Cross-Chain Oracle Compromise Triggers Widespread DeFi Chaos

A cross-chain oracle compromise has triggered liquidations and frozen vaults across multiple DeFi networks. Switchboard, an oracle provider that supplies price data to DeFi applications, said contributors halted its deployments on Aptos, Sui, IOTA, and Movement after reports of a potential Switchboard Move oracle compromise in its Move-language implementations.

At least three applications reported losses, freezes or precautionary access restrictions as Switchboard advised users to migrate temporarily to alternatives. The provider said it had not received similar reports about its Solana implementation, but it has not published a root cause or a timetable for restoring the four Move deployments.

Virtue, an IOTA credit protocol, provided the most detailed account of the incident. It said an attacker gained control of the signing keys used by all 14 oracles on Switchboard's IOTA mainnet queue and pushed IOTA's reported price to $10 million. The attacker then deposited 1 IOTA and minted about 4.94 million VUSD, according to Virtue.

Full Sail, a Sui-based exchange, confirmed that its vaults lost funds and said deposits and withdrawals would remain paused until oracle integrity was restored and verified. Its disclosure did not identify the affected vaults or assets, provide transaction records, or quantify the loss.