The world of decentralized finance (DeFi) has witnessed another shocking incident, following an attack on Radiant Capital recently.
This time, cross-chain lending protocol Radiant Capital found itself in the eye of the storm following a flash loan attack that resulted in a significant loss of $4.5 million.
Today, we received a report of an issue with the newly created native USDC market on Arbitrum. After validation by Radiant developers and the wider Web 3 security community, the Radiant DAO Council paused lending/borrowing markets on Arbitrum temporarily while this is…
— Radiant Capital (@RDNTCapital) January 3, 2024
The exploit, identified as a cumulative precision issue in the newly created USDC market on Arbitrum, led to a temporary halt of its lending and borrowing markets.
🚨ALERT🚨Our AI-powered system has identified multiple #rugpull transactions on #ARB linked to this address: https://t.co/GZKVDypuAh. The address has been involved in creating numerous tokens.
The address has bridged 500K $USDT to $ETH, then swapping it to $DAI before depositing… pic.twitter.com/4l8JmdXmcd
— 🚨 Cyvers Alerts 🚨 (@CyversAlerts) January 2, 2024
The attack, described by blockchain security firm Beosin as a “flash loan attack,” was based on a code error that allowed the attacker to manipulate a critical parameter.
Taking advantage of a window of time during the activation of a new market in the system, the attacker executed repeated deposit and withdrawal operations, thus siphoning a total of USD 4.5 million in Ether from the protocol.
Radiant Capital acted quickly upon receiving reports of the issue in its native USDC market
The platform paused all activities on Arbitrum, assuring investors that no more funds were at risk.
They pledged to conduct a thorough investigation to determine the root cause of the attack and provide transparency into the incident.
However, the challenge was not just limited to the attack itself.
Radiant Capital also had to deal with fake social media accounts, spreading phishing links that could affect unsuspecting users.
This prompted warnings about the need for caution until the situation was resolved and the Arbitrum markets were unblocked.
Despite the setback, Radiant Capital remains a decentralized lending protocol with cross-chain functionality.
According to DefiLlama, it has a total value locked of around USD 315 million, highlighting its relevance and position in the DeFi ecosystem.