Ahmet Bedirhan Arvas 
Radiant Capital fell victim to a hack attack this week, resulting in a theft of $4.5 million for the cross-chain lending platform. What seemed like a minor “rounding error” in the new Arbitrum-based USDC market became a playground for hackers, enabling them to seize millions of dollars through a series of flash loan-supported deposit-withdrawal frauds. Blockchain security firm Beosin likened this to a digital bank heist, where the thief executed a sequence of illegal transaction loops.
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While Radiant and cybersecurity experts swiftly identified the issue, accusations pointed to a pre-existing security vulnerability in the current codebase, shared with popular protocols like Compound and Aave. Another security firm, PeckShield, labeled it as a “known weakness,” raising concerns about imitative attacks on similar platforms.
The consequences were rapid. In an effort to prevent further losses, Radiant froze all lending and borrowing activities on Arbitrum. Investors felt the pressure, but Radiant assured that the remaining funds were secure. A comprehensive investigation was promised, along with a commitment to return to normalcy, though the timeline remained uncertain.
Today, we received a report of an issue with the newly created native USDC market on Arbitrum. After validation by Radiant developers and the wider Web 3 security community, the Radiant DAO Council paused lending/borrowing markets on Arbitrum temporarily while this is…
— Radiant Capital (@RDNTCapital) January 3, 2024
This incident sharply reminds even established players of the inherent risks in DeFi. It underscores the need for meticulous code audits, continuous security attention, and a vigilant community. As DeFi evolves, developers must prioritize robust infrastructure and airtight security to ensure that their dreams of financial freedom do not turn into digital nightmares.