Ethereum Layer 2 Project Kinto Closes After $1.55 Million Exploit, Promises 76% Loan Repayments

- Ethereum Layer 2 modular exchange Kinto shuts down after a critical $1.55 million hack. - Founder Ramón Recuero pledges partial reimbursements to victims and Phoenix program lenders. Kinto, an Ethereum Layer 2 modular exchange platform, will officially shut down on September 30, 2025. The closure follows a crippling security breach in July that drained $1.55 million from the project, triggering a cascade of financial instability. On July 10, 2025, an attacker exploited a vulnerability in the smart contract of Kinto's Arbitrum-based Layer 2 network, minting 110,000 counterfeit Kinto tokens and then selling them. This action drained 577 ETH, valued at $1.55 million at the time, from two key reserves: a Morpho lending vault and a Uniswap v4 liquidity pool. As a result, the attack caused Kinto's token value to crash by 95%, severely eroding liquidity and investor trust. Notably, security researchers had flagged the vulnerability before the hack, but Kinto failed to implement a timely fix. Kinto attempted a recovery through its "Phoenix" program, raising $1 million to replenish liquidity and restart operations. However, the initiative also incurred debt, preventing the project from achieving financial sustainability. Without long-term funding, the team ultimately decided to dissolve the platform. In a public statement, founder Ramón Recuero addressed the closure, underscoring the team's difficulties and revealing they had worked without compensation since the exploit. Recuero also promised partial reimbursements to affected stakeholders. The Kinto foundation's remaining assets will cover 76% of the principal owed to Phoenix program lenders. Additionally, Recuero will allocate $55,000 from his personal funds to reimburse hack victims, and affected Morpho platform users can expect repayments of up to $1,100 per address. On September 8, 2025, CoinMarketCap reported that at 08:09 UTC, Ethereum (ETH) was trading at $4,290.37, down 0.25% in 24 hours. In the same timeframe, Morpho (MORPHO) was priced at $1.965, a 1.91% decrease, while Uniswap (UNI) had risen 0.40% to $9.41.