Venus Protocol faced a phishing attack through a malicious contract that siphoned off $27 million, prompting the team to immediately suspend withdrawals and liquidations to contain the risks.
Less than 24 hours later, the funds were recovered and placed under protection, allowing operations to resume and a comprehensive security audit to be conducted.
The alert raised by on-chain researchers was crucial in tracing the funds and limiting the losses, but confidence remains fragile, with the XVS token dropping by 3%.
Stopped in its Tracks: A Venus Protocol User Hits a Roadblock
Tuesday evening, Venus Protocol, one of the biggest lending protocols on the BNB Chain, sounded the alarm. A malicious contract had just siphoned around $27 million through a phishing attack, forcing the team to immediately suspend withdrawals and liquidations. A radical but necessary decision to avoid contagion and reassure thousands of worried users.
Behind this pause was a vital stake: to verify if the attack was limited to the targeted smart contract or if the protocol’s interface, the famous front-end, had also been compromised.
Funds Recovered, Services Relaunched
Less than 24 hours later, relief set in. Venus announced that the diverted funds had been recovered and placed under its protection. Operations resumed on Wednesday night, around 11:00 PM, with the return of withdrawals and liquidations.
An essential step to secure not only the stolen funds but also to carry out a comprehensive security audit.
Team Explanation on X, thanking the community for its support during this critical moment.
The Role of On-Chain Investigators
The alert came from on-chain researchers, who quickly detected suspicious movements from the Core Pool Comptroller contract. Assets like vUSDC and vETH had been redirected to a wallet linked to the attacker. Once the origin was confirmed, the crisis machine was set in motion: operation freeze, fund tracing, and recovery.
This episode highlights how community surveillance plays a key role in the security of DeFi protocols. In just a few minutes, blockchain analysts helped mitigate the damage and support recovery efforts.
Market Reaction
Despite these comforting announcements, investors’ trust remains shaken. The native XVS token continues to decline by nearly 3% in 24 hours. A modest drop compared to the scale of the attack, but indicative of a lingering sense of caution.
Investors are now awaiting the complete report promised by Venus, which will detail the exact origin of the exploit, the method used to recover the funds, and most importantly, the measures taken to prevent such a scenario from recurring.
