"User Error, Not Smart Contracts, Behind $27M Venus Protocol Heist"

Venus Protocol, a prominent lending platform on the BNB Chain, has temporarily suspended its platform following a significant phishing incident that resulted in a $27 million loss for a single user. The incident was flagged by blockchain security firm PeckShield, which reported that the affected wallet contained $19.8 million in vUSDT and $7.15 million in vUSDC. The attack involved the user approving a malicious transaction, which allowed the attacker to siphon off stablecoins and wrapped assets from the wallet. On-chain data indicates that the funds remain in the attacker’s contract and have not yet been swapped, raising concerns about potential further losses. Venus Protocol has stated that the loss was not due to a flaw in its smart contracts but was likely the result of the user granting unauthorized permissions. As a precautionary measure, the protocol has paused its operations to conduct a thorough security review.

Cyvers, another blockchain security firm, confirmed the incident and noted that the stolen funds had not yet been converted into other assets. DeFi researcher Ignas highlighted that the protocol itself was not compromised, and the attack exploited pre-approved authorizations granted by the user’s wallet. SlowMist founder Yu Xian elaborated that the victim had been tricked into signing a malicious approval transaction, which gave the attacker unlimited permissions to transfer tokens directly from the wallet. While the Venus smart contracts were unaffected, the possibility of a hijacked frontend could not be ruled out. Xian also suggested that the victim may have been targeted through a sophisticated poisoning attack that compromised their computer. The attacker demonstrated a high level of planning, including routing gas fees through Monero exchanges. The actual loss may not have exceeded $20 million, according to Xian, though the exact figure remains under investigation.

The incident has drawn attention to the growing threat of phishing attacks in the DeFi space, particularly those that exploit user permissions and private key compromises. The attack on Venus Protocol is part of a broader trend of increased crypto-related fraud in September. For instance, World Liberty Financial (WLFI) governance tokenholders were also hit by a phishing wallet exploit, as reported by SlowMist. On the same day as the Venus incident, decentralized exchange (DEX) Bunni paused all its smart contract functions following a security exploit that resulted in a $2.3 million loss. These attacks are part of a pattern of rising crypto-related losses, with over $163 million lost across 16 attacks in August. Experts like Hank Huang from Kronos Research have noted that crypto exploits tend to increase as prices rise, highlighting the need for heightened security measures.

The phishing attack on Venus Protocol underscores the importance of user education and robust security protocols in the DeFi ecosystem. Despite the protocol’s pause, the attacker's contract remains active, and the fate of the stolen assets is uncertain. The incident has prompted discussions about the vulnerabilities in user-facing DeFi platforms and the need for improved safeguards. PeckShield emphasized that phishing attacks often rely on users being deceived into granting malicious permissions, a tactic that remains effective due to the complexity of blockchain transactions. Venus Protocol’s response has been to reassure the community that no internal flaws were detected and to focus on preventing similar incidents through enhanced security measures. The platform’s native token, XVS, has seen recent fluctuations, with its price standing at $5.90 as of September 2. The market cap of XVS is currently $97.89 million, with a 24-hour trading volume of $8.19 million. While the token has experienced a 3.63% decline over the past seven days, its 24-hour trading volume has increased by 46.54%, indicating heightened interest and volatility.

As the investigation into the Venus Protocol incident continues, the DeFi community is closely monitoring developments. The attack highlights the critical role that user behavior plays in the security of decentralized platforms. While smart contracts remain a cornerstone of DeFi, the human element—such as granting unauthorized permissions—remains a significant vulnerability. Venus Protocol’s proactive measures, including its platform pause and ongoing security reviews, are seen as necessary steps to restore confidence and prevent further exploitation. However, the incident also raises broader questions about the adequacy of current security practices in the DeFi space. Experts are urging users to exercise caution and to adopt multi-layered security strategies, including the use of hardware wallets and regular audits of transaction approvals. The DeFi sector, despite its innovations, continues to grapple with the challenges of balancing accessibility with security, as this latest attack demonstrates the urgent need for improved user education and more robust platform defenses.

Source: [1] BNB Chain-Based Venus Protocol Drained of $27M on Suspected Contract Compromise (https://www.coindesk.com/tech/2025/09/02/bnb-chain-based-venus-protocol-drained-of-usd27m-on-suspected-contract-compromise) [2] Venus Protocol suspends platform amid $27 million phishing (https://cryptoslate.com/venus-protocol-suspends-platform-after-phishing-scam-drains-27-million/) [3] Convert Venus (XVS) to US Dollar (USD) (https://www.coinbase.com/converter/xvs/usd) [4] Trump's Crypto Project WLFI Under Attack as Ethereum Upgrade Backfires with Hackers Exploiting EIP-7702 Vulnerability (https://finance.yahoo.com/news/trump-crypto-project-wlfi-under-081337737.html) [5] Venus Protocol user suffers $27M loss from phishing attack (https://cointelegraph.com/news/defi-trader-loses-27m-phishing-scam-venus-protocol-pauses?utm_campaign=rss_partner_inbound&utm_medium=rss&utm_source=rss_feed)