Stablecoin ℓUSD Plunges to Zero After Linear DeFi Hack

The Hong Kong-based DeFi project Linear Finance stated that it was attacked, resulting in the loss of all liquidity in the stablecoin ℓUSD on PancakeSwap and Ascendex.

The price of the token collapsed to zero. The extent of the loss is unknown.

NEWS: @LinearFinance has reported an attack that resulted in the draining of all $LUSD liquidity on both PancakeSwap and Ascendex.

As a result, the price of $LUSD has fallen to zero.

? https://t.co/pjWVaoUEaf pic.twitter.com/lx1GYlyacp

— CoinGecko (@coingecko) September 22, 2023

«The attacker was able to mint an unlimited amount of ℓAAVE and subsequently swap the liquid asset for ℓUSD through Linear Exchange, and then sell it on PancakeSwap and Ascendex,» the statement said.

The Linear team has taken a number of steps to safeguard the protocol and user funds:

• suspended all smart contracts that enable minting, exchanging and burning of tokens;
• disabled the ℓUSD bridge;
• hired external specialists to track down the hackers and hold them to account;
• provided the data on wallets involved in the exploit to major exchanges and law enforcement authorities.

The developers pledged to publish further details later and asked users to refrain from trading ℓUSD during the investigation.

?️Urgent Update Re $LUSD ?

The Linear stable coin $LUSD appears to be under an exploit attack. While the team investigates, DO NOT BUY LUSD, DO NOT TRADE $LUSD

Liquidations are paused and users accounts are not at risk.

Further updates will follow.

— Linear Finance (@LinearFinance) September 21, 2023

According to CoinGecko, the stablecoin’s trading volume over the last 24 hours was about $3 million, roughly $2 million of which came after the exploit.

«Restoring the protocol and redressing user losses will be our top priority until the issue is fully resolved,» the team stressed.

Earlier, the DeFi protocol Balancer reported a frontend hack. The damage was reportedly around $238 000.