerabilities within the DeFi sector as 2025 progresses.

On April 26, Loopscale, a Solana-based platform, reported a major security breach that impacted its USDC and SOL vaults. The exploit resulted in the loss of approximately $5.8 million, which represents about 12% of the platform’s total value. This attack occurred just two weeks after Loopscale’s official launch. The breach was identified as an isolated issue with Loopscale’s pricing of RateX-based collateral, although RateX itself was not compromised. Loopscale’s co-founder, Mary Gooneratne, confirmed that an attacker exploited the system by securing under-collateralized loans. Following the breach, Loopscale temporarily halted all markets to assess the damage and has since resumed partial operations, allowing key functions like loan repayments, top-ups, and loop closures, while vault withdrawals remain restricted.

In response to the breach, Loopscale offered a 10% bounty to the attacker and proposed a whitehat agreement. The platform requested the return of 90% of the stolen assets and warned of legal action if the attacker did not respond by April 28. Loopscale is currently working with security firms and law enforcement agencies to manage the situation.

Meanwhile, Term Finance, an Ethereum-based platform known for its scalable fixed-rate lending, also reported a security incident on April 26. Blockchain security firm TenArmorAlert identified two suspicious transactions linked to Term Labs, resulting in losses of about $1.5 million. Term Finance later confirmed that a faulty update to its tETH oracle caused the problem. Fortunately, no smart contracts were exploited, and the issue was contained within the tETH markets. The platform assured users that all other funds remain secure and has committed to a full reimbursement plan for those affected.

These attacks highlight a worrying trend in 2025, with crypto projects losing close to $2 billion this year. High-profile incidents like Bybit’s hack in February have shaken confidence across the industry. Tim Haldorsson, founder of Lunar Strategy, questioned whether DeFi returns justify the ongoing exploit risks. He suggested that DeFi yields might lag behind traditional investments like bonds once adjusted for hack-related losses.

“How safe is actually all this DeFi? We are chasing yield, but hack-adjusted is it actually better than just holding bonds?” Haldorsson questioned.

The recent losses experienced by Loopscale and Term Finance serve as stark reminders of the vulnerabilities within the DeFi sector. As investors navigate these challenges, the future landscape of crypto finance may necessitate enhanced security measures and greater transparency across protocols. These incidents underscore the need for continuous improvement in security protocols to protect against future exploits and ensure the stability of the DeFi ecosystem.