Venus Protocol Recovers $13.5M for User After Smart Contract Phishing Attack

In a notable demonstration of incident response within the decentralized finance (DeFi) sector, Venus Protocol, a prominent lending platform operating on the BNB Chain, successfully recovered $13.5 million for a user who fell victim to a sophisticated phishing attack. The rapid recovery and subsequent resumption of full operations underscore the evolving capabilities and persistent vulnerabilities inherent in the digital asset landscape, particularly concerning user interaction with smart contracts.

• Venus Protocol successfully recovered $13.5 million following a sophisticated phishing attack.
• The attack involved a user inadvertently signing a malicious smart contract.
• The protocol temporarily suspended withdrawals and liquidations to conduct a comprehensive security audit.
• All services were fully restored within hours after the security review confirmed no broader system vulnerabilities.
• The incident highlights ongoing challenges and the critical need for user vigilance in the DeFi ecosystem.

Incident Details

The incident, which transpired on September 2, 2025, involved a major trader on the Venus Protocol platform. The individual inadvertently signed a malicious smart contract through the updateDelegate() function, an action that granted the attacker unauthorized access to their digital wallet. Initial assessments by analytics firm PeckShield had pegged the potential losses at $27 million, a figure later adjusted to the confirmed $13.5 million withdrawn by the perpetrator.

Protocol’s Swift Response

Upon detecting the compromise, Venus Protocol swiftly implemented a temporary suspension of both withdrawals and liquidations. This decisive measure was critical, as the protocol’s team later clarified, not only for the successful retrieval of the misappropriated assets but also for conducting a comprehensive security audit of the platform’s infrastructure. This precautionary step ensured that no broader system vulnerabilities were exploited and that the protocol’s core operations and other user assets remained uncompromised. The platform confirmed that user assets and its frontend interface were unaffected by the breach.

Service Restoration and Market Reaction

Following the extensive security review, Venus Protocol announced the complete restoration of its services, including withdrawals and liquidations, as of 9:58 PM UTC on September 2, 2025. In a statement on X (formerly Twitter), the protocol conveyed its gratitude to the community for their support during the critical period. The prompt resolution, however, elicited a subdued market response; the protocol’s native token, XVS, traded at approximately $6.19 following the announcement, indicating a cautious investor sentiment despite the successful recovery.

Broader Implications and Ongoing Vigilance

The incident highlights the ongoing challenges faced by users in the DeFi ecosystem, where the security of funds often hinges on individual vigilance against increasingly elaborate phishing tactics. While protocols can implement robust internal security, the point of interaction between users and malicious external elements remains a significant risk vector. Venus Protocol has committed to publishing a detailed post-mortem report on the exploit, which is expected to offer deeper insights into the attack vector and enhanced preventative measures. This event also serves as a reminder of broader industry threats, echoing similar phishing attacks, such as those targeting hardware wallet manufacturer Trezor in June of the same year.

Official Announcement

For official updates regarding the incident, please refer to the Venus Protocol’s announcement: https://x.com/VenusProtocol/status/1709403166258950587