Venus Protocol Recovers $13.5M in Phished Funds After Emergency Governance Vote
Venus Protocol, one of the largest lending platforms on BNB Chain, has recovered around $13.5 million lost in a phishing attack...
Quick overview
- Venus Protocol successfully recovered approximately $13.5 million lost in a phishing attack, which initially reported losses of around $27 million.
- The breach occurred due to a user-level compromise when a whale wallet approved a malicious transaction, not a failure of the smart contract.
- Swift actions included pausing the protocol, forcing liquidation of the attacker's positions, and freezing compromised funds, leading to a confirmed recovery by Sept 3.
- The incident raised concerns about centralization in decentralized systems, highlighting the importance of community governance in protecting users against phishing attacks.
Venus Protocol, one of the largest lending platforms on BNB Chain, has recovered around $13.5 million lost in a phishing attack. The recovery was announced on Sept 3, a day after the incident.
The breach happened when a high value whale wallet approved a malicious transaction, giving the attacker access to assets like BTCB, vUSDT, vUSDC, vXRP and vETH. Initial reports estimated the loss to be around $27 million but it was later adjusted to reflect the user’s outstanding debt. This was a user level compromise not a smart contract failure.
Phishing is one of the most common attack vectors in DeFi. Unlike code exploits, phishing relies on social engineering where malicious websites or pop-ups trick users into giving access.
Swift Action Secures Recovery
Venus acted fast to prevent the attacker from liquidating or transferring the assets. The protocol was paused, all activity was halted and a community governance vote was called.
Venus Protocol recovers $13.5M lost in phishing attack
Venus Protocol has recovered $13.5M after a whale wallet phishing attack. Funds restored via governance action, but decentralization questions remain.
— crypto.news (@cryptodotnews) September 3, 2025
The measures approved were:
- Forced liquidation of the attacker’s positions.
- Freezing the compromised funds before they could be bridged or mixed.
- Restoring assets to protocol reserves under community oversight.
By Sept 3, blockchain data confirmed the funds were safe, PeckShield verified the recovery. Venus resumed full operations at 9:58 PM UTC after additional safety checks.
Market and Community Impact
The news spooked the market. XVS, the governance token, dropped around 10% as trading volume spiked. But once the recovery was confirmed, the token stabilized, market confidence was restored.
The full recovery of funds is rare in DeFi and highlights the strengths and trade-offs of Venus’s governance model. While the intervention was effective, it also raised questions about centralization in decentralized systems since a multisig was required to pause the protocol and enforce liquidations.
Venus will release a post-mortem report to outline the lessons learned. The protocol emphasized that their smart contracts were secure throughout the incident, meaning the risk was from user interaction not protocol design.
As phishing attacks increase across the crypto space, the case shows how community governance can play a key role in protecting users and maintaining trust in DeFi platforms.
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