Loopscale, a decentralized finance (DeFi) protocol operating on the Solana blockchain, has halted its lending activities following an exploit that resulted in a loss of $5.8 million.
The breach occurred on April 26, when an attacker executed a series of undercollateralized loans, draining approximately 5.7 million USDC and 1,200 SOL, as confirmed by Loopscale co-founder Mary Gooneratne.
In light of the incident, Loopscale has restored certain functionalities on its platform, allowing users the ability to repay loans, add collateral, and close existing positions. However, key services, including vault withdrawals, are still disabled as the team continues to investigate the incident.
Loopscale Exploit Impacts USDC and SOL Vaults
According to Gooneratne, the exploit specifically targeted the protocol’s USDC and SOL vaults, which represent 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 via X.
Update: Loopscale has re-enabled loan repayments, top-ups, and loop closing. All other app functions (including vault withdrawals) are still temporarily restricted while we investigate and ensure mitigation of this exploit.
The root cause of the exploit has been identified as an… https://t.co/Pk2pMx8UcK
— Loopscale (@LoopscaleLabs) April 26, 2025
This incident adds to the increasing tally of crypto exploits in 2025. According to reports from blockchain security firm PeckShield, over $1.6 billion worth of cryptocurrency was stolen in the first quarter of the year, with a significant portion linked to a $1.5 billion hack on the centralized exchange ByBit, attributed to North Korea’s Lazarus Group.
Publicly launched on April 10 after a six-month beta phase, Loopscale aimed to revolutionize DeFi lending with a model designed to enhance capital efficiency. In contrast to protocols like Aave, which depend on pooled liquidity, Loopscale employs an order book system for direct lender-borrower matching.
The protocol also features specialized markets for structured credit, receivables financing, and undercollateralized loans. Before the hack, Loopscale boasted around $40 million in total value locked and attracted a user base of over 7,000 lenders, with its USDC and SOL vaults offering competitive yields exceeding 5% and 10% APR, respectively.
The platform supported lending for various tokens such as JitoSOL and BONK, along with looping strategies across 40 token pairs. Investigations into the breach are still ongoing.
Crypto Ecosystem Suffers $1.6 Billion in Q1 Hacks
During the first quarter of 2025, the crypto sector experienced staggering losses amounting to approximately $1.6 billion across 39 separate incidents, as reported by the blockchain security platform Immunefi. The report deemed Q1 2025 the most devastating quarter for hacks in the history of the crypto landscape.
A significant portion of the losses stemmed from just two major hacks impacting centralized exchanges. Phemex reported a $69.1 million loss in January, while Bybit suffered a massive $1.46 billion breach in February.
This alarming figure represents a 4.7-fold increase in total losses compared to the same period in 2024, which saw hackers and fraudsters stealing a total of $348.25 million. Notably, it is believed that the notorious Lazarus Group from North Korea was responsible for the two largest attacks, accounting for 94% of the total losses at $1.52 billion.
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