Extropy Security Bytes: w15 2025

In a turbulent week for the decentralized finance (DeFi) ecosystem, three separate security incidents have impacted the web3 community. From administrative key compromises and front-end manipulation to complex economic exploits, these breaches highlight the evolving tactics used by attackers. This report breaks down the technical details and implications of recent exploits affecting UPCX, Morpho Labs, and Filament Finance — collectively accounting for over $73 million in crypto losses.

UPCX Platform Suffers $70M Security Breach

On April 1, the open-source crypto payment platform UPCX experienced a significant security incident. An unauthorized actor exploited a vulnerability, leading to the loss of approximately $70 million in UPC tokens.

Technical Breakdown:

The attack sequence appears to have involved:

• Privileged Access: The attacker gained unauthorized access to an administrative address associated with the UPCX project.
• ProxyAdmin Upgrade: Leveraging this access, the attacker maliciously upgraded the ProxyAdmin contract. This likely involved deploying a compromised version.
• withdrawByAdmin Exploitation: Following the upgrade, the attacker executed the withdrawByAdmin function, a tool intended for administrative fund management.
• Significant Token Transfer: This action resulted in the unauthorized withdrawal of 18.4 million UPC tokens from three distinct management accounts.
• Early Detection: Blockchain security firm Cyvers identified the suspicious transactions.
• On-Chain Tracking: Analysis indicates the stolen funds were initially consolidated in a single address.

Root Cause Analysis:

The likely cause of the breach points to a compromised private key or weaknesses in the access control mechanisms governing the administrative wallet. Security experts note that the compromise of administrative privileges remains a prevalent attack vector in the Web3 space. This incident underscores how attackers can bypass standard security layers by targeting high-access accounts.

UPCX Response:

UPCX has acknowledged the breach, temporarily suspending deposits and withdrawals. They have also stated that user funds were not affected and have initiated a full investigation while taking steps to secure remaining assets.

Key Takeaway:

This incident serves as a critical reminder of the inherent risks associated with centralized administrative controls within DeFi platforms and the paramount importance of implementing rigorous key management strategies.

Morpho Blue Application Exploited for $2.6M Loss

On April 11, the DeFi protocol Morpho Labs reported a security breach affecting its Morpho Blue application, resulting in the loss of approximately $2.6 million in crypto assets.

Technical Details:

• Front-End Vulnerability: The exploit stemmed from a front-end update implemented on Morpho Blue on April 10, 2025.
• Unauthorized Access: An unauthorized party gained access through a vulnerability introduced by this update.
• Reported Loss: Blockchain security firm PeckShield identified an address that lost $2.6 million due to the exploit.
• Incorrect Transaction Crafting: The Morpho Labs team clarified that while the front-end itself remained secure, specific transactions processed through it were incorrectly crafted following the update.

Morpho Labs’ Response:

• Isolated Impact: Morpho Labs confirmed that the exploit was isolated to the $2.6 million loss from the Morpho Blue application and that all other funds within the Morpho Protocol remained secure.
• No User Action Required: Users were assured that no additional actions were needed to secure their assets.
• Issue Identified and Fixed: The Morpho Labs team reported swift identification and implementation of a fix for the vulnerability. A more detailed post-mortem is expected the following week.

Interesting Development:

Notably, a well-known MEV white hat operator, c0ffeebabe.eth, intercepted approximately $2.6 million in the stolen crypto assets. c0ffeebabe.eth has a track record of recovering funds from DeFi exploits, including a significant recovery during the Curve Finance incident in July 2023. The sources do not explicitly state whether these intercepted funds were fully recovered by Morpho Labs.

Filament Finance Suffers $572K Loss via Sophisticated Order Book and Liquidation Abuse

On April 6, between 12:00 AM and 4:00 AM UTC, Filament Finance was targeted by a sophisticated, four-hour coordinated exploit resulting in the loss of approximately $572,000 in user funds. The total user deposits before the attack amounted to $680,000.

