Ethereum Layer 2 Exchange Kinto Shuts Down After $1.55M Hack

- Ethereum Layer 2 exchange Kinto to cease operations on September 30, 2025. - Closure follows a July hack resulting in a $1.55 million loss; partial reimbursements planned. On September 8, 2025, The Block reported that Kinto, an Ethereum Layer 2 modular exchange, will permanently shut down. The closure follows a financial collapse caused by a sophisticated smart contract exploit. A July attack drained $1.55 million from the platform, making recovery and continued operations unsustainable. As a result, Kinto will officially close on September 30, 2025. Attackers exploited loopholes in Kinto's smart contracts to mint 110,000 fraudulent Kinto tokens. They then sold these tokens on the market and siphoned off 577 ETH, which was valued at $1.55 million at the time. The funds came from both a Morpho lending vault and a Uniswap v4 liquidity pool. Following the breach, Kinto's token value plummeted by approximately 95%. Consequently, this collapse severely undermined user confidence and the platform's financial footing. In a bid to recover, the platform introduced a program called "Phoenix," through which it raised $1 million in loans and launched a new token. However, looming debts and inadequate funding ultimately made this effort unviable. Founder Ramón Recuero described the shutdown as a necessary step to protect users and lenders, given the scale of the liabilities. Recuero has pledged partial compensation to victims. The foundation will use its remaining assets to help lenders from the "Phoenix" program recover up to 76% of their principal loan amounts. Additionally, Recuero committed $55,000 of his personal funds to address bad debt on Morpho, offering affected addresses up to $1,100 each. The Kinto team has operated without salaries since the breach to ease the financial strain during the recovery period. According to CoinMarketCap, as of September 8 at 06:08 UTC, Ethereum (ETH) was trading at $4,291.93, a 0.046% decrease over 24 hours. Meanwhile, The Graph (GRT) saw a 0.223% increase to trade at $0.09, while Arbitrum (ARB) traded at $0.493, a decrease of 0.925% over the same period.