Cronos has halted all operations across its blockchain network. The decision to shut down the network was made shortly after decentralized lending protocol Tectonic was hit by an exploit with estimated losses reaching $75 million.
Cronos stated in an official announcement that it had identified the exploit. Most of the stolen funds were reportedly still within the Cronos network at the time of publication. As of now, there is no definitive timeline for when the Cronos blockchain will resume operations, but the development team promised to provide further updates to the public.
The impact of the exploit did not spread to centralized exchange entities. Crypto.com CEO Kris Marszalek confirmed that neither his company’s app nor its exchange was affected by the incident on Cronos. Its services are operating normally and all user funds remain safe from the attacker.
Mango Markets-Style Pump-and-Borrow Pattern
The loophole exploited by the attacker was revealed by researcher Weilin Li, who detailed the mechanics of the exploit based on two conditions: the use of a 20% collateral factor for the TONIC token combined with thin market liquidity for the asset.
Leveraging this vulnerability, the perpetrator pumped the price of the TONIC governance token by 100x. The price manipulation maneuver was executed in a span of just 20 minutes. Once the collateral value surged on paper, the attacker used it to borrow various other crypto assets from Tectonic. Weilin Li described this attack method as a Mango Markets-style pump-and-borrow scheme.
Tectonic immediately issued an official warning to all users. They are advised not to interact with the protocol temporarily while the investigation remains underway.
What Remains Uncertain
Although the attack flow has been outlined by external analysts, Cronos and Tectonic have yet to release official confirmation regarding the technical cause behind the exploit. Neither has published the final loss figure or detailed a compensation plan for the protocol’s users.
The Tectonic exploit underscores the ongoing risks in the decentralized finance space. Lending protocols that accept low-liquidity governance tokens as collateral will continue to face vulnerabilities related to price manipulation.
Reported via Cointelegraph.
Read also: Avici Crypto Platform Breached, $1 Million Collateral Lost - How the Attacker Bypassed Admin Access
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
