Solana DeFi Protocol Loopscale Halts Lending After $5.8M Exploit

Crypto Journalist

Amin Ayan

Crypto Journalist

Amin Ayan

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Amin Ayan is a crypto journalist with over four years of experience in the industry. He has contributed to leading publications such as Cryptonews, Investing.com, 99Bitcoins, and 24/7 Wall St. He has...

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April 26, 2025

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Loopscale, a decentralized finance (DeFi) protocol built on Solana, has suspended its lending operations following a $5.8 million exploit.

The incident occurred on April 26, when a hacker drained 5.7 million USDC and 1,200 SOL by executing a series of undercollateralized loans, according to Loopscale co-founder Mary Gooneratne.

In response, Loopscale has partially restored platform functions, allowing users to repay loans, add collateral, and close existing loops.

However, key features, including vault withdrawals, remain disabled as the team continues its investigation.

Loopscale Exploit Hits USDC and SOL Vaults

Gooneratne confirmed that the exploit was limited to the protocol’s USDC and SOL vaults, representing about 12% of Loopscale’s total value locked (TVL).

“Our team is fully mobilized to investigate, recover funds, and ensure users are protected,” Gooneratne stated on X.

The attack adds to a growing list of crypto exploits in 2025. Blockchain security firm PeckShield recently reported over $1.6 billion in crypto thefts during Q1 alone, with the majority linked to a $1.5 billion hack on centralized exchange ByBit by North Korea’s Lazarus Group.

Launched publicly on April 10 after a six-month beta, Loopscale introduced a unique DeFi lending model aimed at improving capital efficiency.

Unlike protocols such as Aave, which rely on pooled liquidity, Loopscale uses an order book system to directly match lenders and borrowers.

It also offers specialized markets for structured credit, receivables financing, and undercollateralized loans.

Before the exploit, Loopscale managed around $40 million in TVL and had attracted over 7,000 lenders.

Its USDC and SOL vaults were offering attractive yields of over 5% and 10% APR, respectively.

The platform also supported lending for tokens like JitoSOL and BONK, along with looping strategies across 40 token pairs. Investigations into the breach remain ongoing.

Crypto Lost $1.6 Billion to Hacks in Q1

In the first three months of 2025, the crypto ecosystem lost a whopping $1,635,933,800 across 39 incidents, according to the blockchain security platform Immunefi.

The report claimed, “Q1 2025 marks the worst quarter for hacks in the history of the crypto ecosystem.”

Most of that was the result of only two hacks of two centralized exchanges. Phemex suffered a $69.1 million loss in January, while Bybit lost $1.46 billion in February.

Subsequently, the total number of losses in the first quarter marks a 4.7x increase compared to Q1 2024. At that time, hackers and fraudsters stole $348,251,217.

Notably, experts assume that the infamous North Korean Lazarus Group is behind the two largest attacks. They stole $1.52 billion, which is 94% of total losses.