Detailed Attack Mechanism:

The attacker executed a multi-stage attack leveraging order book manipulation and exploiting vulnerabilities in the platform’s liquidation logic:

1. Spoofed Order Placement: Multiple attacker-controlled accounts placed large, non-binding “spoof” orders to artificially inflate the price of specific assets on Filament’s order book.
2. Self-Trading at Inflated Prices: These spoof orders were then matched against the attacker’s other accounts, enabling trades at the artificially inflated prices. This allowed the attacker to dictate price movements without genuine market participation.
3. Over-Leveraged Position Creation: Capitalizing on the artificially high prices, the attacker opened significantly over-leveraged positions with minimal collateral.
4. Reverse Manipulation and Self-Liquidation: Subsequently, the attacker reversed the price manipulation, causing their previously leveraged positions to become severely undercollateralized. Using a separate account, the attacker then triggered self-liquidations of these positions at the now deflated (and advantageous to the attacker) prices, extracting inflated asset values.
5. Repeated Liquidity Draining: This entire cycle of spoofing, self-trading, leveraging, reverse manipulation, and self-liquidation was repeated across numerous accounts over the four-hour attack window, systematically draining liquidity from Filament Finance.

Root Cause Analysis:

The exploit was made possible by inadequate circuit breakers within the liquidation mechanism and a lack of robust safeguards against manipulation involving multiple accounts. While the protocol’s code executed as intended, its economic design lacked sufficient defenses against this type of sophisticated market manipulation.

Exploit Timeline:

• 12:00 AM UTC: Initial spoof orders began appearing on Filament’s order book.
• 12:15 AM UTC: The first self-trades were executed at manipulated prices.
• 12:45 AM UTC: Attacker initiated leveraged positions based on the inflated prices.
• 1:30 AM UTC: Reverse price manipulation commenced, triggering cascading liquidations of the attacker’s positions.
• 2:00 AM — 4:00 AM UTC: Multiple cycles of price manipulation and liquidation were executed.
• 4:00 AM UTC: Administrative keys were utilized to halt all trading and withdrawal activities.

Fund Movement:

The stolen funds were bridged out using Symbiosis Bridge and subsequently deposited into the FixedFloat exchange. Following this, the funds were rapidly dispersed across numerous different wallets.

Known Attacker Wallets:

• 0x6aa5214abb24cf06591900ffc00f5f50dc5fa892
• 0x8f8ab407c1dc380c8302976df184ab3e78ec1c0f
• 0xc3d088dc15a3b01277f301f8b42427bdc3a8ecb7
• 0x2147921681116d2459b5bb105036791cbb0ff58f

Immediate Response Actions by Filament Finance:

• Trading and withdrawal operations were immediately suspended.
• Blockchain forensic partners and law enforcement were engaged to investigate.
• All relevant wallet addresses and transaction hashes were submitted to the appropriate authorities.
• A public disclosure of the incident was promptly made.

Recovery Efforts by Filament Finance:

• A 10% bounty has been offered for the return of 90% of the stolen funds, with a guarantee of full immunity and anonymity upon full cooperation. Contact: [email address removed].
• Active coordination with ecosystem partners, including bridges and exchanges, is underway to attempt to freeze or trace the stolen assets.
• Filament Finance is conducting thorough post-mortem and architectural reviews to implement crucial safeguards, including anti-spoofing mechanisms, per-user liquidation throttles, circuit breakers, and optional KYC measures.

These incidents serve as stark reminders of the multifaceted risks facing DeFi protocols today — whether through compromised admin access, front-end updates, or economically-driven exploits. While each case differs in technique and scope, the underlying lesson remains consistent: security in Web3 must be holistic, covering both technical infrastructure and operational governance.

About Extropy

Since 2017, Extropy has been at the forefront of blockchain security, auditing smart contracts across Ethereum and Zero-Knowledge (ZK) protocols. We have collaborated with leading ecosystems, including Base, Starknet, and MINA, ensuring their smart contracts are resilient, efficient, and secure.

We specialize in DeFi, on-chain games, and ZK applications, leveraging formal verification, static analysis, and deep manual reviews to uncover vulnerabilities before they become exploits. Whether you’re working with Solidity, Rust, Cairo, or zkVMs, our collaborative approach ensures your project meets the highest security standards.

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