Balance Coin (BLC), an algorithmic stablecoin designed to track the US dollar, lost more than 99% of its value after blockchain security firms reported a suspicious exploit involving 42DAO.
Summary
- Balance Coin lost more than 99% after security firms linked its fall to the 42DAO exploit.
- The attackers reportedly created unsupported BLC before exchanging tokens to USDT and BTCB via PancakeSwap pools.
- Two suspicious transactions on the BNB Chain reportedly took out about $915,000 as Balance Coin quickly dropped.
PeckShield said the incident caused about $915,000 in losses and linked the collapse of BLC to an exploit affecting 42DAO, a decentralized organization connected to the Balance Protocol ecosystem. The security firm said Balance Coin “dropped -99%” following the reported attack.
The price dropped from near its target peg of $1 to a record low of $0.001209 on July 22. At the time of testing, CoinMarketCap showed BLC trading near $0.00247, down 99.75% over 24 hours. Its 24-hour range extended from $0.001209 to $0.9955.
Security firms are tracking the alleged attacks in two cases
TenArmor reported that it found two suspicious transactions involving GemJoin and 42DAO on the BNB Chain. Onchain data cited in the reports showed that the first transaction was made about 4.5 million BLC from a blank address before transferring tokens to PancakeSwap V2.
The attacker then reportedly exchanged the newly minted BLC for Binance’s tokenized USDT, also known as BSC-USD, and Binance Bitcoin (BTCB). About two hours later, a second transaction allegedly used the same method to make another 5,900 BLC and remove more assets from the available funds.
The implementation reportedly increased the number of BLC tokens available for sale without the usual regulation expected of the protocol. As newly minted tokens entered decentralized exchange pools, selling pressure pushed BLC sharply away from its dollar target.
PeckShield estimated the loss at about $915,000. However, security firms described the event based on their analysis of onchain activity, and a detailed post-event report from 42DAO was not identified in the latest publicly available information reviewed for this report.
Balance Coin loses its US dollar peg
Balance Coin serves as a stablecoin at the center of the Balance Protocol Ecosystem. CoinMarketCap describes BLC as an algorithmic stablecoin on the BNB Chain designed to maintain a stable value against the US dollar, while 42DAO describes the token as part of its broader financial ecosystem.
The token’s fall left it trading at a fraction of its target price. Although its price recovered slightly from intraday lows, it remained more than 99% below the level recorded before the manipulation reported at the test.
This incident is similar to other cases where the unauthorized creation of tokens put sudden pressure on the market capitalization. As crypto.news reported, USR stablecoin Resolv lost its peg in March after an attacker issued millions of unbacked tokens and exchanged them for DeFi markets. Resolv later suspended protocol operations while it investigated the breach.
Unauthorized mining remains a recurring attack method
Some crypto projects have also faced sharp price drops after attackers created tokens without authorization. As previously reported by crypto.news, MAPO dropped by 96% in May after attackers used a bridge flaw to create unauthorized tokens and sell them on limited exchanges.
In another case, Stake DAO suffered a hack in May after an attacker reportedly made billions of vsdCRV tokens before exchanging them for ETH. These scenarios involved different technical weaknesses, but each allowed an attacker to create tokens outside of the expected provisioning process.
For Balance Coin, the immediate focus remains on the reported exploitation of 42DAO and the state of BLC after its complete depeg. Available onchain reports point to two suspected attacks,
