Initia Halts Layer-1 Chain After Exploit Drains Over $2.6 Million

Initia halted its layer-1 blockchain and its rollups at 3:41 p.m. UTC on Friday after an attacker minted unbacked tokens and drained more than $2.6 million in crypto assets to Ethereum.

The team announced the halt in a post on X, describing the event as a security incident. Initia said it was working with security researchers, validators and exchanges to determine the full extent of the impact. The company has not publicly confirmed the estimated losses or the precise cause of the exploit.

Who flagged the attack first?

Blockchain security researcher Spreek first reported the exploit on Friday. The researcher said an attacker had minted tokens without authorization and converted approximately $2.6 million into other assets, with additional funds still moving at the time of the report.

DeFi platform D2 Finance later published a more detailed reconstruction of the incident:

• The attacker exploited a vulnerability to mint 2 million AUSD tokens without sufficient backing.
• Cross-chain transfers were used to withdraw approximately 1.4 million AUSD, 105 Ether (ETH) and 1.08 million USDC to Ethereum.
• The stolen assets were consolidated into an Ethereum wallet holding approximately 1,135.5 ETH, worth $2.73 million, according to D2 Finance.

D2 Finance attributed the exploit to a vulnerability in a Move function that allowed the attacker to create unbacked tokens and exchange them for assets on Ethereum. That makes the incident a minting exploit rather than a straightforward key compromise: the attacker manufactured value on Initia and realized it on another chain.

What is the operational impact?

Initia is a layer-1 blockchain built to support a network of interconnected rollups, known as Minitias. Friday's halt suspended both the base chain and those rollups, freezing normal transaction processing across the ecosystem while the investigation proceeds.

The native token INIT fell to around $0.115 on Friday before recovering above $0.15, according to CoinGecko data. The token traded near $0.1496 at the time of writing, up about 14% over the previous 24 hours.

The extent of the impact on users remains unclear, and Initia has not published a timeline for restoring network operations. Cointelegraph was unable to reach Initia for additional comment through its official X account.

The pattern mirrors earlier cross-chain minting exploits, where unbacked tokens minted on a source chain were bridged to a more liquid network before the issuing protocol could react. Initia's coordinated work with validators and exchanges suggests the response now hinges on tracing the consolidated Ethereum wallet and coordinating freezes at exchange endpoints. A post-mortem with a confirmed loss figure and a restart schedule is the next milestone for the protocol.