Taiko bridge exploit drains up to $1.7M

• Taiko urged users to withdraw funds after a bridge exploit allowed unauthorised withdrawals worth up to US$1.7 million.
• The attack compromised Taiko's chain state verification mechanism, affecting the security assumptions of all bridges on the network.
• Taiko has paused affected systems and is working with partners to contain the incident and investigate the breach.

Taiko (CRYPTO:TAIKO) has advised users to withdraw assets from all bridges deployed on its network after an exploit targeting its chain state verification mechanism resulted in losses estimated at up to US$1.7 million.

The incident marks at least the 23rd crypto protocol exploit reported this month, following recent attacks on Secret Network and Humanity Protocol that caused losses of US$4.67 million and more than US$30 million respectively.

“We strongly advise all users to withdraw their funds from all bridges deployed on Taiko immediately,” said Taiko.

Blockchain security firm Blockaid said the exploit appears to have stemmed from a flaw in how the bridge validated source signals, allowing fraudulent message proofs to be accepted on Ethereum (CRYPTO:ETH) and enabling unauthorised asset withdrawals from the ERC20 vault.

Taiko said it had confirmed a compromise of its chain state verification mechanism and paused affected systems while coordinating with ecosystem partners to contain the incident, with estimates from security researchers placing losses between US$1 million and US$1.7 million. Following the announcement the Taiko price was down at US$0.084.

Blockchain intelligence platform Arkham reported that wallets linked to the exploiter were holding approximately US$1.5 million in assets, primarily Ether, while security firm PeckShield said 1.99 million TAIKO tokens worth about US$189,000 had already been transferred to MEXC.

Taiko is an Ethereum layer-two network, and the exploit follows several other decentralised finance attacks this month, including incidents affecting Secret Network, PancakeSwap's OLPC/LABUBU liquidity pool, Aztec Connect, RetoSwap, Raydium AMM and Syscoin Bridge.

At the time of reporting, Taiko price was $0.07489.