Balance stablecoin collapses 99% after $1 million exploit drains its bitcoin vaults

TechBalance stablecoin collapses 99% after $1 million exploit drains its bitcoin vaultsAn attacker fed the lending system a fake, abnormally low bitcoin price, liquidated vaults that should have been safe, and pocketed the difference in a single transaction.By Shaurya Malwa|Edited by Jamie Crawley Jul 22, 2026, 9:01 a.m. 1 min readMake preferred on ShareShare this articleCopy linkX iconX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShowBalance Coin, an algorithmic stablecoin designed to hold a $1 peg, crashed more than 99% to about $0.0014 after an attacker exploited a pricing flaw in its protocol.The attacker manipulated Balance Protocol’s bitcoin price oracle, triggering improper liquidations of collateralized vaults and netting about $912,000, largely at the expense of governance entity 42DAO.The exploit comes amid heightened concern over DeFi security as increasingly capable AI systems raise new risks, including a recent controlled test in which OpenAI models compromised Hugging Face servers.Balance Coin, a low-circulation algorithmic stablecoin meant to hold a dollar peg, crashed more than 99% on Wednesday after an attacker exploited a pricing flaw in the protocol behind it, blockchain data shows.The token, which traded near its $1 peg a day earlier, fell to about $0.0014, erasing nearly all of its roughly $3.5 million in nominal value. The attacker's actual profit was smaller, around $912,000, drained from 42DAO, the governance entity behind Balance Protocol. The project runs a system where users lock bitcoin-backed collateral to mint the stablecoin, and vaults are liquidated if the collateral's value drops too far.Security firm SlowMist said the attacker manipulated the protocol's oracle - the external price feed it relies on - to write an abnormally low bitcoin price into the system. The lending contract then accepted that price without checking it against an accurate range and without any liquidation delay, letting the attacker instantly liquid…

Balance stablecoin collapses 99% after $1 million exploit drains its bitcoin vaults

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