1. The Exploit and Fund Theft
2. Actions Taken by Penpie and Pendle
3. Penpie's Appeal to the Hacker and Aftermath

On September 3, the decentralized finance (DeFi) protocol Penpie, built on Pendle, was hacked, resulting in the loss of $27 million in various cryptocurrencies.

The Exploit and Fund Theft

The stolen funds included Ether (ETH) and stablecoins like wrapped USDC and sUSDE, according to EmberCN. The hacker reportedly exploited a vulnerability in Penpie's security, converting most of the stolen assets into ETH and then transferring them to a new Ethereum address, making it difficult to trace. The hack was first brought to light by an X account, Chaofan Shou, affiliated with Fuzzland. The account reported that $17 million had been drained from Penpie, indicating that the protocol was unaware of the breach even after it had begun. This delay in response led to an additional $10 million in losses. Most of the stolen assets were converted into 11,109 ETH, worth approximately $26.95 million. Of this amount, the hacker laundered 1,000 ETH (about $2.42 million) through the crypto mixer Tornado Cash.

Actions Taken by Penpie and Pendle

Penpie confirmed the security breach in an X post approximately an hour after the hack began. The protocol immediately paused all deposits and withdrawals to prevent further losses. `CITE_W_A`: “Penpie has encountered a security compromise. We have paused all deposits and withdrawals. Our team is working tirelessly to address it. Your patience and support are invaluable during this time.” - Penpie (@Penpiexyz_io), September 3, 2024. Pendle, the platform on which Penpie is built, also took action, pausing all contracts on Pendle as a precautionary measure, safeguarding approximately $105 million. They confirmed that their funds were secure and that the breach was specific to Penpie. The Pendle team reached out to security experts at Seal 911 to evaluate the situation and devise strategies to prevent further breaches.

Penpie's Appeal to the Hacker and Aftermath

Penpie reached out to the hacker with an offer to negotiate a bounty for the safe return of the stolen funds. The protocol emphasized that they would not pursue legal action if the funds were returned. They also offered the hacker an opportunity to transition into a white-hat role, where their skills would be recognized and rewarded. Currently, Penpie’s stolen funds have been partially transferred to Tornado Cash, making recovery efforts more challenging. Penpie is actively working to ensure that users can securely withdraw their remaining funds.

The Penpie hack highlighted the importance of strengthening security measures in DeFi protocols. While the investigation continues, affected platforms are working to regain user trust and enhance their security systems.