CryptoSlate
USDC withdrawal attempts on Initia failed after the October 23 exploit depleted the reserves backing token balances on the network, according to Bitquery's investigation. The reserve, held on the Noble blockchain, fell from about $1 million before the cash-outs to an intraday low of $63 at 15:37 UTC, recovering only to roughly $24,000 by an 18:52 UTC check. Initia's L1 and rollups halted at 15:41:30 UTC, and the project said on October 24 that a fix and audit were expected within days, with asset recovery ongoing.
Bitquery distinguished about $3 million in real assets paid out from bridge reserves from roughly $7 million in face-value unauthorized balances the attacker created without depositing matching backing. The project attributed the exploit to a MoveVM script-caching bug that bypassed security checks, letting the attacker mint unbacked WETH, iUSD and USDC representations without changing total supplies. No native INIT was minted. Bitquery counted 55 failed ordinary withdrawal attempts before the halt, most from a single bot repeating the same balance.
Why it matters
The mechanism is the core risk of any bridged stablecoin: tokens represented on Initia are backed by assets locked elsewhere, and when the reserve runs dry, holders cannot exit even though Circle's native USDC remains fully backed issuer-wide. AUSD issuer Agora also confirmed its contract was never deployed on Initia, containing that exposure to a third-party product on Ethereum.
Market impact
As of the October 24 update, Initia's chains remained halted with no firm restart date and no reimbursement terms announced, leaving unresolved how the missing bridge backing gets restored. The gap between the $3 million actually drained and the $7 million in phantom balances is the number holders and counterparties will watch as recovery talks proceed.
Frequently asked questions
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Why did USDC withdrawals on Initia fail after the hack?
Bridged USDC on Initia is backed by reserves held on the Noble blockchain. The attacker depleted that reserve, so there were no assets left to pay out legitimate withdrawal requests.
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How much did the Initia exploit actually cost?
Bitquery estimated about $3 million in real assets were paid out from bridge reserves, while roughly $7 million in face-value unauthorized balances were created without matching backing.
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What caused the Initia exploit?
Initia attributed it to a MoveVM script-caching bug that bypassed security checks, letting the attacker create unbacked WETH, iUSD and USDC balances without changing total supplies.
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Was Circle's native USDC affected by the Initia hack?
No. The depleted reserve backed third-party bridged representations of USDC on Initia, not Circle's native USDC, which remains redeemable issuer-wide.
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Is the Initia network back online?
As of the October 24 update, Initia's L1 and rollups remained halted. The project said a fix and audit were expected within days but gave no firm restart date or reimbursement terms.
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