The decentralized finance (DeFi) landscape is once again in the spotlight following the recent exploit of the Solana-based protocol, Loopscale. The hacker who illicitly acquired approximately $5.8 million in assets—including over 5.7 million USDC and 1,200 Solana tokens—has entered negotiations to return the stolen funds for a bounty, according to the protocol’s official communications.
On April 26, 2025, Loopscale was forced to temporarily pause its lending markets after the exploit targeted two of its yield vaults. The next day, the hacker communicated via the Ethereum blockchain platform, expressing a willingness to negotiate a resolution while indicating their intention to return a portion of the stolen assets.
According to Loopscale’s communication on social media, the hacker stated, “We are agreeable to collaborating with you to reach a white hat agreement. However, we would like to negotiate the bounty percentage; our expectation is 20%.” In a demonstration of good faith, the hacker claimed they would return 5,000 wSOL immediately following the transmission of this message.
Negotiations appear to still be ongoing, as evidenced by publicly accessible exchanges on Etherscan regarding the remainder of the stolen assets. This situation highlights the distinct challenges and ethical dilemmas faced by the DeFi space, where negotiations between hackers and protocols are becoming a more common occurrence.
The Broader Impact
Incidents like the Loopscale exploit underscore the vulnerabilities inherent in Web3 protocols, which have collectively seen more than $1.6 billion in crypto losses during the first quarter of 2025 alone. Loopscale’s exploit represents about 12% of the protocol’s total value locked (TVL), a significant impact for a newly launched protocol that promises to enhance capital efficiency through direct lender-borrower matching and specialized lending markets.
In the aftermath of the attack, Loopscale has restored some of its functionalities, including loan repayments and top-ups, but has retained restrictions on other app functions while they investigate the exploit thoroughly. Launched only on April 10, 2025, Loopscale aims to provide innovative solutions in structured credit and undercollateralized lending, making the recovery from this incident all the more critical.
As the DeFi community watches the ongoing negotiations, the situation serves as a reminder of the imperatives surrounding security in emerging financial technologies. The ability to negotiate with hackers who demonstrate an inclination towards ‘white hat’ behavior complicates traditional views on crime and restitution in the crypto sphere.
For now, the future of Loopscale—and the potential restoration of confidence in its services—hinges on the resolution of these negotiations and the broader implications for the DeFi ecosystem.
