Chainflip zeros TRON USDT LP balances after $736K exploit

Chainflip will set the live TRON-USDT (trxUSDT) balances of affected liquidity providers to zero as part of a restart and recovery process after an exploit removed 736,442.17 USDT from its TRON vault on Sept. 12 between 01:44 and 03:10 UTC. The protocol will record each provider’s pre-migration trxUSDT amount in a separate on-chain account to preserve claims for later reimbursement.

The attacker submitted a transaction that validators had already signed and appended a malformed TRON memo. Chainflip’s monitoring software interpreted the memo as a failed swap and issued refunds on top of ordinary withdrawals, allowing six withdrawals to be paid twice and enabling the removal of the extra funds from the TRON vault.

As part of the recovery process, Chainflip plans to close open TRON/USDT orders, unwind related loans and lending positions, and migrate balances into the separate on-chain records for recovery processing. The protocol reported that swaps and quoting have resumed on other network routes while TRON-based operations remain excluded during migration and recovery.

The on-chain records will preserve the amount the protocol tracks as owed to each provider but do not represent completed reimbursements. Chainflip has pledged to make affected liquidity providers whole; it has not identified a funding source for repayments, provided a payout schedule, documented any completed payouts, or confirmed the total amount recovered.

Chainflip implemented a software patch to block the attack vector by changing which TRON transfers may carry swap instructions in a memo. Under the new logic, memos are accepted only when attached to a plain TRX transfer or a direct TRC-20 token transfer. Memos wrapped inside another contract call are excluded, closing the route used to trigger duplicate refunds.

Affected liquidity providers remain awaiting Chainflip’s accounting migration and a formal recovery plan. The protocol reported that all other network funds were unaffected and that the shortfall, position unwind and balance reset apply specifically to trxUSDT liquidity providers.