Crypto : Taiko Hacked, 1.7 Million Dollars Stolen

The crypto Taiko is undergoing a major crisis after a hack causing approximately 1.7 million dollars in losses. The Ethereum layer 2 network has halted its block production and asks users to withdraw their funds from all its crypto bridges.

Taiko stops its blocks after the attack

Taiko confirmed a critical flaw in its message verification mechanism. This crypto attack allowed a hacker to submit false proofs on Ethereum and withdraw assets without a legitimate transaction on the source chain. The incident reignites concerns around crypto bridges. Facing the risk, Taiko contributors halted the production of new blocks. The crypto protocol also asked centralized platforms to suspend deposits of its native token until further notice.

Taiko then announced it contained the exploitation. Withdrawals via its layer 1 bridge and its ERC-20 vault were stopped. This measure limits new losses, but also prevents some users from accessing their funds normally. The attack targeted the system responsible for verifying messages between Taiko and Ethereum. The attacker succeeded in getting false proofs accepted on layer 1, without a corresponding event actually existing on the Taiko network.

These fraudulent messages allowed recording fictitious withdrawals. The crypto bridge however considered them valid, then released the assets held in its token vault.

lockaid quickly identified a problem in the source signal validation. According to the onchain security company, the system did not properly verify that each message presented on Ethereum actually came from an authentic operation recorded on Taiko.

The flaw therefore affects a central element of the network’s crypto architecture. It is not simply a compromised wallet or a stolen private key. The mechanism designed to differentiate a real proof from a forged proof directly failed.

The crypto hack reaches 1.7 million dollars

Initial estimates from Blockaid reported about 1 million dollars in losses. PeckShield later estimated the stolen amount to nearly 1.7 million. Taiko finally confirmed this estimate in its official communication.

The hacker also transferred about 1.99 million TAIKO tokens to an address linked to the MEXC platform. These crypto assets represented nearly 170,000 dollars at the time of the transfer.

This transfer could help investigators track some of the funds. Centralized platforms sometimes have the capacity to freeze reported assets. Intervention is required before the hacker exchanges them or splits them across multiple addresses.

Taiko is now preparing a full analysis of the hack. The report will need to specify the exact origin of the flaw, the affected components, and the method used to bypass controls. It will also need to explain whether other crypto assets remain exposed.

A shock for Layer 2s

Taiko is a rollup based on Ethereum block validators. The main network was launched in May 2024 to improve Ethereum’s capacity while maintaining strong compatibility with its environment.

But a crypto Layer 2 does not depend solely on its block production. Bridges play an essential role, as they enable asset transfers between Ethereum and the secondary network. A flaw in these gateways can therefore threaten the entire ecosystem.

This attack joins other incidents that have struck Ethereum Layer 2s. Crypto bridges remain prime targets. They hold large amounts of funds and use complex validation mechanisms across multiple blockchains.

Taiko now needs to restore its network, secure its bridges, and explain whether victims will be compensated. Above all, the protocol must demonstrate that the flaw can no longer be exploited. In a market marked by crypto hacks, a simple technical recovery will not suffice. The priority will be to rebuild trust around the network.