Loopring, a layer-2 scaling protocol for developers to build decentralized exchanges (DEXs), suffered a hack that drained around USD 5 million from user wallets.

The protocol stated that the security breach was related to its "Guardian" two-factor authentication service, which enables users to name wallets of trusted individuals or institutions to support security operations. The hacker reportedly bypassed this service to initiate recoveries on wallets that used Loopring as their single guardian without the users' permission.

Notably, wallets that used multiple guardians or a different, third-party guardian were unaffected by the exploit. The company stated it was working with law enforcement to trace the perpetrator.

Analyst QuickTake:  This attack adds to the growing list of DeFi lending protocols targeted by hackers within the past few months. Loopring joins Sonne Finance , Dolomite , and Unizen , all of which suffered hacks that led to losses of USD 20 million , USD 1.8 million , and USD 2.1 million , respectively.