Cronos halted its blockchain on Sunday after detecting an exploit involving the decentralized lending protocol Tectonic, while on-chain researcher Weilin Li estimated that about $75 million in assets were affected.
Tectonic advised users not to interact with the protocol while it investigates the exploit. Neither Tectonic nor Cronos had confirmed the cause or total losses, and no timetable for restarting the network had been announced.
Researcher Traces Exploit to TONIC Price Manipulation
Li attributed the exploit to manipulation of TONIC, Tectonic’s governance token, which had a 20% collateral factor despite limited market liquidity.
According to Li, the attacker drove TONIC’s price roughly 100-fold higher in about 20 minutes, then used the inflated collateral value to borrow other assets from Tectonic. He characterized the method as similar to the pump-and-borrow strategy used in the Mango Markets exploit.
Li initially estimated that about $66 million was affected. He said roughly $6 million was bridged to Ethereum before Cronos stopped the network, leaving about $60 million on Cronos. His estimate later rose to approximately $75 million after he found an additional address linked to the attacker that held about $8 million.
Crypto.com Says App and Exchange Unaffected
Crypto.com Chief Executive Kris Marszalek said the company’s app and exchange continued operating normally and that funds held through those services were safe.
Cronos and Tectonic had not disclosed whether they planned to restrict the identified attacker addresses, seek the return of the funds, or reimburse users affected by the exploit.