Flow Pushes $3.9M Recovery Into Phase Two — Exchange Risks Still Present
The Flow Foundation has moved its restoration efforts right into a second part following a $3.9 million exploit that disrupted the community late final month, whereas additionally elevating recent issues about how a centralized alternate dealt with giant token actions tied to the incident.
In an replace posted Thursday, Flow mentioned it had made “important progress” on its remediation plan and had begun part two of the restoration, which is anticipated to take a number of days.
The basis mentioned builders have recognized a strategy to restore Ethereum Virtual Machine performance in parallel with ongoing fixes to Flow’s native Cadence atmosphere.
Flow Resumes Blocks and Moves Toward Full Recovery
Flow famous that the EVM community may return inside 24 hours of the announcement, barring unexpected points.
Block manufacturing on the community has already resumed, with the most recent block stamped at 09:30:50 UTC on Jan. 2, 2026.
Cadence-based transactions are processing, whereas account-by-account verification continues for wallets affected by the exploit.
Flow mentioned fraudulent tokens are being eliminated via on-chain transactions that may be independently verified, and that greater than 99.9% of accounts are anticipated to retain full entry as soon as EVM performance is restored.
The exploit occurred on Dec. 27, when an attacker took advantage of a vulnerability in Flow’s execution layer to mint and distribute fraudulent tokens, shifting roughly $3.9 million in belongings throughout a number of bridges earlier than validators halted the chain.
@flow_blockchain‘s deliberate controversial rollback after a $3.9M exploit attracts backlash from “blindsided” ecosystem companions#Flow #Blockchain #Exploithttps://t.co/A8w3rJJAUn
— Cryptonews.com (@cryptonews) December 29, 2025
Investigators later recognized the attacker’s Ethereum pockets and tracked tried laundering via cross-chain protocols, whereas freeze requests have been despatched to main exchanges and stablecoin issuers.
Initially, Flow builders proposed rolling the chain again to a checkpoint previous to the exploit.
That proposal drew sharp criticism from bridge operators and different ecosystem companions, who warned it may create accounting inconsistencies and push losses onto third events.
After Backlash, Flow Opts for Targeted Token Cleanup
Following the backlash, the inspiration launched a revised plan targeted on isolating and destroying illicit tokens whereas preserving respectable transactions.
Under the present approach, the community restarted from the final sealed block earlier than the halt, with out reorganizing the chain. Roughly 1,500 Cadence accounts that obtained fraudulent tokens have been briefly restricted whereas remediation transactions have been carried out.
Flow mentioned most of these accounts have little or no prior exercise and are anticipated to be restored shortly as soon as the illicit balances are eliminated. Validators permitted a short lived software program improve granting elevated permissions to hold out the cleanup, with these permissions set to be revoked as soon as remediation is full.
As a part of its autopsy disclosures, Flow additionally flagged what it described as troubling exercise on an unnamed centralized alternate.
The basis mentioned that inside hours of the exploit, a single account deposited round 150 million FLOW tokens, roughly 10% of the entire provide, transformed a big portion into bitcoin, and withdrew greater than $5 million earlier than the community was halted.
Flow mentioned the alternate failed to answer requests for details about the buying and selling patterns, calling the episode an obvious AML and KYC lapse that shifted threat onto customers who unknowingly purchased fraudulent tokens.
While Flow didn’t establish the alternate, some customers have speculated it may contain Binance.
Market information shows the fallout remains to be weighing on Flow’s DeFi ecosystem, as the entire worth locked on the community fell 12% over the previous 24 hours to about $72.1 million, down from roughly $102 million on Dec. 31.
The FLOW token is at present buying and selling at $0.081, dropping by 53.3% within the final 7 days following the exploit and the preliminary rollback proposal, as uncertainty unfold and a few exchanges paused deposits and withdrawals.
The submit Flow Pushes $3.9M Recovery Into Phase Two — Exchange Risks Still Present appeared first on Cryptonews.
