$10.8M Garden Finance Hack: Multi-Chain Exploit Strikes Days After Money Laundering Claims

Key Takeaways:

• Garden Finance suffered a multi-chain hack resulting in over $10.8 million in losses, just days after ZachXBT publicly accused the platform of facilitating money laundering operations.
• On-chain investigators had flagged that more than 25% of Garden's transaction volume originated from illicit sources, raising concerns similar to those previously seen with THORChain.
• The Garden team has offered a 10% white hat bounty to the exploiter, though significant uncertainty remains regarding the total amount stolen and the full scope of affected blockchains.

The Exploit

Garden Finance fell victim to a significant security breach this week, with losses currently estimated at $10.8 million across multiple blockchain networks. The timing proved particularly notable, as prominent blockchain investigator ZachXBT had publicly called out the platform for allegedly enabling money laundering activities just days before the attack.

This incident echoes a pattern previously observed in the DeFi space. Earlier this year, THORChain faced similar scrutiny for allegedly facilitating fund laundering by North Korean state-sponsored hackers. In a twist of irony, those same threat actors later exploited THORChain's founder for $1.3 million.

Rising Concerns Before the Breach

Just this week, Garden Finance had celebrated a milestone of bridging over $2 billion in tokens. However, the announcement was quickly overshadowed by serious allegations from multiple blockchain security researchers.

ZachXBT presented data suggesting that more than 25% of Garden's transaction volume could be traced to illicit sources. Fellow investigator Tayvano raised additional concerns about potential mass adoption of the platform by DPRK-affiliated actors.

These allegations added an ironic dimension when the same investigators were among the first to identify Garden's security breach. ZachXBT reported via Telegram:

"Garden Finance was likely exploited for $10.8M+ on multiple chains. An address related to the team sent a message onchain to the alleged exploiter offering a 10% whitehat bounty. A few days ago, I pointed out how Garden Finance was ignoring victims."

The initial loss estimate of $5.8 million was subsequently revised upward as more information emerged. ZachXBT also noted that "all freezable assets were quickly swapped," complicating recovery efforts and making it difficult to determine the exact extent of the damage.

What We Know About the Attack

Garden Finance confirmed that the exploit compromised multiple blockchain networks, specifically naming Arbitrum among the affected chains. In their statement, the team notably emphasized that "assets have been taken from us," suggesting the attack primarily targeted platform-controlled funds rather than user deposits.

However, critical details about the attack remain unclear:

• The precise total amount stolen
• The complete list of affected blockchain networks
• The technical vulnerability that enabled the exploit
• Whether any user funds were compromised

A Familiar Pattern

The irony of a platform accused of facilitating illicit transactions becoming a victim of theft itself is not unprecedented in the cryptocurrency ecosystem. THORChain's experience serves as a cautionary tale—after facing allegations of enabling North Korean hackers to launder stolen funds, the protocol's founder became a direct target, losing $1.3 million in a subsequent attack.

These incidents raise uncomfortable questions about the incentive structures for white hat security researchers and legitimate investigators. When platforms operate in regulatory gray areas or allegedly facilitate illicit activity, the community faces a moral dilemma: should investigators dedicate resources to helping recover stolen funds? If assets cannot be frozen or recovered, what practical purpose would such an investigation serve beyond building evidence for potential future prosecution—a process that may prove entirely impractical in decentralized environments?

What Happens Next?

Garden Finance's response has been to offer the attacker a 10% white hat bounty in exchange for returning the stolen funds. The team sent an on-chain message to an address believed to be controlled by the exploiter, proposing this arrangement.

Whether this incentive will motivate cooperation remains to be seen. Without a willing return of funds, Garden's options are limited. The platform will likely need to:

• Conduct a thorough post-mortem analysis of the security breach
• Determine the full extent of affected chains and assets
• Communicate transparently with users about any impact to their funds
• Implement security improvements to prevent future exploits

For now, closure may be limited to understanding how the breach occurred, with little hope of recovering the stolen assets unless the exploiter chooses to cooperate. The incident serves as another reminder of the security challenges facing DeFi protocols—particularly those operating in controversial or legally ambiguous spaces.

References

ZachXBT: https://x.com/zachxbt
Advanced Blockchain Security: https://advancedblockchainsecurity.com/