A crypto wallet connected to the October 2022 BNB Chain $600 million exploit has lost approximately $63 million on the decentralized lending platform Venus Protocol. This loss was a result of liquidation triggered by the recent market crash. The exploit involved the minting of two million BNB tokens, with the attacker using 900,000 of them to borrow around $150 million worth of Tether (USDT) and USD Coin (USDC) against Venus.
As the price of BNB continued to decline in recent months, concerns arose about the health of the loan and the potential cascading effects on the BNB Chain upon liquidation. To address this, BNB Chain and Venus passed a proposal in November, authorizing only the core team to liquidate the exploiter’s position. A specific wallet was whitelisted for this purpose, ensuring a controlled liquidation process that would prevent a shortfall on Venus.
In preparation for the liquidation, the wallet received $30 million in USDT. When BNB’s price fell below $220 alongside other cryptocurrencies, the collateral positions linked to the hacker’s wallet were liquidated, and the 900,000 BNB was sent to Venus. At the time of writing, these assets were valued at around $196.2 million, with BNB trading at $218 according to CoinMarketCap.
Despite the significant liquidation, there was no resulting shortfall on Venus or cascading effects on BNB or the broader market. The proposal implemented by Venus and BNB Chain after the hack last year successfully contained the mass liquidation. The Venus team confirmed that the exploiter’s account was made healthy without any further impact to BNB.
This incident highlights the risks associated with decentralized lending platforms and the potential consequences of exploiting vulnerabilities in blockchain networks. It serves as a reminder for users and developers to prioritize security measures and implement robust protocols to safeguard against such exploits. The market crash further underscores the volatility of the crypto market and the need for investors to exercise caution and diversify their portfolios.