Bitcoin and Ethereum Plunge Amid Yearn Finance Exploit and Other Market Pressures

The cryptocurrency market saw extreme volatility on the 1st. At the time of writing, Bitcoin (BTC) is trading at $86,000 (approx. ¥13.3 million) and Ethereum (ETH) at $2,830 (approx. ¥440,000)—both down about 6% from the previous day. Many other major assets have also recorded significant declines.

One of the key factors driving the downturn is the exploit affecting Yearn Finance, a DeFi protocol built on Ethereum. The protocol’s yETH, a token that aggregates liquid staking assets, was illicitly drained, triggering intensified selling pressure, particularly across Ethereum-related tokens.

Concerns over security risks in the crypto ecosystem had already been elevated following another major exploit last week at Upbit, a leading South Korean exchange. Approximately ¥4.8 billion (USD equivalent) worth of Solana-based tokens were stolen, deepening fears surrounding the safety of digital assets.

In addition, traders appear to be adjusting their positions ahead of the FOMC (Federal Open Market Committee)meetings scheduled for December 9 and 10. While the possibility of a December rate cut had temporarily faded due to issues such as the U.S. government shutdown, the CME FedWatch Tool now indicates an 87.6% probability of a 0.25% rate cut.

The DeFi protocol Yearn Finance has revealed that the unauthorized outflow confirmed on the 1st has grown to $9 million (approximately 1.4 billion yen). The affected asset appears to be limited to yETH, a token that aggregates liquid staking tokens, and no impact has been reported on other protocols.

According to Yearn Finance’s statement, although the investigation is still in its early stages, the attack appears to be a complex exploit similar to the unauthorized outflow that occurred last month on the DEX Balancer. The attacker is believed to have exploited a vulnerability to mint an unlimited amount of yETH, draining the pool and acquiring the assets illicitly.

The stolen funds have reportedly already been sent to the cryptocurrency mixing service Tornado Cash.

The unauthorized outflows that occurred at Balancer and Upbit have been linked to North Korea–affiliated hackers. North Korea’s cyberattack activity has been growing increasingly aggressive, and given the sophistication of the methods used, it is possible that hackers from the country were also involved in the Yearn Finance exploit.

Announcement: Yearn Finance Announcement
Image: Shutterstock

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