Initia, a network designed for interleaved optimistic rollups, shut down its layer 1 blockchain after detecting unauthorized transfers from escrow accounts holding assets linked to multiple rollups.
According to the team, approximately $615,000 left the network before the shutdown, with the incident raising new concerns for a project that has only just resumed operations after another exploit that cost it approximately $2.7 million.
Initia identifies compromised rollup infrastructure keys
In a post on X last night, Initia said it was “investigating an issue affecting the rollup infrastructure” and had been temporarily suspended.
“We have not identified any impact on user funds and we hope that rollups will resume block production soon,” the team wrote at this point.
However, today the story has changed, with the team adage it had halted L1 operations at 06:18 UTC after preliminary investigations identified unauthorized transactions on the network’s escrow accounts where assets related to a number of rollups were kept.
They said the unauthorized transfers came from compromised rollup infrastructure keys, which allowed an attacker to fabricate inter-blockchain communication (IBC) transfers and earn approximately $605,000 in USDC through Noble, as well as an additional $10,000 in other tokens, before validators paused the network.
However, they noted that most of the remaining assets that had been withdrawn from escrow accounts are still stuck on L1. The team also told users that it was still trying to establish the full extent of the incident and would provide more details as they become available.
Second attack in less than a month
This is not the first time that Initia has faced such a problem. Less than three weeks ago, an attacker took advantage of a vulnerability in its MoveVM script caching system to create unsaved WETH, iUSD and USDC balances without changing the corresponding token supplies.
In this incident, the attacker managed to transfer approximately $2.7 million through LayerZero and Noble before the network was shut down. According to Initia’s own accounting, by October 24, the thief had successfully converted the stolen assets into 1,135 ETH. The Initia Foundation subsequently approved funding to restore 1:1 support to affected assets, covering up to 1.08 million USDC, 105 ETH and 1.4 million AUSD0.
Then on November 2, a little over a week before the new exploit, the network resumed operations after performing upgrades including an independently audited MoveVM patch as well as isolating the attacker’s remaining tampered balances.
Back-to-back successes are nothing new in crypto. You may recall that in July, Verus Bridge lost $7.55 million to a hacker just two months after thieves made off with $11.58 million, with security firm Blockaid linking both attacks to the same bridge contract and the same class of bugs.
Interestingly, despite Initia’s L1 shutdown, CoinGecko data at the time of writing showed that its native INIT token was up almost 60% in 24 hours and over 71% in the last seven days. It was also in the green over longer periods, having gained 45% in the past fortnight and well over 88% in 30 days, although it is still 84% below its May 2025 all-time high of $1.42.
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