Texture Finance recovers 90% of $2.2 million USDC after hacker bounty

In a notable development within the decentralized finance (DeFi) ecosystem, Texture Finance successfully recovered a significant portion of funds lost in a recent exploit. The hacker returned 90% of the $2.2 million in stolen USDC after Texture Finance offered a public bounty. This diplomatic resolution highlights the evolving dynamics within the DeFi community, where transparency and community engagement play crucial roles in mitigating security breaches.

The exploit, which was disclosed by Texture Finance on July 9, originated from a vulnerability in one of its vault smart contracts. The protocol emphasized that only its USDC vault was affected. In response, Texture Finance immediately disabled withdrawals and initiated a comprehensive "war room" response, involving auditors and code patches to address the issue. The team also issued an open call to the hacker, offering a 10% bounty of the stolen funds if the remaining 90% were returned. This offer was conditional, with a deadline set for July 11 at 18:00 UTC, after which the hacker would be considered a blackhat and referred to law enforcement.

Less than a day before the deadline, the hacker returned 90% of the stolen funds to the designated Texture SOL address, effectively claiming the 10% bounty. Texture Finance acknowledged the hacker's compliance and announced that they would not pursue the matter further. The protocol expressed gratitude for the community's patience and understanding, highlighting the collaborative spirit within the Solana ecosystem. This incident is part of a growing trend of "greyhat" exploits, where attackers breach vulnerable protocols but ultimately return most or all of the funds in exchange for immunity or a bounty. This approach has become more prevalent in the DeFi world, where on-chain activity is transparent, and attribution can expose hackers to real-world consequences.

Despite the successful resolution, the incident underscores the persistent security challenges facing DeFi protocols. Texture Finance has developed a full fix for the vulnerability, which is currently undergoing audit. The updated contract is expected to be redeployed shortly, with a post-mortem analysis forthcoming. In the meantime, user withdrawals remain disabled, though repayments are functional in standard mode. The protocol has not provided a specific timeline for resuming normal operations.

This incident adds to a turbulent week in DeFi security, as perpetuals protocol GMX also suffered a separate exploit on Arbitrum, resulting in $42 million in losses. GMX offered the hacker a 10% white-hat bounty, further emphasizing the community's efforts to address security vulnerabilities through diplomatic means. These incidents highlight the need for continuous vigilance and improvement in DeFi security measures, as the ecosystem continues to evolve and attract more users and capital.