Taiko Loses $1.7M In Bridge Exploit, Suspends Block Production And Freezes Withdrawals

Blockchain security firm PeckShield reported that Ethereum Layer 2 scaling network Taiko was recently exploited in an incident that resulted in losses of approximately $1.7 million.

According to the firm, the attacker transferred 1.99 million TAIKO tokens, valued at roughly $189,120, to the cryptocurrency exchange MEXC and continues to hold 870.8 ETH worth approximately $1.52 million.

Web3 security platform Blockaid stated that the breach appears to have originated from a vulnerability in Taiko’s bridge source-signal proof validation process. The flaw allegedly allowed specially crafted message proofs to be recognized as valid on Ethereum’s Layer 1 network despite the absence of legitimate MessageSent events on the Taiko source chain. As a result, fraudulent bridge messages could be registered and later redeemed, enabling unauthorized withdrawals of assets from the protocol’s ERC-20 vault.

Taiko Implements Emergency Measures to Contain Breach

Following the discovery of the exploit, Taiko confirmed that its chain state verification mechanism had been compromised, warning that the security assumptions underpinning all bridges deployed on the network could no longer be considered reliable. The project said it had begun coordinating with its Security Council and ecosystem partners to contain the incident, suspend affected systems where possible, and pursue both technical and legal responses.

The team advised users to immediately withdraw funds from all bridges operating on Taiko and urged centralized exchanges to suspend TAIKO deposits until further notice. During the investigation, block production by Taiko proposers was temporarily halted.

In a subsequent update, Taiko reported that the situation had been contained. The project stated that the affected bridge and vault had been paused, preventing any further withdrawals. Bridge operations in both directions were taken offline, while pending transactions were suspended rather than lost. Additional details are expected to be released as the investigation continues.

Taiko is a decentralized Type 1 ZK-EVM Layer 2 blockchain designed to improve Ethereum’s scalability. The network enables faster and lower-cost transaction processing while maintaining Ethereum equivalence, allowing developers to deploy existing Ethereum smart contracts without modifying their code.

At the time of writing, TAIKO, the network’s native token, had declined 9.41% over the previous 24 hours and was trading at $0.07500. According to CoinMarketCap data, the token previously reached a high of $0.12000.

The incident adds to a series of security breaches affecting the DeFi sector in recent months. Over the same weekend, another exploit was reported on Secret Network, where an attacker allegedly leveraged an “infinite mint” vulnerability in a smart contract to create unbacked wrapped versions of Axelar-wrapped assets, resulting in losses estimated at $4.67 million.

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