Avici, the crypto neobank that suffered a $500K hack, has pledged to fully repay victims.
Additionally, the firm assured its users that the vulnerability that enabled the exploit has been resolved by its card-issuing partner, Rain.
Over 1600 Avici victims to be refunded
In an update on the 28th of August, Avici said that 1,685 users were affected by the incident. This translated to $500,859.20 in impacted card balances. The firm added,
Every affected user will have their card balance refunded in full. We remain in close contact with our card-issuing and security partners and are monitoring the remediation closely.
Separately, Rain reinforced the full repayment process, noting that the bug impacted a “small number of programs” that were using an outdated version of their Solana contracts.
Can the crypto card sector survive a contagion?
However, the incident has also increased scrutiny on crypto card players and broader safety amid rising stablecoin adoption.
For clarity, Avici wallets are self-custodial. However, its card balances are separate. Whenever a user tops up their cards, the funds are transferred into a separate Solana contract that holds the card balance.
So Avici’s card balances were the only ones affected due to a bug in a codebase being managed by Rain. But the funds in Avici wallets are reportedly safe and under users’ control.
However, Rain infrastructure powers most of the crypto cards. So, what if the hack was more than $1M or $100M and extended beyond a few Solana contracts? Can the crypto cards hold up in such a possible contagion event?
Case in point – crypto card volumes, based on issuers, hit a record high of $625M in August, led by Rain. In fact, it has become the de facto way to spend stablecoins.
Rain’s market dominance further underscores how big and far-reaching the exploit could have been if it were not an isolated case.
Final Summary
- Rain and Avici pledged to fully repay over 1600 victims who were drained of $500K in crypto card balance exploit.
- Rain dominates the crypto card issuance, underscoring an inherent risk and contagion if targeted again for a bigger exploit.