Incident Overview
On August 30, 2025, Cozy Finance, a DeFi hack protection protocol on Optimism, was exploited for $427,000. The attacker exploited a vulnerability in the withdrawal process that allowed anyone to complete another user's redemption, stealing funds that were then bridged to Ethereum mainnet and deposited into Tornado Cash for laundering.
The vulnerability existed in Cozy Finance's two-step redemption process for their CSET contract. Users must first call redeem() to initiate a withdrawal and receive a redemption ID, then call completeWithdraw() with that ID to finalize the withdrawal. However, the completeWithdraw() function failed to verify the caller's identity, allowing anyone to complete withdrawals on behalf of other users by simply providing their redemption ID.
On August 28, victim user 0xd4398 initiated a redemption for $427,000 and received ID 6. The attacker exploited this by calling completeWithdraw() with the victim's redemption ID, completing the withdrawal to their own address and stealing $427,000 USDC from Aave. The exploit was facilitated by the unwrapWrappedAssetViaConnectorForWithdraw function which allows the receiver argument to be any address.
The attacker could have stolen even more, as the same victim had completed another withdrawal of $677,000 just before the attack. After stealing the funds, the attacker bridged them to Ethereum mainnet and deposited them into Tornado Cash for obfuscation.
Incident Report
Protocol Information
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to Cozy Finance, these are the critical security checks that could have prevented this incident (August 2025).
- Verify all logic paths related to Access Control are guarded by proper access controls and input validation - see the Access Control Attacks attack class for patterns
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.
Free TrialFunds Recovery
Recovered
$1
Net Loss
$427K
Related Attack Classes
The technique used in this hack maps to these vulnerability classes in our security curriculum:
Sources & References
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