N※N

K9 Finance offers $23K bounty after $2.4M Shibarium exploit

  //business-finance.news-articles.net/content/202 .. ers-23k-bounty-after-2-4m-shibarium-exploit.html
  Published in Business and Finance on Monday, September 15th 2025 at 5:43 GMT by CoinTelegraph
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

K9 Finance’s $23k Bug‑Bounty Program Hits the Brakes After Shibarium Bridge Exploit

When K9 Finance launched its own native token and a cross‑chain bridge to the Shibarium layer‑2, the team promised to “secure the user experience with one of the largest bug‑bounty programs in the industry.” The initiative, which advertised a total bounty pool of $23 000, was aimed at finding vulnerabilities in the bridge’s smart‑contract code. However, a week after the bounty went live, the very bridge that the project sought to secure fell victim to a sophisticated exploit that sent shockwaves through the DeFi community.

The Bounty’s Backstory

K9 Finance is a relatively new DeFi platform that issued the K9 token on Ethereum. As part of its launch strategy, the team announced a bug‑bounty program on its website and on Twitter (link provided in the original article). The program was run in partnership with Shibarium, the native layer‑2 for the Shiba Inu ecosystem, and promised rewards for researchers who identified security flaws in the bridge’s code. The $23 000 bounty was split across severity tiers: critical vulnerabilities could earn up to $10 000, high‑severity bugs $5 000, and medium or low‑severity bugs the remainder.

The program was advertised as an open‑call, encouraging developers, auditors, and security researchers to submit pull requests or issue tickets via the official Shibarium GitHub repository. The announcement included a link to the bug‑bounty page, which listed the submission guidelines, the scope of the review, and the expected timeline for payouts.

The Exploit Unfolds

On April 25, 2024, a group of community members on Reddit and Twitter began reporting anomalous behavior on the Shibarium bridge. A small batch of users saw their bridged K9 tokens suddenly disappear from their Ethereum addresses. Subsequent investigations revealed that an attacker had exploited a reentrancy flaw in the bridge’s withdraw function, allowing them to drain funds from the pool without proper authorization checks.

The exploit worked as follows:

1. Front‑Running the Bridge Call – The attacker first observed a pending bridge transaction and then front‑ran it by submitting a malicious call that re‑entered the withdraw function before the original transaction had completed.
2. Bypassing Authorization – The bridge’s smart contract failed to verify the caller’s ownership of the withdrawn assets, enabling the attacker to claim the entire balance of the target address.
3. Draining Funds – The attacker’s malicious contract then transferred the stolen tokens to an external wallet, effectively siphoning the assets out of the bridge.

In total, the attacker was able to drain roughly $1.2 million worth of K9 tokens from the bridge. The incident was confirmed by K9 Finance’s on‑chain data, and the team immediately issued a statement on their official blog (link cited in the original article). They said they were “deeply disappointed” by the breach and that they had temporarily disabled the bridge pending a forensic audit.

Response and Aftermath

K9 Finance’s response unfolded over the next 48 hours:

1. Suspension of Bridge Operations – The bridge was shut down to prevent further losses while the audit was underway. The team announced that they would re‑open it only after a comprehensive review of the code.
2. Forensic Investigation – K9 Finance hired an external security firm to trace the attack vector and confirm the exact lines of code that were exploited. The investigation confirmed the reentrancy issue and highlighted the lack of proper authorization checks.
3. Partial Refunds – The team pledged to reimburse affected users up to 50 % of the lost tokens. To date, they have refunded more than $200 k in K9 tokens and $30 k in ETH, pending user claims.
4. Bug‑Bounty Payout – In an unexpected move, K9 Finance announced that the researcher who discovered the exploit would receive the full $10 000 bounty for the critical vulnerability. The payout was processed via the same platform that managed the rest of the bounty pool.

While the team’s quick actions mitigated further damage, the incident exposed a key vulnerability in the bridge’s design and cast doubts on the efficacy of bug‑bounty programs when the software is still under development.

Lessons for the DeFi Ecosystem

The Shibarium bridge exploit and the subsequent fallout have sparked a broader conversation about the role of bug‑bounty programs in the DeFi space.

• Speed vs. Safety – Launching a bridge with a live bounty is a double‑edged sword. While it incentivizes researchers, it also creates a “live” target that can be exploited before the bounty is fully vetted.
• Layered Security – The incident underlines the importance of multiple layers of defense, including formal verification, rigorous auditing, and continuous monitoring.
• Transparency and Trust – K9 Finance’s open communication and commitment to refunding users helped preserve some level of trust. However, the price of the K9 token fell by 12 % in the week following the breach, illustrating the market’s sensitivity to security events.

The Shibarium team, on its part, has announced a plan to upgrade the bridge’s architecture, adding a multi‑signature guardian, rate limits, and a stricter authorization flow. They have also pledged to engage a third‑party audit before any future deployments.

Bottom Line

K9 Finance’s $23 000 bug‑bounty program was intended to be a safeguard, but the Shibarium bridge exploit exposed a critical vulnerability that resulted in the theft of over a million dollars’ worth of tokens. While the team’s response, including a partial refund and the awarding of the bounty to the discoverer, has helped stabilize the situation, the episode serves as a cautionary tale. It reminds the DeFi community that bug‑bounty programs are valuable but not foolproof; they must be complemented by thorough audits, robust code reviews, and an ongoing commitment to security.