Cronos blockchain halts after $75 million exploit on Tectonic lending protocol

The Cronos blockchain, linked to crypto exchange Crypto.com, was halted on Sunday after an exploit on its largest lending protocol, Tectonic. An onchain researcher estimates the attack affected roughly $75 million in assets.

Tectonic, a decentralized finance (DeFi) protocol where users can lend or borrow crypto assets, confirmed it was investigating an incident and warned users not to interact with it until further notice. DeFi refers to financial services like lending that run on blockchains without traditional intermediaries like banks.

How the attack unfolded

Researcher Weilin Li said the attacker manipulated the price of Tectonic’s governance token, TONIC, inflating its value by about 100 times in 20 minutes. The attacker then used the artificially inflated TONIC as collateral to borrow other assets from Tectonic. Li estimates the attacker borrowed around $75 million but only managed to move about $6 million to Ethereum before Cronos paused the network.

Tectonic’s documentation notes that low-liquidity assets like TONIC can be vulnerable to price manipulation. The protocol allows users to borrow assets worth up to 20% of the value of TONIC deposited as collateral.

Official responses

Cronos Network announced on X (formerly Twitter) that it had identified the exploit and halted the blockchain, promising updates as the investigation continues. Tectonic also acknowledged the incident and advised users to avoid the protocol for now.

Crypto.com CEO Kris Marsalek stated that the company’s app and exchange were not compromised and that Crypto.com’s security team is assisting with the investigation. Cronos was originally developed by Crypto.com, but Tectonic operates independently on the network.

What is confirmed

• Cronos blockchain was halted due to an exploit on Tectonic.
• Tectonic confirmed it is investigating an incident and warned users to avoid the protocol.
• Crypto.com’s app and exchange were not affected.
• An onchain researcher estimates $75 million was affected, with about $6 million moved to Ethereum.
• The attack involved manipulating the price of TONIC, Tectonic’s governance token.

What is still unclear

• The exact amount affected and the root cause of the exploit have not been confirmed by Tectonic or Cronos.
• Cronos has not announced when the network will resume or how the attacker’s assets will be handled.

Why this matters

This incident highlights risks in DeFi protocols, particularly those involving low-liquidity tokens that can be manipulated to inflate collateral value. Similar attacks have recently targeted other lending protocols, such as Moonwell on the Base network, which lost an estimated $8.7 million to a similar price-manipulation exploit.

Sources

• The Block