Venus Tightens Collateral Rules After $3.7 Million Exploit Involving THENA's THE Token

Venus Protocol, the largest lending platform on BNB Chain, has frozen collateral on six additional markets after an attacker exploited THENA’s low-liquidity THE token to drain an estimated $3.7 million in digital assets.

Security researchers identified the attacker’s address as 0x1a35…6231, which received 7,400 ETH from crypto mixer Tornado Cash before executing the attack.

The attacker built a large position in THE, inflating its price from roughly $0.27 to nearly $5 according to on-chain researcher Weilin Li.

That inflated collateral was used to borrow approximately 20 BTCB, 1.5 million CAKE, and 200 BNB before liquidation triggered a price collapse back to $0.24.

To bypass Venus’s supply cap , the attacker transferred THE tokens directly to the vTHE contract rather than depositing through standard minting. The technique is a known vulnerability in Compound-forked lending platforms.

THENA said its security systems flagged the incident around 12 PM UTC and confirmed its smart contracts were not breached .

Venus confirmed “unusual activity” in the THE and CAKE markets.

In response , Venus reduced collateral factors to zero on Bitcoin Cash (BCH), Litecoin (LTC) , Uniswap (UNI), Aave (AAVE), Filecoin (FIL), and Trust Wallet Token (TWT).

The freeze targets markets with capitalization below $2 billion, daily volume under $100 million, DEX TVL below $40 million, and single-user collateral concentration above 60%.

Venus has accumulated bad debt from exploits since 2021, including $95 million from XVS price manipulation and $14 million from the Terra/LUNA collapse. Its TVL has fallen from a peak of $7 billion to approximately $1.47 billion.