yETH Exploit Drains Millions, Attacker Launders Funds Through Tornado Cash

A recent exploit targeting Yearn Finance’s yETH product resulted in the theft of millions of dollars in assets, followed by a series of transfers into Tornado Cash. Blockchain analytics show that roughly 3 million dollars worth of Ethereum was funneled into the mixer shortly after the attack. The incident highlights ongoing vulnerabilities in DeFi protocols and the persistent challenge of laundering stolen funds through privacy mixing services.

 

What Happened, The yETH Exploit and Stolen ETH Flows

The attack began when a malicious actor exploited an infinite mint vulnerability in yETH, which is a liquid staking token product operated by Yearn Finance. The flaw allowed the attacker to mint an effectively unlimited supply of yETH in a single transaction. With this artificially inflated supply, the attacker was able to drain liquidity pools that held real assets, including ETH and major liquid staking tokens.

Immediately after draining the pools, the attacker began moving stolen assets through multiple wallets. On chain activity shows that large transactions flowed directly into Tornado Cash. In total, about 1,000 ETH, roughly 2.8 million dollars in value, was pushed into the mixer as part of the laundering process.

The exploit appears to be isolated to the older yETH implementation, which relied on outdated token mechanics. Yearn Finance acknowledged the situation, stating on their official X account that "We are investigating an incident involving the yETH LST stableswap pool," and that users can feel secure that  "Yearn Vaults (both V2 and V3) are not affected.".

 

Why This Attack Is Significant

Infinite Mint Vulnerabilities Remain a Critical Threat

This type of exploit is one of the most catastrophic forms of smart contract failure. When a token’s supply can be arbitrarily increased, attackers can manipulate liquidity pools, redeem inflated assets and drain valuable tokens held by real users. Even established protocols with long track records can be exposed if older code is not continuously audited and updated.

Liquidity Pools Become Fragile Under Supply Manipulation

The integrity of liquidity pools depends entirely on predictable token behavior. When a token’s supply is altered outside expected rules, the pool’s balance collapses instantly. This creates massive losses for users who provided liquidity and may trigger wider liquidity crises across DeFi platforms that rely on interconnected pools.

Mixers Are Still the Tool of Choice for Laundering

The attacker quickly sent stolen ETH to Tornado Cash, which remains a primary method for obscuring stolen funds. Despite regulatory scrutiny and sanctions, mixers continue to attract hackers because they allow for rapid, high volume anonymization. This pattern is consistent with previous DeFi exploits and exchange hacks, where mixers are used almost immediately after funds are stolen.

 

A Pattern That Repeats Across DeFi

The combination of an exploit followed by a mixer transfer has become predictable. Major hacks from past years have shown the same behavior. An attacker identifies a flaw, drains assets, splits them among multiple wallets and launders them through a mixing protocol. This cycle reinforces two critical realities, DeFi is still highly vulnerable, and laundering infrastructure remains robust enough for attackers to operate with confidence.

Until more advanced detection systems, stronger audits and better economic modeling become the standard, similar vulnerabilities will continue to be exploited.

 

Implications for DeFi Security and Governance

Even reputable projects with long track records must prioritize frequent, thorough audits, especially for older token contracts. Legacy code is often the weakest link.

Mechanisms that detect abnormal supply changes, enforce withdrawal limits or restrict redemptions during anomalies should be incorporated into liquidity pool architecture. Economic safety modeling must complement smart contract audits.

DeFi users often underestimate the risk of providing liquidity or staking in complex protocols. No audit or reputation fully eliminates risk. Users must diversify exposure and treat yield opportunities with caution.

With Tornado Cash and similar services repeatedly used for laundering, regulators may push for more enforcement actions. This increases pressure on privacy tools, but it also highlights the need for decentralized privacy solutions that cannot be misused as easily.

 

Final Thoughts

The Yearn yETH exploit and subsequent laundering through Tornado Cash are the latest reminders that DeFi, while innovative, remains structurally fragile. As ecosystems grow more interconnected and protocol complexity increases, so does the risk of catastrophic failures.

For DeFi to become a trusted global financial system, it must adopt stronger audits, safer economic design and better user protections. Until then, the space will continue to experience painful setbacks where millions are lost and trust is shaken.

 

This incident reinforces a simple truth, decentralization does not remove the need for rigorous security. It amplifies it.

