Loopring, a DeFi protocol powered by Ethereum, faced a security breach in its Guardian 2FA service resulting in a $5 million cryptocurrency theft. The breach targeted the Guardian service, integral to securing the smart wallet application labeled as 'Ethereum's most secure wallet'.

With the Guardian service, wallet owners could involve trusted wallets in security protocols like freezing compromised wallets or aiding in recovery during seed phrase loss. The breach involved a hacker bypassing Loopring's Official Guardian service to exploit wallets with a single guardian, leaving wallets with multiple or alternative guardians unharmed.

An analysis of blockchain data uncovered two impacted wallets, one of which was completely emptied of tokens worth $5 million. Loopring collaborated with Mist Security to investigate the 2FA service vulnerability and temporarily suspended Guardian and 2FA functions to prevent unauthorized access.

Efforts are underway to identify the hacker, with Loopring seeking community assistance for relevant information. Following the breach, Loopring's native token, LRC, experienced a 5% drop, currently trading at $0.2171, reflecting market sentiments post-breach.