IoTeX supplied a ten% white-hat bounty to the hacker or hackers who exploited a personal key on its cross-chain bridge ioTube, siphoning tens of millions of {dollars}, in alternate for the voluntary return of funds inside 48 hours.
With this transfer, IoTeX is providing the $440,000 if the malicious actor or actors return roughly $4.4 million they stole, based on an IoTeX X put up, to which IoTeX co-founder and CEO Raullen Chai pointed “as a supply of reality” on Monday.
Chai instructed CoinDesk that the crew despatched an onchain message providing to not pursue authorized motion or share figuring out data with legislation enforcement if the remaining funds are returned.
“That is concerning the ioTube bridge exploit on Feb. 21, 2026,” Chai stated within the message. “All fund actions throughout Ethereum, IoTeX, and bitcoin have been totally traced.”
The message states that alternate deposits have been flagged and frozen and gives a ten% bounty for the return of remaining funds.
Chai additionally stated IoTeX is rolling out a brand new chain model, Mainnet v2.3.4, requiring node operators to improve. The replace features a default blacklist of malicious externally owned account (EOA) addresses.
“This blacklist accommodates a listing of malicious or problematic EOA addresses that shall be filtered by the node,” Chai stated.
The provide comes after a Feb. 21 exploit during which a compromised validator proprietor non-public key enabled unauthorized management over ioTube’s bridge contracts.
IoTeX stated the incident is “beneath management,” saying that its Layer 1 blockchain was not affected and that the breach was remoted to the Ethereum-side infrastructure of the bridge.
The IOTX token fell roughly 22% following the exploit, dropping from $0.0054 to under $0.0042 earlier than partially rebounding.
Cross-chain bridges have been one in every of crypto’s essential failure factors, with a number of high-profile exploits in recent times. In line with trade stories, greater than $3.2 billion has been misplaced as a result of cross-chain bridge hacks, making them a chief goal for superior menace actors.
Accountability and key management
IoTeX framed the exploit as an operational difficulty particular to the bridge fairly than a failure of its Layer 1 community.
“IoTube is IoTeX’s personal cross-chain bridge constructed and maintained by their crew,” Nick Motz, CEO of ORQO Group and CIO of Soil, instructed CoinDesk. “The breach got here all the way down to a compromised validator proprietor non-public key on the Ethereum facet, which is basically an operational safety failure, not a sensible contract vulnerability found by an outdoor actor.”
Motz agreed that IoTeX’s Layer 1 was not compromised however stated person funds have been entrusted particularly to the bridge.
“Whenever you construct and function the bridge infrastructure and the important thing administration is what fails, it’s troublesome to separate your self from that consequence,” he stated.
Nanak Nihal Khalsa, co-founder of human.tech, stated accountability in crypto usually comes all the way down to key custody.
“Sure, whoever holds the non-public secret is chargeable for securing it,” Khalsa stated. “Is {that a} cheap accountability? It’s exhausting to say. However that’s how the trade works proper now.”
He added that legal responsibility norms stay unsettled in comparison with conventional finance and known as for stronger pockets and multisig setups to scale back comparable dangers.
The estimates diverge
On-chain evaluation by safety agency PeckShield estimated extra than $8 million price of belongings have been affected, saying the attacker swapped funds into ether (ETH) and started bridging them to bitcoin by way of THORChain.
“The hacker has swapped the stolen funds to $ETH and has began bridging them to #BTC by way of #Thorchain,” the agency wrote.
One other onchain investigator, Specter, stated on X that “the non-public key of @iotex_io could have been compromised,” leading to an estimated $4.3 million loss.
“As soon as belongings are routed via THORChain […] restoration turns into extraordinarily troublesome,” Motz stated.
IoTeX stated it has recognized 4 bitcoin addresses holding 66.78 BTC price roughly $4.3 million at present costs and that the addresses are being monitored in cooperation with exchanges.
A CoinDesk assessment of these addresses on Feb. 23 confirmed they held roughly 66.6 BTC.
IoTeX didn’t instantly reply to CoinDesk’s request for remark.
“Containment is just not the identical as restoration,” he added. “The belongings with precise market worth have been swapped and bridged. These are, in my evaluation, unlikely to be recovered.”
Khalsa equally cautioned that restoration prospects are unsure. “It’s exhausting to foretell how a lot, if any, could be recovered,” he stated.
IoTeX revised its determine upward to roughly $4.3 million, reflecting the direct asset drain however excluding minted tokens. Motz stated broader estimates could higher seize the severity of the breach.
“Personal key compromise fairly than sensible contract bugs is rising as a dominant assault vector,” Motz stated, noting that such incidents goal operational safety fairly than audited code.
Earlier than providing the ten% bounty, IoTeX stated a compensation plan could be in place throughout the subsequent 48 hours.
