Phishing Shadows DeFi: User Error, Not Smart Contracts, Costs $13.5M

Venus Protocol, a leading lending platform on the BNB Chain, experienced a $13.5 million loss following a phishing attack in late August 2025, according to a blockchain security report from PeckShield. The incident triggered a temporary pause in the platform’s operations to conduct a security review, though the protocol confirmed no vulnerabilities in its smart contracts. The affected user reportedly authorized a malicious transaction, leading to the siphoning of stablecoins and wrapped assets from their wallet. PeckShield initially misreported the amount as $27 million but corrected the figure after accounting for the user’s debt position [2].

The phishing attack unfolded as part of a broader wave of cyber incidents in the DeFi sector during the early days of September. On the same day, decentralized exchange Bunni halted its smart contract functions after detecting a security exploit, resulting in an estimated $2.3 million in losses. Meanwhile, World Liberty Financial’s (WLFI) governance tokenholders were also targeted by a known phishing wallet exploit. These incidents follow a pattern of increasing attacks during periods of rising crypto prices, with August alone witnessing over $163 million in losses across 16 incidents [2].

In response to community inquiries, Venus Protocol emphasized that the incident was likely due to a user error rather than a flaw in its smart contracts. The protocol’s official social media account stated it would conduct a precautionary security review and shared updates as the investigation progressed. The native XVS token, central to governance and protocol incentives, is not currently under threat, as the platform’s core infrastructure remains intact [2].

The attack highlights the growing sophistication of phishing schemes in the DeFi ecosystem, where users are often targeted through social engineering tactics. PeckShield detailed how attackers impersonated legitimate entities to gain unauthorized access to user wallets. Venus Protocol’s swift response—pausing operations for a security audit—demonstrates a commitment to transparency and risk mitigation amid rising cyber threats [2].

The DeFi sector has long grappled with security risks, and this incident underscores the need for enhanced user education and improved wallet security measures. Venus Protocol, which previously held over $7 billion in total assets, continues to be a pivotal player in the BNB Chain’s decentralized finance ecosystem. As investigations continue, the platform is expected to release a detailed report outlining the findings and steps taken to prevent similar incidents [1].

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[1] BNB Chain-Based Venus Protocol Drained of $27M on ... (https://www.coindesk.com/tech/2025/09/02/bnb-chain-based-venus-protocol-drained-of-usd27m-on-suspected-contract-compromise)

[2] Venus Protocol user suffers $13.5M loss from phishing attack (https://cointelegraph.com/news/defi-trader-loses-27m-phishing-scam-venus-protocol-pauses)