The BNB Chain core team is set to take over a substantial Binance Coin (BNB) loan position belonging to the decentralized lending platform Venus Protocol as it approaches its liquidation threshold.
The $150 million BNB loan belonged to a hacker who exploited a cross-chain infrastructure on the BNB Chain in October 2022, resulting in the loss of more than $100 million in crypto assets.
According to the BNB Chain team, $30 million in Tether (USDT) has been sent to the whitelisted wallet exclusively permitted to implement the liquidation to prevent a shortfall on Venus and provide additional support during the process. The wallet was selected through a governance proposal released a month after the BNB Chain hack.
During the attack, the exploiter manipulated security proofs and minted two million BNB tokens, worth $560 million at the time, from thin air. The hacker capitalized on a vulnerability related to the “iavl hash check” within the BNB cross-chain bridge.
With the stolen BNB, the exploiter borrowed $150 million worth of USDT and USD Coin (USDC), leveraging a 900,000 BNB position against Venus. Although the BNB Chain team temporarily paused the bridge and eventually resumed operations, the position has remained in place, with the loan still active.
In November, the duo passed a proposal to authorize only the core team to liquidate the position to mitigate the impact on the broader market in the event of such. Due to the deteriorating health rate of the loan and the possibility of a further drop in BNB’s price, the whitelisted wallet has begun preparations to liquidate the position.
“The whitelisted wallet was initially funded with $30M in USDT with the assurance of preventing shortfall on Venus and providing additional support through this Venus governance approved mechanism,” the Venus team said.
Liquidating the loan without the whitelisted wallet may trigger cascading effects on the BNB Chain and cause unnecessary damage to the market, Venus, its users, and the BNB token, which has already declined significantly since the U.S. SEC’s legal action against crypto exchange Binance.
It is worth noting that the BNB Chain team uted a hard fork after the hack to secure the bridge between the BNB Beacon Chain and the BNB Smart Chain.
