Initia suspends network operations following $2.6M+ security breach
Analysts specializing in blockchain security have identified unauthorized minting of tokens and transfers of millions in cryptocurrency to Ethereum while Initia examines the breach and attempts to resume normal operations.
Following reports from blockchain investigators of a security exploit enabling an attacker to create tokens without proper authorization and siphon off over $2.6 million worth of cryptocurrency, Initia has suspended operations of its layer-1 blockchain along with its rollups.
Operations on the network came to a halt at 3:41 p.m. UTC on Friday in response to the security breach, according to a post published by Initia on X. The project's team indicated they were collaborating with security analysts, validators and cryptocurrency exchanges to assess the complete scope of the damage.
The security incident was initially brought to light on Friday by Spreek, a researcher focused on blockchain security, who documented that an attacker had created tokens without proper authorization and successfully converted roughly $2.6 million into alternative assets, with further funds continuing to be transferred.
Subsequently, D2 Finance, a decentralized finance platform, disclosed that the perpetrator took advantage of a security flaw to create 2 million AUSD tokens lacking adequate collateral backing. The perpetrator then leveraged cross-chain transfer mechanisms to extract roughly 1.4 million AUSD, 105 Ether (ETH) and 1.08 million USDC (USDC) to the Ethereum network.
Following the theft, the compromised assets were combined into a single Ethereum wallet containing roughly 1,135.5 ETH, valued at $2.73 million, as reported by D2 Finance. The organization identified the root cause of the exploit as a security weakness in a Move function that enabled the perpetrator to generate tokens without backing and swap them for assets on Ethereum.
Designed as a layer-1 blockchain to facilitate a network of interconnected rollups called Minitias, Initia saw its native token, INIT, temporarily drop to approximately $0.115 on Friday before recovering to levels above $0.15, based on data from CoinGecko. At the time of publication, the token was changing hands near $0.1496, representing roughly a 14% gain compared to the prior 24 hours.
The company behind Initia has not issued public confirmation regarding the estimated financial losses or the specific root cause behind the exploit, leaving the full impact on users and the projected timeline for resuming network operations uncertain. Attempts by Cointelegraph to reach Initia for further commentary via its official X account were unsuccessful.