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The FLOW price dropped by 40% after an execution-layer exploit worth $3.9M forced validators to stop the chain.
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The attacker made millions of FLOW and drained the liquidity. He then laundered money across bridges to BTC.
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Validators rolled the chain back, triggering backlash among bridge operators.
FLOW was heavily discounted last week following a confirmed security breach in the Flow blockchain. The token dropped by about 40% in one day, from $0.17 down to $0.10 when the news of the exploit spread.
FLOW was trading at $0.10, after a brief rise to $0.12. Data shows that the token is down by more than 11% in the last 24 hours. This pullback is the result of a $3.9 million loss due to an execution layer failure.
Execution-Layer Exploit Triggering Emergency Halt
Wazz, an on-chain researcher, first reported the incident. He tracked an attacker who was minting approximately 5 million FLOWs through a compromised execution pathway. The newly-minted tokens were then sold into liquidity pools. This drained market depth and increased the price correction.
Flow confirmed the breach later, adding that an attacker exploited a vulnerability in the transaction execution layers and moved approximately $3.9 Million off the network before validators were able to coordinate a halt. The team stated that user balances were unaffected. Validators halted the chain shortly following the exploit.
The attacker routed money through multiple cross-chain system. Assets were transferred via Celer, deBridge and Relay. Then, they were swapped using THORChain, Chainflip and Chainflip.
Related: Binance Takes the Heat after Freezing Only 17% Of Hacked Upbit Funds
Chain Rollback Sparks Industry Pushback
To limit the damage, Flow validaters reverted the state of the blockchain to a point prior to the exploit. The decision was met with immediate concern across the ecosystem. Bridge operators warned users that a rollback would result in doubled balances or unresolved liability for those who bridged assets within the affected window.
Alex Smirnov, deBridge’s founder, publicly urged validators not to process transactions until a clear plan of remediation was communicated.
He warned that the rollback would cause more financial harm than the original exploit, by breaking accounting assumptions about bridges, custodians and exchanges.
At the time of the stop, the chain was stuck at block height 137.385.824. Flow said that the network would be back up and running within hours. It will operate in a limited manner while fixes are deployed.
Exchanges suspend transfers as liquidity dries up
Following the attack, Upbit and Bithumb, two South Korean exchanges, decided to suspend FLOW withdrawals and deposits. Korea’s Digital Asset Exchange Alliance also issued a warning about transaction risks.
The exchange response eliminated a major liquidity source during the selloff. The market depth shrank quickly as traders stepped back, contributing to a sharp drop in price to $0.10.
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