Kinto’s $K Token Plummets After Arbitrum Smart Contract Exploit—Here’s What Went Wrong

Another day, another DeFi exploit—this time Kinto's $K token takes the hit. Arbitrum's smart contract flaw triggers a freefall, leaving traders scrambling. Who's left holding the bag? Let's break it down.

How the exploit unfolded: Attackers bypassed contract safeguards, draining liquidity faster than a crypto influencer's credibility. The $K token nosedived—no parachute, no lifelines.

The aftermath: Cue the usual post-hack playbook—team promises 'investigations,' exchange halts deposits, and Twitter finger-pointing begins. Meanwhile, retail traders learn (again) that 'code is law' only applies until it isn't.

Bonus cynicism: Another win for 'decentralization'—where your funds are safe unless someone smarter (or greedier) decides otherwise. At least the exploiters paid gas fees.

Exploit may have originated on Arbitrum mint contract

According to an on-chain analyst on X, the Kinto exploit occurred off-network and targeted the minting contract of the $K token on Arbitrum. That vulnerability allowed a malicious actor to mint nearly 7 million tokens, exceeding the project’s circulating supply, which is below 2 million.

#PeckShieldAlert $Kinto has dropped -45% in the past hourhttps://t.co/3xZeneqdbR pic.twitter.com/b6f8tf5iKS

The blockchain data analyst claims that the attacker did not directly dump the excess tokens into the market. Instead, they reportedly inflated the token price over a seven-day period, likely to maximize the collateral value. 

The hacker then deposited the newly minted tokens into the Morpho lending protocol as collateral and borrowed a large amount of USDC, which was subsequently drained from the platform.

By manipulating the price and leveraging low liquidity conditions, they avoided triggering an alarm immediately. Uniswap, a commonly used decentralized exchange, had too little liquidity for the attacker to sell directly without detection. Still, the protocol-based route allowed them to exploit systemic trust in Kinto’s token economy.

“Please don’t spread baseless FUD on Kinto XYZ just because of past ICO experience. I am also waiting for official information about the exploit and the above is just my personal understanding of what might have happened,” the pseudonymous defi enthusiast asserted.

As it stands, Morpho has been left holding the inflated supply of $K tokens, now worth a fraction of their previous value. Kinto has not confirmed how much USDC was withdrawn but stated that recovery efforts are ongoing.

Kinto to investigate exploit with third-party assistance

Kinto announced that it is working with several third-party cybersecurity and blockchain forensics teams, including Seal 911, Hypernative, Venn, and Zeroshadow. The company promised to share a full report with the public and relevant authorities. For now, the platform insists that its mainnet, wallets, and bridge vaults were unaffected by the breach.

The DeFi project assured users that the team and its early investors had not sold tokens or committed a “rug pull.” Token unlocks are reportedly scheduled for April 2026, which arguably rules out insider dumping during the crash.

Market sentiment surrounding Kinto has soured quickly, and some traders and analysts on social media blamed the exploit on poor contract design and insufficient audit procedures.

“These types of projects can’t survive,” wrote one X user. “Greedy influencers promote these kinds of cheap projects, and you end up losing your money. Always put your money in real use-case projects.”

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