Hacker Returns $5M Stolen From 1inch: Funds Recovered

Last week, DEX exchange pioneer, 1inch, suffered a critical attack on its smart contracts, which led to a hacker stealing $5 million.

However, after intense negotiations with the perpetrator, the exchange managed to recover the stolen funds.

Although the funds were recovered, this attack highlights the security challenges that the decentralised finance ecosystem continues to face.

Hacker Returns-Funds-to-1inch

On 5 March, 1inch fell victim to a specific attack in the smart contract section. Investigators linked the attack to an outdated version of the platform's smart contract. After negotiations and the payment of a generous reward for reporting the bug, the hacker returned the funds to the platform.

The news was released by WuBlockchain, which stated:

"After negotiations with the hacker, most of the $5 million stolen from 1inch was returned, with the hacker retaining a portion as a reward."

Wu Blockchain News

According to Decurity's postmortem report, after negotiations with the hacker, most of the $5 million stolen from 1inch has been returned, with the hacker keeping a portion as a bug bounty. The attack was caused by a vulnerability in the Fusion v1 smart contract, primarily affecting those using outdated versions of the resolver. Regular users' funds were not impacted.-link

Telegram

1inch published a blog in which it explained that the attack was caused by a vulnerability in the Fusion V1 Resolver smart contract, calling it "an obsolete component". The platform pointed out that the team detected the incident on 5 March at 18:00 UTC.

The hackers exploited the outdated logic of the V1 resolver to execute a series of transactions. It was emphasised that no direct users were affected by this attack; the action was aimed at TrustedVolumes, a third-party market maker. After the attack was discovered, the platform immediately redistributed the resolver to prevent further exploits.

A report by Decurity revealed that the hacker sent a message after the cyber attack, demanding a reward in exchange for the return of the stolen funds. TrustedVolumes, the affected party, entered into negotiations with the hacker and reached a positive resolution. This case represents a rare event in which an attack on decentralised finance ended with the return of funds.

Yul Calldata Corruption - 1inch Postmortem

This is an overview of one of the toughest DeFi exploits which happened around 5 pm UTC on March 5, 2025.

DecurityOmar Ganiev

The Security Challenges in the DeFi

This is not the first time that 1inch has faced a similar problem. Back in October 2024, the platform suffered a front-end compromise due to a supply chain attack.

These attacks highlight the security challenges that DeFi protocols constantly face. The latest hack is a reminder of the importance of continuous surveillance and rapid responses to protect users and assets.

After the recovery of funds, the market reacted positively: the price of 1INCH rose 1.12% to $0.22.

In conclusion, it is crucial to implement robust security protocols and conduct regular audits on smart contracts to prevent future breaches. The crypto sector is constantly expanding and increasingly accessible to less experienced users, making it a target for hackers planning coordinated attacks. The responsibility to protect users and their funds falls on exchanges, which must take appropriate measures to ensure a safer environment.