DEX Platform KyberSwap Faces Exploit Losing $47M

UTC by Bhushan Akolkar · 2 min read
DEX Platform KyberSwap Faces Exploit Losing $47M
Photo: Depositphotos

Kyber Network has asked all of its users to promptly withdraw all their funds without clicking on any suspicious links or DMs.

KyberSwap, a decentralized exchange (DEX) protocol, has reportedly experienced a $47 million exploit, based on on-chain data. The funds were associated with its Elastic Pools liquidity solution.

Unexpectedly, funds from wallets linked to the protocol moved to a single wallet, as highlighted by a user known as Spreek on X. The affected funds include $20.7 million on Arbitrum, $15 million on Optimism, $7 million on Ethereum, $3 million on Polygon, and $2 million on Base.

A significant portion of the funds comprises various forms of Ether, including wrapped tokens and liquid staking tokens. This is also in addition to other tokens like Arbitrum (ARB) and various stablecoins.

DEX platform KyberSwap issued a cautionary post on X, notifying users of a “security incident” involving KyberSwap Elastic. It strongly advised users to promptly withdraw their funds in response to the situation. KyberSwap further noted:

“We regret to inform you that KyberSwap Elastic has experienced a security incident. As a precautionary measure, we strongly advise all users to promptly withdraw their funds. Our team is diligently investigating the situation, and we commit to keeping you informed with regular updates. Reminder to not click on any phishing links or respond to DMs”.

KNC Price Tanks

A message embedded in a transaction, seemingly sent by the perpetrator, conveyed:

“Dear Kyberswap Developers, Employees, DAO members and LPs, Negotiations will start in a few hours. Thank you.”

KyberSwap Elastic, a platform enabling liquidity providers to select their preferred price ranges with automatic yield compounding, appears to be targeted. According to 0xngmi, an anonymous employee at crypto data site DefiLlama, who examined the transaction, it seems the hacker is draining the Kyber liquidity provider pools. The total value locked in the protocol also remains unaffected at $72 million. Besides, the news of the potential exploit led to a sharp decline in the price of Kyber Network Crystal (KNC).

“Looks like the Kyber exploits is flash loans and some sort of math/rounding issue. Each [transaction] is starting with an ETH balance coming in, looped mint/redeem/swap,” noted Adam Cochran, general partner at Cinneamhain Ventures, on X.

Crypto-related exploits continue this year as well in 2023. So far, the month of September has proved to be the worst month facing these exploits.

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