Price Manipulation Attacks Flood Crypto Lending Market

Rising price manipulation attacks are increasingly affecting crypto traders and lenders, with more than 32 cases reported in 2026 alone, according to blockchain intelligence firm TRM Labs. This type of attack occurs when an attacker artificially inflates the price of a token with little trading volume, then uses it as collateral to borrow other assets from a lending protocol.

As the price of the collateral crashes immediately, the attacker walks away with the borrowed assets, leaving behind worthless collateral and no obligation to repay the debt. This has become a growing concern in the crypto industry, particularly in the asset-backed lending market, which has seen a significant increase in value locked in platforms.

The total value locked in these platforms has increased by around 56% over the past two years, reaching nearly $50 billion, while active loans have almost doubled to nearing $29 billion. This expansion has made it easier for attackers to exploit price manipulation vulnerabilities, and the number of such attacks is on the rise.

One recent example is the attack on Tectonic, a money market protocol that lost over $70 million after an attacker inflated the price of its governance token, TONIC. The attacker was able to walk away with around $6 million worth of assets, highlighting the risks associated with price manipulation attacks.