Chainflip to reset TRON USDT provider balances to zero after $736k exploit

Chainflip announced a restart plan that will set the active TRON USDT balances of affected liquidity providers to zero following a loss of 736,442.17 USDT.

Exploit details

On September 12, an attacker withdrew USDT from Chainflip’s TRON vault twice for six liquidity‑provider withdrawals. The attack leveraged a malformed memo attached to a TRON transfer, causing the protocol’s monitoring software to interpret the transaction as a failed swap and issue an additional refund.

Restart and migration plan

Chainflip will record each provider’s pre‑migration balance on a separate on‑chain account, preserving the amount the protocol owes while the active account will show a zero balance. The migration includes:

• Closing open TRON/USDT orders and related strategies.
• Unwinding associated loans and lending positions.
• Writing the pre‑migration “trxUSDT” amount to a distinct on‑chain balance.

Swaps and quoting resumed across the network by September 16, except for the TRON route, which remains excluded pending recovery.

Recovery and reimbursement

Chainflip has pledged to make affected providers whole but has not disclosed a funding source, payout schedule, or the amount that has been recovered. The separate on‑chain record is intended to keep the owed amount available for future payouts.

Technical fix

The vulnerability was patched by restricting which TRON transfers can carry swap instructions in a memo. New logic only accepts memos on plain TRX transfers or direct TRC‑20 token transfers, blocking the contract‑wrapped transfer route used in the exploit.