Flow Enters Phase Two of Recovery After $3.9M Exploit, Flags Exchange Token Movements

Flow is rebuilding its network after a US$3.9 million (AU$5.9 million) exploit on Saturday, and says it is investigating suspicious exchange activity tied to a large FLOW token deposit and rapid withdrawals.

In an update on X, the Flow Foundation said its recovery effort has moved into “phase two,” which it expects to take several days. It said engineers have found a way to bring back Ethereum Virtual Machine (EVM) support while remediation continues on Cadence, Flow’s non-EVM chain. Both tracks will now be worked on at the same time.

Moreover, Flow said the Community Governance Council is carrying out “cleanup” transactions within limits approved by validators, and that the actions can be independently checked on-chain using block explorers.

This is a complex process requiring individual account assessment and verification. The Foundation is working with external forensic firms to accelerate remediation while maintaining the precision required for secure restoration.

Flow Foundation.

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Flow Steps Back From Early Proposal

The foundation has also stepped back from an earlier proposal that would have rolled back the blockchain. That idea drew pushback from users who said a rollback would undermine decentralisation and introduce new security concerns.

In its post-incident report, Flow said it was alarmed by how one centralised exchange handled token movements during the incident and claimed the exchange did not respond to its outreach about trading patterns. Flow did not name the venue, though some users speculated it could be Binance. 

Flow said a single account deposited 150 million FLOW, about 10% of total supply, swapped a large amount into Bitcoin, and withdrew more than US$5 million (AU$7.6 million) within a few hours before the network was halted. 

Flow said the pattern indicated an AML/KYC breakdown and pushed losses onto users who may have bought tokens created through the exploit.

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