Ionic Hack

On February 4, 2025, Ionic Protocol suffered a $12.3 million exploit on the Mode network due to social engineering. The attacker deployed a fake Lombard Bitcoin Token (LBTC), manipulated the approval process, and used it as collateral to drain assets. While $3.5 million was bridged to Ethereum and deposited into Tornado Cash, swift action froze $8.8 million on Mode.

The attacker created an imitation LBTC and, through prolonged engagement with the Ionic team, secured its approval as collateral with an API3 Oracle and a Balancer pool. After minting 250 LBTC, they used it to withdraw $12.3 million in supply assets, later depositing them into Layerbank and Ironclad to borrow liquid tokens. Despite Mode freezing the attacker’s wallet, they circumvented the block via Layer 1 transactions, bridging additional assets and depositing another 159 ETH into Tornado Cash.

The Ionic team, alongside SEAL911 and zeroShadow, is working with law enforcement to trace the attacker and recover funds, while a compensation plan is being formulated for affected users.