Initia Halts Chain After Second Exploit, Total Losses Reach $3.3M

Initia’s X account reported combined losses of $3.3 million across two exploits in three weeks, including a $615,000 breach that halted the chain on Tuesday morning. The account announced the halt after detecting “unauthorized transfers from the escrow accounts on the Initia L1 that hold assets bridged to several rollups.”

The post blamed “compromised rollup infrastructure keys allowing an attacker to fabricate IBC transfers.” It counted $615,000 that made it off-chain, while most assets removed from escrow accounts remain on Initia. The project said those assets may be recoverable through validator coordination.

Initia describes its L1 as a base layer and central liquidity hub for its Interwoven Rollups. The project lists Binance Labs, Delphi Ventures and HackVC among its backers. The latest incident therefore reached infrastructure serving multiple rollups, rather than one isolated application.

What does the latest exploit change?

The latest breach separates $615,000 of off-chain movement from the assets still held on Initia. The post gave no dollar figure for the on-chain remainder and identified validator coordination as the recovery route. The announcement did not name the affected rollups.

The halt affects the base layer supporting those rollups. Initia did not provide a restart date in the announcement, so the operational scope of the stoppage remains undefined.

How did the first exploit work?

The earlier incident stemmed from a script-caching bug that let an attacker artificially spoof MoveVM state and credit themselves with unbacked WETH, iUSD and USDC tokens. Initia halted the chain and its rollups, and the $2.7 million in losses were bridged to Ethereum.

The two exploits used different mechanisms. The first credited an attacker with unbacked token balances, while the second relied on fabricated IBC transfers from escrow accounts. Initia and its rollups returned online on November 2, eight days before the latest exploit.

What can be recovered?

Most assets removed from the latest incident’s escrow accounts remain on Initia, and the project says validator coordination may recover them. The $615,000 figure covers the portion that made it off-chain, not the full amount removed from escrow.

The notice supplied neither a recovery deadline nor a dollar estimate for the on-chain remainder, and did not identify individual validators. That leaves the final loss from the Tuesday incident undetermined.

The $3.3 million in combined losses exceeds Initia’s remaining total value locked. TVL has fallen more than 90% from its peak shortly after the chain launched in May last year. The earlier $2.7 million loss accounts for the larger share of the combined total.

User reaction to the second halt has been aggressive, with users urging the chain to shut down and accusing the team of an inside job. INIT rose about 60% over the previous 24 hours, prompting suspicions among frustrated users of a crime-driven price increase.

The next operational checkpoint is validator coordination on the assets still held on Initia. The X post set no recovery deadline or restart date, leaving the immediate reopening timetable unspecified.