Velocore decentralized exchange exploited for $6.8 million, Linea blockchain halts in response

The Velocore DEX, built on the Linea Ethereum layer-2 blockchain, was exploited for around $6.8 million in ETH. The hacker was able to take advantage of a bug in the project's smart contract in the logic to calculate swap fees. Using a flash loan attack funded through Tornado Cash, the attacker drained most of the tokens from the pool, bridged the tokens back to the Ethereum mainnet, and then tumbled the stolen funds back through Tornado.

In an unusual move, the operators of the Linea layer-2 blockchain chose to unilaterally halt the chain in order to stop the outflow of stolen assets. Because Linea — like many layer-2 chains — is highly centralized, it was possible for the Linea team to unilaterally stop the production of blocks.

This was very controversial, as a single operator being able to unilaterally control the operation of a blockchain goes against much of the cryptocurrency ethos. Following their action, they tried to explain that "Linea's goal is to decentralize our network - including the sequencer. When our network matures to a decentralized, censorship-resistant environment, Linea's team will no longer have the ability to halt block production and censor addresses - this is a primary goal of our network".