Initia hack reduces USDC bridge reserve to 63 dollars after failed withdrawals

USDC withdrawal attempts on Initia failed after an attacker depleted reserves needed to cash out tokens on the blockchain. Bitquery's investigation revealed that the Noble blockchain's USDC reserve fell from about 1000000 dollars to an intraday low of 63 dollars at 15:37 UTC on October 23, later checking at approximately 24000 dollars. There were 55 failed ordinary USDC withdrawal attempts, primarily from one bot. Larger withdrawal requests from the attacker also failed due to insufficient reserves. Initia halted its L1 and rollups at 15:41:30 UTC on October 23, with co-founder estimating about 3000000 dollars had been bridged out before the pause. Bitquery estimated 3000000 dollars in real assets paid from bridge reserves, distinct from approximately 7000000 dollars in unauthorized balances. The mechanism described by Bitquery indicates that legitimate tokens on Initia are backed by assets held elsewhere, and depleting the reserve can obstruct exits without indicating a failure of Circle's dollar backing. Initia attributed the exploit to a MoveVM script-caching bug that bypassed security checks, allowing the attacker to create unbacked balances. As of 08:46 UTC on October 24, Initia's L1 and rollups remained halted, with ongoing asset recovery and no firm restart date or reimbursement terms provided.

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