In a setback for the crypto and decentralized finance (DeFi) sector, Radiant Capital, a prominent player, faced issues with its newly established native USDC market on the Arbitrum network. PeckShield, a blockchain security and analytics company, disclosed that approximately $4.5 million worth of the cross-chain lending protocol Radiant Capital was compromised, involving 1,900 ETH.
Responding promptly to the incident, the Radiant DAO committee, comprising members of the Web 3 security community and developers, temporarily halted the loan market on Arbitrum.
The breach, identified as a flash loan attack, took advantage of a vulnerability that often arises when a new market is introduced in the lending industry. According to PeckShield, the attack occurred six seconds after the launch of the new crypto market.
Crypto Flash Loan Vulnerabilities: A $1.5 Billion Security Wake-Up Call
Flash loan attacks exploit features allowing users to borrow assets without collateral, influencing markets or exploiting smart contract vulnerabilities. Notably, as of September 2023, the cryptocurrency industry had incurred losses totaling $1.5 billion due to hacks and frauds, underscoring the escalating security concerns.
Radiant Capital addressed the issue, assuring that the Radiant DAO Council has temporarily suspended lending and borrowing markets on Arbitrum while the matter is under investigation.
The custodian emphasized that no funds are currently at risk. A comprehensive postmortem report will be released once the investigation concludes, with normal operations set to resume on Arbitrum.
This security breach is part of a broader trend of crypto attacks in the DeFi sector. Notably, Orbit Chain’s bridging service, Orbit Bridge, experienced a significant loss of $82 million in a breach on December 31, further highlighting the vulnerability of platforms in the decentralized finance space.