The Threat Extends to Other Cryptocurrency Networks: What Is the Market Doing?

• An attacker drained about 200,000 XRP from the reserves of the bridge connected to the XRP Ledger.
• In Harmony, 4 billion ONE were created without authorization, and 97% were sent to exchanges.

Security incidents are piling up again in the cryptocurrency ecosystem. After the hack of Coldcard hardware wallets, two attacks recorded in August targeted very different infrastructures: a bridge connected to the XRP Ledger and the main network of Harmony.

Although they have different origins and consequences, these episodes show that the security risk extends across various points of the ecosystem. Recent attacks affected self-custody devices, bridges between networks, decentralized finance (DeFi) protocols, and even the operation of a network.

The precedent of Kelp DAO had already shown in April how far a problem can spread when these layers are interconnected. Its hack caused losses of about $292 million and triggered an outflow of billions of dollars from the DeFi sector.

The difference between these cases also allows us to observe something from the markets: the economic impact depends less on whether there is a hack than on which part of the infrastructure is compromised and how much risk it can transmit to the rest of the system.

On August 9, an attacker exploited a vulnerability in the bridge connecting Coreum with the XRP Ledger and stole approximately 200,000 XRP from its reserves, as reported by CriptoNoticias.

The error lay in the logic used to detect deposits. The software recognized as valid operations that had never delivered real XRP to the bridge and allowed the issuance of representations of Ripple Labs' cryptocurrency without the corresponding backing. With that balance, the attacker was able to withdraw the authentic coins from the reserves.

The incident did not compromise the XRP Ledger nor did it allow the creation of new XRP on that network. The problem was limited to the infrastructure of the bridge and to the cryptocurrency represented in Coreum, which ceased to be fully backed.

The distinction is important. A bridge adds an additional layer for an asset to be used outside its original network and, with it, introduces risks that do not necessarily exist in the source network.

Three days later, a problem of another technical magnitude arose. On August 12, Harmony, a smart contract network compatible with the Ethereum Virtual Machine, confirmed a vulnerability that allowed an attacker to generate 4 billion of the native ONE token without authorization by exploiting empty blocks. This time, the problem did directly affect an economic property of the asset: its supply.

Moreover, the attacker acted quickly. According to on-chain analysis, 97% of the generated ONE was transferred to different exchanges, presumably with the intention of liquidating them. In this context, the developers of Harmony coordinated with those platforms to try to trace, intercept, and freeze the funds.

The market's reaction was swift, and the price of ONE fell to a new historical low.

Not all hacks weigh equally on the market. The comparison helps explain why two security incidents can produce completely different consequences on prices.

In Coreum, the problem was confined to a bridge and approximately 200,000 XRP. The supply of XRP was not modified, and the XRP Ledger continued to function normally.

Harmony faces a different scenario. The vulnerability allowed the creation of billions of units of its own cryptocurrency, while almost all of that new supply was sent to exchanges. For investors, this immediately introduces the risk of dilution and selling pressure.

The severity led the team to deploy a patch and even consider a rollback, that is, a possible reversion of the network's history to a state prior to the attack.

Therefore, from the market's perspective, it is not enough to measure how much money was stolen. It also matters which property of the system was compromised and how far the damage can spread.

And the precedent of Kelp DAO offers the clearest example of that contagion effect.

The risk lies in the connections. Coldcard, Coreum, Harmony, and Kelp DAO are technically different incidents and should not be interpreted as a single vulnerability spreading among projects.

What they do share is another characteristic. Each hack shows how the attack surface grows as the ecosystem adds new layers and connections.

Coldcard exposed a risk associated with self-custody tools. Coreum showed what can happen when the accounting of a bridge fails. Harmony faced a vulnerability capable of altering the supply of its asset. Kelp DAO, in turn, demonstrated how a problem in a protocol can transmit to others through assets used as collateral.

For the market, that difference is fundamental. A peripheral attack can be contained; one that compromises the supply, the backing of an asset, or the guarantees used by other protocols can quickly translate into price and liquidity issues.

The events of recent months thus leave a broader signal than the succession of hacks: as cryptocurrency networks become more interoperable and financially connected, the security of each piece also matters for the consequences that its failure can provoke outside of it.

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