KyberSwap Suffers $47M Exploit on its Elastic Pools Liquidity Solution

,There has been some unauthorized wallet movement on KyberSwap which suggests that the Decentralized Exchange (DEX) protocol has been infringed. Apparently, an unidentified entity transferred funds linked to KyberSwap into a single wallet. The unexpected movement was discovered and reported by an X user identified as Spreek.

The loss is valued at approximately $47 million, inclusive of $20.7 million on Arbitrum, $15 million on Optimism, $7 million on Ethereum, $3 million on Polygon and $2 million on Coinbase’s Base. Notably, the funds were siphoned for KyberSwap’s Elastic Pools liquidity solution.

KyberSwap Hacker Plans to Open Negotiations 

KyberSwap immediately took to the X app to inform its users of the attack on its liquidity providers. Users were therefore advised to withdraw their funds pending when the breach is addressed and fixed. “Our team is diligently investigating the situation, and we commit to keeping you informed with regular updates,” the DEX protocol promised. 

On the other hand, the hacker released a message which was specifically directed to Kyberswap developers, employees, members of its Decentralized Autonomous Organization (DAO) and the affected liquidity providers. The bad actor clearly stated that negotiations for the stolen funds will commence once he is fully rested. 

KyberSwap’s TVL Drops Significantly 

According to DefiLlama data, KyberSwap’s Total Value Locked (TVL) has dropped by 68% within the few hours following the breach. The hack has triggered huge outflows from the protocol as users become jittery and fear a recurrence. Almost $78 million has been withdrawn from the protocol due to the hack and user withdrawals. 

KyberSwap’s TVL is currently at $27 million, a far cry from its 2023 peak of $134 million. Similarly, Kyber Network Crystal KNC token prices tanked by 7% as news of the attack broke out. Although there has been a gradual recovery and the token is now trading at $0.71 with 3.63% value loss within the last 24 hours.

Another $265k Siphoned From KyberSwap 

This news comes barely one year after the KyberSwap network lost $265,000 worth of user funds to a frontend exploit by an unidentified hacker.

During that time, the team was compelled to disable the user interface to carry out an investigation on the cause of the frontend exploit. To salvage the situation, KyberSwap went as far as offering that hacker a 15% bounty reward if the funds were returned.

In the long run, Binance identified and reported two wallets linked to the theft. It is not yet clear what the outcome of the current investigation will be but users are advised to stay vigilant.