Radiant Capital Freezes Arbitrum Markets Amid 4.5M Dollars Flash Loan Attack Report

Crypto News- Cross-chain lending platform Radiant Capital has temporarily halted its lending and borrowing markets on Arbitrum due to a reported $4.5 million exploit affecting one of its recently created USDC Coin (USDC) markets.

In a statement released on January 3, Radiant Capital acknowledged an issue with the newly established native USDC market on Arbitrum, which was later verified by Radiant developers and the wider cybersecurity community. Blockchain security firm Beosin characterized the exploit as a flash loan attack, where the attacker exploited a “rounding issue” in the codebase, leading to a cumulative precision error.

Radiant Capital Freezes Arbitrum Markets Amid 4.5M Dollars Flash Loan Attack Report

The flaw enabled the attacker to profit through repeated deposit() and withdraw() operations, as explained in Beosin’s January 3 post. PeckShield also identified the issue on January 2, attributing it to a “known rounding issue” in the current Compound/Aave codebase. The exploit targeted a time window when a new market was activated in a lending market, forked from the popular Compound/Aave protocols.

According to data from the Arbitrum block explorer Arbiscanner, the attacker successfully siphoned a total of $4.5 million in Ether (ETH) from the protocol.

Radiant Capital Pauses Operations on Arbitrum Following 4.5M Dollars Exploit

In response, Radiant Capital promptly paused lending and borrowing markets on Arbitrum, assuring investors that no additional funds were currently at risk. The platform pledged a detailed postmortem analysis and committed to restoring normal operations once the investigation was completed.

Radiant Capital reminded users that no actions could be taken until the markets were unpaused on Arbitrum. Meanwhile, the crypto community witnessed fake Radiant Capital accounts flooding social media platforms with phishing links, falsely claiming to assist users in revoking approvals.

Radiant Capital, a decentralized borrowing and lending protocol with cross-chain functionality built using LayerZero technology, currently boasts approximately $315 million in total value locked, according to DefiLlama.