Decentralized exchange aggregator 1inch suffered a loss of $5 million when the hacker found a weakness in their smart contract. SlowMist detected the first signs of the attack on March 7 when it spotted a hacker stealing USDC and WETH tokens from the network.

The hacker targeted 1inch’s weak Fusion v1 feature that let unauthorized parties handle order filling tasks. The platform ensured customers that users of their own Fusion v1 contracts were impacted but that customer funds remained safe. To enhance security 1inch set up a bug bounty program and searched for ways to get back the stolen digital assets.

1inch Security Flaw Exploited

The recovery of stolen assets depends greatly on whether the hacker decides to return them based on their actions. Throughout past events hackers worked out deals where they kept part of the stolen assets as payment for revealing the security weaknesses. In the crypto lender Shezmu attack the cyber criminals gave back most of the hacked funds in return for a 10% compensation.

“We’re actively working with affected resolvers to secure their systems. We urge all resolvers to audit and update their contracts immediately.”

The 1inch cyberattack stands as one of industry-wide crypto breaches that includes the $1.5 billion Bybit theft which remains the largest heist ever witnessed in digital currency history. North Korean hackers used their technical skills to steal different types of digital assets from Bybit including stETH, mETH, and ERC-20 tokens. Crypto experts tried to locate and recover the funds but the criminals laundered $1.4 billion out of the stolen assets in just ten days.

According to our analysis, this incident resulted in a loss of 2.4 million $USDC and 1276 $WETH, totaling over $5 million.

— SlowMist (@SlowMist_Team) March 7, 2025

Bybit ensured seamless asset withdrawal for users during the hack by borrowing fast loan funds from other crypto firms. The exchange resolved the loans quickly after resolving the security violation in a prompt manner.

Blockchain experts believe some of the funds kept by Bybit hackers can be tracked because of their many asset swaps. The CEO of blockchain security firm Cyvers Deddy Lavid stated in an interview that forensic blockchain analysis could help trace parts of the stolen funds.

“While laundering through mixers and crosschain swaps complicates recovery, cybersecurity firms leveraging onchain intelligence, AI-driven models, and collaboration with exchanges and regulators still have small opportunities to trace and potentially freeze assets.”

1inch Investigates Stolen Funds

The intrusion at Bybit delivered direct market impacts. The thieves who stole from Bybit heavily relied on THORChain to move their funds and the service recorded a substantial increase in transactions afterward. People became afraid of DeFi platforms and doubted the protection they offer after hackers moved large amounts through THORChain during this theft.

The recent exploits highlight ongoing security challenges within DeFi and the broader cryptocurrency ecosystem. 1inch keeps refining its security systems but these system weaknesses appear to happen often. The breach shows that security audits must run constantly while protocols need to update correctly and fast.

Business actors watch carefully to see what companies in the industry do to protect against future security risks. How well DeFi platforms fix their security problems forms the base for investor trust in the sector’s safe future.