USDC withdrawals on the Initia blockchain network failed after an attacker drained much of the reserve supporting bridged tokens, according to an investigation by CryptoSlate. The reserve, held on the Noble blockchain, fell from about $1 million before the cash-outs to an intraday low of $63 on October 23.
Reserve depletion halted USDC exits
Bitquery, which investigated the exploit, recorded the low at 15:37 UTC. Its later check at 18:52 UTC found approximately $24,000 remaining. The reserve was used to back representations of USDC on Initia, meaning users seeking to withdraw the token depended on the reserve releasing the corresponding underlying assets.
Bitquery identified 55 failed ordinary USDC withdrawal attempts before withdrawals stopped. Most were linked to a bot repeatedly submitting the same balance. Larger requests from the attacker also failed once the available reserve became insufficient.
Initia said its layer-1 blockchain and rollups halted at 15:41:30 UTC on October 23. The project’s co-founder initially estimated that around $3 million had been bridged out before the pause. Bitquery similarly estimated that approximately $3 million in real assets had been paid from bridge reserves, but placed the face value of unauthorized balances at roughly $7 million. Those figures describe different parts of the incident: assets actually released from reserves versus balances created without matching backing.
What the exploit changed
Initia said in an October 24 update that the incident was caused by a MoveVM script-caching bug that bypassed security checks. According to the project, the attacker created unbacked WETH, iUSD and USDC balances without increasing the corresponding total supplies. Initia also said no native INIT tokens were minted.
The distinction between native and bridged USDC is important. Native USDC is issued by Circle and can be redeemed for dollars, while a bridged version is a third-party representation backed by USDC locked on another blockchain. A depleted reserve for one bridge can therefore prevent users from exiting through that bridge without, on the information provided, indicating a failure of Circle’s broader dollar backing.
The incident also involved exposure connected to AUSD, issued by Agora. Agora’s account said its AUSD contract was not deployed on Initia and that no AUSD was minted there. It described the affected exposure as a separate third-party product using AUSD on Ethereum, rather than a product operated by Agora.
Initia recovery update and market picture
At 08:46 UTC on October 24, Initia said its layer-1 network and rollups were still halted. It expected a fix to be completed and audited within days and said asset recovery was continuing. The update did not provide a firm restart date or terms for reimbursement, leaving the restoration of missing bridge backing unresolved.
Moneyiar market data at 22:38-22:39 on October 25 showed USDC at $0.9998375755, down 0% over 24 hours and 0.01% over seven days. Chainlink was $11.4919002167, down 0.49% in 24 hours and 3.57% over seven days. Celestia stood at $0.5321576029, unchanged over 24 hours and down 11.85% over seven days, while Nexus was $0.0000006151, up 1.61% over 24 hours and down 13.97% over seven days.
