Venus’ XVS token slid more than 9% over the past 24 hours after an exploit left the BNB Chain-based lending protocol with roughly $2.15 million in bad debt.
The March 16 incident did not immediately weigh on prices, but selling pressure emerged after on-chain analysts identified large token holders moving significant amounts of XVS to exchanges.
The protocol, which holds over $1.4 billion in total value locked, was hit as part of a broader risk-off move across digital assets. The CoinDesk 20 (CD20) index declined 4.6% over the same period.
According to Venus, the attacker exploited low liquidity in the THE token market. By accumulating THE and using it as collateral, the attacker borrowed other assets and recycled liquidity back into THE, driving its price from around $0.26 to nearly $0.56.
Venus emphasized the exploit did not involve flash loans, adding that its price oracles continued functioning normally and its Venus Flux platform remained unaffected.
The scheme unraveled when the attacker began selling THE, sending the token down more than 17% within a day and triggering liquidations. Estimates suggest between $3.7 million and $5.8 million was extracted prior to those liquidations, including tokenized bitcoin, BNB, and stablecoins.
The protocol said the damage was largely confined to THE markets and, to a lesser extent, CAKE, with no losses to users outside the impacted pools.
In response, Venus halted borrowing and withdrawals for THE, set its collateral factor to zero, and tightened risk controls across several other markets deemed vulnerable, including BCH, LTC, and AAVE.
The wallet behind the exploit had previously been flagged by community members, but Venus said no action was taken at the time since no protocol rules had been violated.
“Venus operates as a permissionless protocol, and freezing or blacklisting addresses based solely on suspicion is not appropriate,” the team said, highlighting the challenges inherent in decentralized finance.
A governance vote is expected to determine how the protocol will address the losses, likely through its risk reserve fund.
