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Following the recent major drop in the cryptocurrency market led by Bitcoin (BTC), a partial liquidation was triggered in the $150 million Binance Coin (BNB) credit position of Venus Protocol, a decentralized lending platform taken over by the BNB Chain core team.
Hacker’s Credit Position Liquidated for $5.5 Million
In November, Venus Protocol and the BNB Chain core team had accepted a management proposal that granted the core team the authority to liquidate the position in order to mitigate the impact on the broader market in the event of a liquidation.
Chinese blockchain journalist Colin Wu reported that the recent market drop triggered a partial liquidation in the hacker’s (0x48…9bec) Venus Protocol credit, resulting in the liquidation of 1.10 million vBNB (approximately $5.5 million) being refunded. Currently, the hacker still holds 912,235 BNB collateral, as well as 112 million USDT and 36.75 million USDC credit positions in Venus Protocol.
Hacker’s Liquidation Control in the Hands of BNB Chain Team
In October 2022, an unidentified hacker targeted the cross-chain infrastructure of BNB Chain, causing a major uproar. The hacker, who caused the loss of over $100 million worth of cryptocurrencies, manipulated security proofs during the attack and minted 2 million BNB, which was valued at $560 million at the time. By exploiting a security vulnerability in the BNB cross-chain bridge’s “iavl hash control,” the hacker used the stolen BNB to acquire $150 million worth of USDT and USD Coin (USDC) in Venus Protocol, taking advantage of a 900,000 BNB position.
BNB Chain team temporarily halted the bridge during that time, but eventually resumed its operations, leaving the credit position intact and still active. In early June, as the liquidation of the credit approached, the BNB Chain core team took over the credit position of Venus Protocol.
The main reason behind the BNB Chain team’s control of the process is to avoid the direct liquidation of the credit, which could have negative consequences for BNB Chain. Such a scenario could lead to a sharp drop in the price of BNB, causing unnecessary harm to the broader market, Venus Protocol, and its users.
