UPDATED: February 29, 2024, 2:52 a.m. EST
The stablecoin Seneca protocol suffered an exploit, resulting in a loss of over $6 million on the Ethereum and Arbitrum networks.
The exploit was identified as being related to an issue within the protocol’s smart contract approval mechanisms, which was exploited by an unknown attacker to misappropriate funds.
Blocksec security analysts identified the root cause of the breach as an “arbitrary calling issue” in Seneca smart contracts.
The project’s contracts did not contain code allowing the team to pause it. Instead, users had to revoke permissions. The stolen assets reportedly amounted to over 1,900 ETH ($6 million).
This vulnerability allowed the attacker to perform unauthorized transfers of project contract tokens to external addresses controlled by him. “The root cause was an arbitrary call issue, therefore the approvals of the vulnerable contract may be transferred,” Lei Wu, CTO of Blocksec, told The Block.
The Seneca team recognized the incident and urged users to revoke previously granted permissions in order to prevent further unauthorized transactions.
Seneca is a decentralized finance project that allows users to create and borrow its stablecoin, senUSD, against other crypto assets – a stablecoin mechanism also known as a collateralized debt position.
The Seneca token fell more than 60% following the exploit, going from around $0.1 to less than $0.04.
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