Initia halts L1 and rollups: attacker mints tokens without a cap and takes out $2.7 million

Initia’s blockchain has stopped. On October 23, 2026 at 15:41:30 UTC the project halted its layer 1 blockchain and the rollups built on top of it, after an attacker was able to create tokens without any cap through a flaw in the minting mechanism. According to co-founder Ezaan Mangalji, the attacker extracted around $2.7 million in the stablecoins AUSD and USDC and in ether before the blockchain was stopped. If you hold assets on that blockchain, the consequence is very concrete: balances sitting on it cannot be moved while it stands still. Balances held on an exchange are not affected for now, because exchanges settle internally.

What happened on the Initia blockchain on October 23, 2026

Initia’s official account on the platform X announced the halt with the exact time. Bitcoin.com News quotes the statement as saying that the Initia L1 and the rollups had been halted because of a security incident. The blockchain remained stuck at block height 23365925 as the source went to press. The developers had not given a time for the resumption of normal operations at that point, and the project had not officially confirmed a total figure for the damage.

The incident was first noticed outside the project. Blockchain security researcher Spreek described the unusual minting publicly before a statement from the project existed. The minting transactions themselves could be traced through Initia’s official block explorer, so they were visible in the blockchain’s public data. That is typical of this kind of incident: the entries sit openly in the blocks, only their cause is unclear at first.

Infinite mint means tokens appear without backing

An infinite mint is a flaw that allows new tokens to be created without any deposit, collateral or upper limit being required. Minting is the normal process by which a protocol puts new units of a token into circulation. Ordinarily that process is tightly bounded, for instance to the amount someone has deposited beforehand. If a programming error removes that boundary, an attacker can credit themselves any number of units.

The economic damage does not arise at the moment of minting. Tokens without backing are at first only numbers in a database. It turns dangerous at the second step, when those numbers are exchanged for something that actually holds value. That is exactly where the loss sat in Initia’s case: the freshly minted units were sent across a bridge to other blockchains and redeemed there for real assets. A bridge is a service that moves tokens from one blockchain to another and is supposed to check whether the other side is covered.

This two-stage sequence explains why the number of minted tokens and the figure for the actual loss can lie far apart. The network halt as an emergency brake is not an isolated case either: at Maya Protocol the sequence after an exploit ran in a comparable way, and there too it started with a mint that was not meant to be possible.

The MoveVM on the Cosmos SDK is the named weak point

Co-founder Ezaan Mangalji placed the cause technically, on his own account. Bitcoin.com News quotes him saying this was a day-0 bug relating to Initia’s MoveVM on the Cosmos SDK, while he expressly limited that assessment to what was known at the time. A day-0 bug describes an error that was in the code from the start and went unnoticed until the incident, so it is not the result of a later change.

To place the terms: the Cosmos SDK is a construction kit from which independent blockchains are built. The MoveVM is an execution environment for programs on the blockchain that comes from the Move programming language and is regarded as particularly strict in handling assets. Initia combines the two and additionally operates what are called rollups, separate execution layers that deliver their results to the main blockchain. According to the project, those rollups support both the MoveVM and the EVM known from Ethereum.

What matters for the assessment is what Mangalji expressly excluded: the flaw does not affect the native INIT tokens. That is not an aside but the reason the incident hit the project token’s price differently from comparable cases. That distinction rests on the co-founder’s statement, not on an independent review; a post-mortem from the project with a full error analysis was not available at the time of this article.

$2.6 to $2.7 million: why the figures diverge

Different figures exist for the damage, and they should not be melted into one round number. Mangalji names around $2.7 million that the attacker was able to mint in AUSD, ether and USDC and move out across the bridge before the blockchain was paused. Crypto Briefing reports around $2.6 million that the attacker converted, and points out that further funds were still in motion. DefiLlama’s hack list carries the incident at $2.6 million, classified as a flaw in token accounting with infinite mint as the technique.

A third figure sits considerably higher and refers to the nominal amount minted. An analysis by the research firm Bitquery, quoted by The Block, arrives at around $7.48 million of tokens created nominally. The larger part of that, however, was said to be synthetic iUSD, which could not be redeemed at face value. Synthetic means the token only reproduces a value by calculation, without redemption at that value being guaranteed. Anyone comparing the figures therefore has to separate cleanly what was minted from how much of it could be turned into real money. The Block blocks automated retrieval; the content was confirmed through a search.

Agora declares AUSD and its own business unaffected

One of the token names involved belongs to a third-party issuer, and that issuer has contradicted the account clearly. Agora, the house behind the stablecoin AUSD, said according to Bitcoin.com News that it has no smart contracts deployed on Initia. AUSD and Agora are not affected, and AUSD does not exist on Initia. At the same time Agora announced it would freeze balances connected to the attacker’s addresses, insofar as they sit on blockchains where Agora operates its own contracts.

This apparent contradiction with Mangalji’s list can be resolved, and it matters for understanding the case: what was carried on Initia under the name AUSD was, from the issuer’s point of view, not a token issued by it but a representation on an external blockchain. In practice that means a familiar name on a blockchain is no guarantee that the issuer of that name is actually active there and stands behind the backing. The question can be settled before buying, by checking which contracts an issuer officially names as its own.

Upbit suspends INIT deposits and withdrawals

Exchanges respond to a network halt with a protective measure of their own. The South Korean exchange Upbit suspended deposits and withdrawals for INIT. That is technically unavoidable: as long as a blockchain confirms no new blocks, an exchange can neither credit an incoming transfer reliably nor execute an outgoing one. A suspension in that situation protects both sides from entries that cannot be allocated later.

