Unizen, a decentralized finance (DeFi) protocol, has pledged to reimburse users who lost $750,000 or less following a security breach that resulted in the loss of approximately $2.1 million in user funds.

The breach was identified and assessed by blockchain analytics firms PeckShield and SlowMist on March 9. PeckShield first detected an “approve issue” on March 9, leading to the discovery that over $2 million had been siphoned from the platform. SlowMist’s investigation confirmed the total losses amounted to around $2.1 million, noting that the stolen funds were converted from Tether (USDT) to the stablecoin Dai (DAI).

The hacker exploited an external call vulnerability within the Ethereum-based contract, converting the stolen USDT to DAI. Unizen has urged users to revoke any approvals associated with the hacker’s address to prevent additional losses.

In response to the theft, Unizen reached out to the hacker with an on-chain message on March 10, offering a 20% bounty for the return of the remaining stolen assets. The company has also engaged with law enforcement and forensic experts to trace the hacker’s identity.

Despite ongoing negotiations for the bounty, Unizen announced on March 11 its plan to begin compensating 99% of the victims immediately, prioritizing a meticulous, individualized approach to the reimbursement process. CEO Sean Noga has provided personal funds to facilitate the reimbursements, ensuring that users who suffered losses below the $750,000 threshold receive their funds back in USDT or USD Coin (USDC).

Chief Technology Officer Martin Granström disclosed on social media platform X that a comprehensive incident report will be published in collaboration with external third-party firms. Granström also reiterated the company’s commitment to enhancing its security measures to prevent future incidents.

This incident highlights the importance of continually reassessing and enhancing security measures in the DeFi sector to protect user assets from online attacks. In a recent event last month, Seneca Protocol experienced a severe security compromise, leading to a sharp decline in the price of its SEN token. CertiK reported that the assailant took advantage of a flaw within the protocol, resulting in damages estimated at about $6.4 million.

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