 

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Upbit’s $30M Hack Exposes Critical Wallet Flaw and Sparks Exchange-Wide Security Overhaul

In late November 2025, South Korea’s largest cryptocurrency exchange, Upbit, confirmed a security breach resulting in the theft of approximately $30 million in digital assets. Following the incident, an emergency audit uncovered a critical vulnerability in Upbit’s internal wallet software, a flaw that, under certain conditions, could allow private keys to be inferred from public blockchain data. The revelation has shaken the industry, raising serious questions about exchange-level wallet security and exposing structural risks that go far beyond typical smart-contract exploits.

 

What Happened: The Hack and the Audit Discovery

On November 27, Upbit detected irregular withdrawals from wallets associated with Solana ecosystem assets. The suspicious activity triggered an immediate freeze on deposits and withdrawals, and all hot wallets were swept into cold storage for security. The total loss was confirmed at roughly $30 million in tokens, with approximately $1.5 million successfully frozen after being flagged in the withdrawal process.

As part of the recovery efforts, Upbit initiated a full emergency audit of its wallet infrastructure and blockchain transaction logs. The audit revealed that a flaw in the wallet’s internal signature implementation could have compromised private keys. Specifically, the software generated weak or predictable signature patterns. In cryptographic terms, this can make it mathematically possible to reconstruct private keys from publicly visible blockchain signatures. This is a deeply serious vulnerability that strikes at the core of how digital signatures are supposed to work.

Although Upbit has not concluded that this issue directly caused the hack, the exchange stated that the discovery will guide its complete rebuild of wallet and key-management infrastructure.

 

Why This Flaw Is Particularly Dangerous

Private Key Exposure At the Infrastructure Level

Typically, blockchain signatures are designed so that private keys remain secure even though transactions are public. The weakness in Upbit’s wallet implementation breaks that core principle. A flaw like this is not a user-level mistake, it is a systemic threat, where all assets held by the platform are at risk, not just an individual account.

Historical Transactions Could Be Vulnerable

Even if attackers did not exploit the flaw this time, it may have existed for years. That means older signatures could be analyzed retroactively. If any historical signature was generated under weak conditions, an attacker could potentially reconstruct private keys long after the transaction was made.

Custodial Trust Under Pressure

Most users trust centralized exchanges to safeguard private keys properly. A flaw of this magnitude undermines that trust. Institutional investors and large holders, who rely on strict compliance and robust custodial safeguards, may rethink their risk assessments after this discovery.

 

Upbit’s History of Security Breaches

This is not the first time Upbit has faced major security threats. In 2019 the exchange suffered a breach involving 342,000 ETH, valued at roughly $50 million at the time. That attack was later attributed to state-sponsored hacking groups. The incident influenced South Korean regulators to tighten security and mandate stronger custodial protections.

More recently, Upbit disclosed that it faced more than 159,000 hacking attempts within a six-month period in 2023. That wave of attacks led the exchange to modify its wallet architecture and lean more heavily on cold-storage practices.

The recurrence of significant security issues suggests that Upbit remains a high-value target and that its security infrastructure requires ongoing, rigorous oversight.

 

What Upbit Is Doing Now

Following the hack and the emergency audit, Upbit has taken several immediate actions:

• All deposits and withdrawals have been suspended while systems are secured.

• All hot wallet funds have been transferred into cold storage.

• The wallet infrastructure is being completely rebuilt, with particular focus on signature safety and key-management processes.

• Upbit has pledged to reimburse all affected customers from corporate reserves.

• The exchange is coordinating with law-enforcement agencies to track the stolen funds and freeze assets wherever possible.

The company has described the flaw as extremely rare and emphasized that proper blockchain signatures should never allow private-key inference under normal circumstances. Even so, the discovery will influence exchange security standards going forward.

 

Wider Industry Implications

Custodial Risk Must Be Re-Evaluated

The Upbit incident demonstrates that even large, established exchanges can harbor deeply critical vulnerabilities. The risk here is not just theft, but cryptographic failure. Institutions and retail users may reconsider whether centralized custody is appropriate, and may shift to multi-sig, cold storage, or hardware-based self-custody solutions.

