Initia has suspended its Layer 1 blockchain and all rollups integrated into its network following a security incident in which an attacker reportedly minted unbacked tokens and moved millions of dollars in crypto to Ethereum. Initial estimates put the outflow at approximately $2.7 million across AUSD, ETH, and USDC. The full effects have not been confirmed, and Initia said it is working with validators, exchanges, and security teams to determine the scope of the incident. The company has also cautioned users to beware of unofficial links, messages, and claims circulating during the incident.

The halt was announced through the project's official X account:

As of Oct 23, 2026, 3:41:30 PM UTC, the Initia L1 and Rollups have been halted due to a security incident. Our team is actively investigating the situation and working to establish the full scope of any impact with security teams, validators, and exchanges. We will share verified information through our official channels as it becomes available. Please remain cautious of unofficial links, messages, or claims circulating during this time.

— Initia 🪢 (@initia) October 23, 2026

Network Halt Follows Unauthorized Token Minting

The suspension took effect at 3:41:30 p.m. UTC on Oct. 23 and covers both the Initia Layer 1 network and its connected rollup network, according to the announcement. For context, halting a chain pauses block production entirely: transfers, contract interactions, and rollup execution freeze network-wide until validators restart consensus.

Blockchain security researcher Spreek, who first flagged the incident, reported that a single attacker had “infiniminted” tokens and was already shorting approximately $2.6 million, with more funds expected to follow. Early estimates varied as funds continued to move, and later tallies placed the total near $2.7 million.

Initia subsequently acknowledged the security incident but did not confirm the specific vulnerability or the amount lost. The team said it was working to establish the extent of the hack in collaboration with security engineers, validators, and exchanges.

Preliminary remarks from Initia founder Ezaan Mangalji pointed to a previously unidentified bug in MoveVM's Cosmos SDK implementation — the component that adapts MoveVM, a runtime for the Move programming language originally developed for Meta's Diem project, to Cosmos SDK-based infrastructure. According to Mangalji, the flaw enabled unauthorized token minting but did not affect the native INIT token. The attacker is reported to have extracted roughly $2.7 million worth of AUSD, ETH, and USDC before the chain was suspended. The founder's comments were preliminary, and the team has not yet published a full technical post-mortem.

Exploit Reportedly Targeted AUSD

The attacker used the Move-related vulnerability to mint 2 million AUSD without the necessary backing, according to D2 Finance. The firm found that approximately 1.4 million AUSD, 105 ETH, and 1.08 million USDC were later transferred to Ethereum through the platform, after which the funds were swept into an Ethereum wallet, per an incident report paraphrased by the researchers. Assets on Ethereum fall outside the halted chain's control, so tracking the proceeds depends on coordination with exchanges and off-chain security teams.

Initia has not yet independently verified those figures, and the final loss estimate could change as more details emerge from the ongoing investigation.

INIT Price Rebounds Despite Security Scare

INIT initially came under pressure when the exploit surfaced but quickly recovered. According to CoinGecko data, INIT's price hovered around $0.148 during the past 24 hours, trading within a range of approximately $0.114 to $0.156 over that period. Trading volume also rose significantly as the incident became one of the market's most closely watched events.

Notably, the token's rebound occurred while the network remained halted, which, as the report notes, suggests some traders viewed the reported minting bug as distinct from the native INIT token.

Initia Investigates Scope Before Restarting Network

Initia's architecture centers on a Layer 1 mainnet that hosts connected application-specific rollups, commonly known as Minitias. Because the suspension covers the base chain and every rollup attached to it, the stoppage affects the broader ecosystem rather than a single application. That outcome reflects a structural property of shared-security designs: when many application-specific chains depend on one base layer, a defect in that shared layer can ripple across every chain attached to it.

The company has not announced a timeline for restarting the network, and the chain remains offline in the meantime. Initia also has not issued a definitive account of the damage to assets, the losses borne by users, or the specific steps planned for remediation.

Investigators are, for now, focused on determining whether the vulnerability was confined to a single function within MoveVM, whether it allowed additional tokens to leave the ecosystem, and how much was lost in total before validators halted the chain. Until those questions are answered, the full technical post-mortem, the verified loss tally, and a restart timeline are the key developments to watch.

Source: CryptoNinjas