For holders this creates a clear distinction that often gets lost in such situations. Trading on an exchange runs through its internal book and does not need the blockchain. Deposits and withdrawals need it absolutely. So anyone holding INIT on an exchange may be able to keep trading, but not to withdraw. Anyone self-custodying the tokens has full control over the keys and still no access while the blockchain stands still. Which exchanges are accessible under regulation in Germany, and how they behave during disruptions, we broke down in our comparison of crypto exchanges.

The INIT price rises while the blockchain stands still

The price action contradicts the first expectation. According to CoinGecko, INIT stood at $0.152482, or 0.136096 euros, on October 24, 2026, 14.43 percent higher than 24 hours earlier. Over the week the token is up 22.31 percent, and 68.37 percent over 30 days. Within the day the range ran from a low of $0.114082 to a high of $0.156281. Market capitalisation comes to around $32.16 million, which puts INIT at rank 618. In circulation are 210,794,785 of a total of one billion tokens. The price is 89.29 percent away from its peak of $1.42 on May 13, 2025.

Two reasons carry that move. First, on the co-founder’s account the project token itself could not be minted, so the loss fell on external tokens that were represented on Initia. Second, trading carried on at exchanges, where the blockchain plays no part in the price. No all-clear can be derived from that, however: in this phase the price is mainly valuing the expectation that the restart succeeds. If it fails or takes long, that basis changes. The two intraday levels at $0.114082 and $0.156281 are the points at which that expectation last turned.

Audits and backers are no promise of protection

Initia launched its mainnet in 2025 and total supply stands at one billion INIT. According to Crypto Briefing the project raised around $24 million from investors, among them Binance Labs and Delphi Digital, and went through several security reviews. An earlier misconfiguration of the staking rewards for INIT was, on that account, not an exploit and was cleaned up in 2025 through the project’s governance.

That history is no side issue but the real lesson for picking projects. Several passed audits and well-known backers did not prevent a flaw that, on the co-founder’s account, was in the code from the beginning. An audit checks a particular state of the code against known error patterns, and a new combination of two building blocks, here a Move environment on a Cosmos kit, produces error patterns that nobody has looked for in that form yet. Anyone putting money on young blockchains should therefore read audits as evidence of diligence and not as a guarantee.

Holding period and tax: a network halt is not a sale

In tax terms a halted network changes nothing about your position for now. In Germany, gains from the sale or exchange of crypto assets count as a private disposal under section 23 of the Income Tax Act. What is decisive there is a transaction in which you give something up and receive something else. A network halt is neither a sale nor an exchange: nothing is taken from you, it simply cannot be moved. The one-year holding period keeps running normally during that time, and a loss only arises in tax terms through an actual sale, not already when a price falls or access drops out.

In practice that means anyone close to the end of the one-year period loses no waiting time through the standstill. Anyone considering a sale after a restart, by contrast, should know the acquisition date and the deadline before acting. For documenting cases like this, where credits fail and holdings are spread across several platforms, clean records are decisive: acquisition date, quantity and storage location belong on the file for each position. This article is no substitute for tax advice, and with larger amounts a query to a firm is worth it.

Custody when it counts: where your tokens actually sit

This incident separates two risks that often get thrown into one pot. The first risk is the loss of the keys, through phishing or a compromised wallet. A hardware wallet helps against that, because the key never leaves the device; the differences between the devices we set side by side in our hardware wallet comparison. The second risk is a flaw in the protocol itself. No wallet protects against that, because the error does not lie with you but in the blockchain on which your balance is recorded. The two risks need different answers.

For the second risk, spreading out helps most. Anyone distributing their assets across several blockchains and several places of custody loses access to a part during a standstill rather than to everything. Part of that is deciding deliberately how much sits on young blockchains with a short operating history. A further point concerns represented tokens: if a small blockchain carries a version of a well-known stablecoin, it needs clarifying who issues it and who stands behind the backing if something goes wrong. Agora’s answer in this case shows the question is not theoretical.

How things continue at Initia and how to spot the progress

A restart after an incident like this takes more than restarting the servers. The operators of the validators, the machines that confirm blocks, have to agree on a corrected version of the software and on the state from which work continues. Only after that can it be judged which entries hold. At the time of this article Initia has named no date for it and has not conclusively confirmed the total damage.

Three data points show the progress more reliably than any announcement. The first is the block height: if it rises beyond the level of 23365925, the blockchain is confirming blocks again. The second is the status pages of the exchanges: if an exchange lifts the suspension on deposits and withdrawals, it trusts the confirmations again. The third is a published post-mortem with an error analysis that names what the flaw was and how it was fixed. If that report stays missing for good, that is itself a piece of information. Until then, new deposits onto this blockchain deserve the same caution as a token that has been removed from trading: wait until the way out is demonstrably open again.

Initia network halt: without a restart every balance stays immobile

The position as of October 24, 2026: the blockchain has stood still since October 23, 15:41:30 UTC, at block height 23365925. On the figures available, $2.6 to $2.7 million was extracted. Three steps follow from that.

1. Establish the holding and its location. Clarify whether your tokens sit on the Initia blockchain itself or on an exchange. On an exchange trading is often still possible, withdrawing is not. Which venues come into question for investors in Germany is shown by our comparison of crypto exchanges.
2. Review custody and distribution. Separate the key risk from the protocol risk and spread holdings across several blockchains and places of custody. For the device side, our hardware wallet comparison helps.
3. Secure deadlines and records. Keep hold of acquisition dates, because the holding period keeps running and a standstill is not a sale. Tools for that are in our comparison of tax software and portfolio trackers.

(As of October 24, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)

Sources: Bitcoin.com News on the network halt and the statements and Crypto Briefing on the course of the incident.