Regulatory Scrutiny Will Increase

As more high-profile breaches occur, regulators are likely to introduce stricter auditing and compliance requirements. These may include mandatory signature verification audits, stronger hardware security module standards, and enhanced reporting rules for exchanges.

Developers Must Reassess Wallet Security

The flaw highlights a reality that many developers overlook. While smart-contract security often receives the most attention, wallet security, signature generation, and key-management logic are equally critical. A failure in these components can compromise entire platforms, regardless of smart-contract safety.

 

Final Thoughts

The Upbit breach and the subsequent discovery of a critical signature vulnerability represent a major turning point in how the industry views custodial risk. This incident is not simply another hack. It is a lesson in the fragility of cryptographic assumptions when wallet infrastructures are not implemented perfectly.

Upbit has taken serious steps to contain the damage, reimburse users, and rebuild its systems. Yet the broader implications extend far beyond one exchange. The incident serves as a reminder that in crypto, private keys are the ultimate line of defense, and any systemic flaw that jeopardizes them can create cascading risks across an entire ecosystem.

 

Exchanges, institutions, developers, and users must take this as a call to action. Security must evolve. Auditing must deepen. And the industry must continue moving toward architectures that reduce reliance on single points of failure.

 

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Aerodrome Finance Front End Attack, Users Should Avoid Domains

 

On November 22, 2025, Aerodrome Finance publicly alerted its community that its front-end system had been compromised. Users were urged to avoid interacting with the official domain until further notice. The incident shines a light on not only the specific risks for Aerodrome but the evolving threat landscape that decentralized finance (DeFi) platforms face as they attract more assets and users.

Here is a detailed breakdown of the event, the immediate impact, the underlying vulnerabilities, and what users should do now.

 

What Happened at Aerodrome

Aerodrome, a prominent decentralized exchange (DEX) built on the Base network, discovered a malicious actor had gained control of elements of its front-end infrastructure. The team’s announcement stated that the system was under attack and users should avoid transactions until the issue is resolved.

Investigations and on-chain data suggest the following sequence:

• The attacker exploited the front-end system, possibly via a Domain Name System redirection or DNS hijack, leading users to a fake interface.

• Users connecting wallets and signing transactions through the compromised domain exposed themselves to malicious contract interactions, which allowed the attacker to drain wallets.

• On-chain sleuths identified two wallet addresses receiving stolen funds, with estimates of approximately $40,000 to $70,000 diverted from Aerodrome and related domains.

• Although the core smart contracts reportedly remained secure, the front-end compromise posed serious risk because users interacted with an interface that could initiate unauthorized transactions.

Analysts have pointed out that front-end attacks, while less dramatic than contract exploits, remain one of the most under-appreciated vectors in DeFi. This incident places Aerodrome in the spotlight and raises critical questions about user safety, domain management, and the trust model of DeFi.

 

What Aerodrome and the Community Are Doing

In response to the incident, Aerodrome has taken the following steps:

• Issued urgent advisories to users not to connect wallets or sign transactions on the affected domain.

• Provided a secure, decentralized interface alternative while full remediation is underway.

• Encouraged users to revoke all permissions granted within recent hours and monitor their wallet activity for unauthorized transactions.

• Launched an investigation with bug bounty and intelligence firms to trace the attacker and recover stolen assets.

• Secured its domain provider, locked the domain at the top-level domain (TLD), and initiated provider migration to avoid recurrence.

While the smart contracts remain uncompromised, the front-end risk highlights that all layers—the UI, domain infrastructure, wallet connection flow—must be protected.

 

What Users Should Do Now

If you used Aerodrome recently, please take these actions immediately:

 

1. Revoke Wallet Permissions
   Use your wallet or permissions dashboard (such as Etherscan’s token approvals) to remove any recently granted approvals for the Aerodrome front-end domain.

2. Avoid the Official Domain Until Verified
   Use only mirror or verified alternative interfaces provided directly by the team. Do not trust links in social media bios unless officially confirmed.

3. Monitor Transactions
   Check your wallet transaction history for suspicious outgoing transfers, token approvals or swap interactions you did not initiate.

4. Use a Hardware Wallet
   For any future DeFi interaction, especially involving large amounts, consider using wallets with hardware signing to reduce risk of rogue UI prompts.

5. Stay Updated
   Follow official Aerodrome channels for remediation updates and wait for confirmation that the front-end is secure before interacting again.

 

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