Kinto, an Ethereum Layer 2 project, experienced a $1.55 million exploit due to a vulnerability on its Arbitrum deployment in July 2025, leading to a significant $K token price crash.
The incident underscores the fragility of Layer 2 protocols and highlights the urgent need for enhanced security measures, affecting market confidence and spurring emergency recovery efforts by Kinto.
In July 2025, Ethereum Layer 2 Kinto suffered a $1.55 million exploit. The vulnerability on its Arbitrum deployment led to an 87-90% crash of the $K token price. A temporary shutdown followed as Kinto assessed the damage.
CEO Ramon Recuero, with experience in DeFi, took the lead in addressing the crisis. He stated on Twitter that the team is working hard to fix the issue and will compensate affected users, showing dedication to recovery.
The exploit of $1.55 million affected ETH, USDC, and the $K token from liquidity pools. In response, Kinto initiated emergency fundraising to recover losses. Experts from Hypernative and Seal 911 are engaged in the investigation. The Kinto Team announced: “We are looking into the situation ourselves and with third parties (Hypernative, Seal 911) – as soon as we have a clear picture of what has happened we will make an announcement.”
Potential financial outcomes include emergency audits and liquidity recovery plans. Historical data shows such incidents often lead to immediate token price crashes. Kinto plans to restore the pre-hack state using balance snapshots.
Cross-chain Layer 2 exploits have happened before, notably Polygon’s bridge incident. These events often result in asset depletion and confidence loss. Similar to past occurrences, Kinto paused contracts and sought expert audit support.
Experts highlight the importance of sub-hour withdrawal times for Layer 2 bridges, as emphasized by Ethereum co-founder Vitalik Buterin. Such measures could potentially mitigate future vulnerabilities and ensure quicker asset recovery.
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