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A flaw in something called the SquidRouterModule allowed an attacker to siphon roughly $3.2 million from 86 Gnosis Safe wallets spread across Ethereum and Base. The entire heist took about two hours.
Blockchain security firm Blockaid identified the breach on May 25. The stolen funds were quickly swapped into DAI through Uniswap V3 pools the attacker had opened, consolidating approximately $3.07 million into a single wallet.
Here’s the thing: the exploited module wasn’t even part of the core Squid protocol. It was a third-party add-on, which makes the whole situation both less surprising and more alarming.
How the exploit worked
The problem, according to both Blockaid and PeckShield, was improper identity validation within the module. The module didn’t properly check who was actually calling it. The attacker injected caller-supplied strings to impersonate authorized users, effectively tricking the module into executing transactions without the wallet owners’ consent.
The impersonated assets involved in the attack included USDC, ENA, and USDT. Once drained, everything was routed through Uniswap V3 and converted to DAI.
The attacker’s wallet, identified as 0xa447…54859, now holds the consolidated proceeds. The attacker’s initial funding came from Tornado Cash.
Squid moved quickly to distance itself from the incident, clarifying that the SquidRouterModule is completely independent of its core protocol and contracts. The company assured users that its primary operations remain secure.
A familiar pattern in DeFi security
Third-party modules enabling unauthorized transactions without owner consent have been a known risk vector since at least 2020. The modular architecture that makes Gnosis Safe wallets powerful is the same architecture that creates attack surface.
The SquidRouterModule was verified on Basescan, which gives it a veneer of legitimacy. But verification on a block explorer simply means the source code is publicly readable. It doesn’t mean the code has been audited, battle-tested, or is free of critical flaws.
The two-hour window between the start of the drain and consolidation highlights how quickly funds can move in DeFi once a vulnerability is found. By the time Blockaid flagged the activity, the attacker had already completed the operation and parked the proceeds in DAI.
What this means for investors
The immediate concern is straightforward: if you have a Gnosis Safe wallet with the SquidRouterModule enabled, you should revoke its permissions immediately. Any wallet that granted this module access is potentially at risk, regardless of whether it was targeted in this specific attack.
The use of Tornado Cash for initial funding and Uniswap V3 pools for laundering also raises ongoing questions about the DeFi ecosystem’s ability to respond to exploits in real time. Once funds hit a mixing service, recovery becomes exponentially harder, and the attacker’s consolidation into DAI means those proceeds can be redeployed or bridged with relative ease.
Squid’s core protocol may be unaffected, but the company now faces the challenge of explaining why a module bearing its name, even if independently developed, became the vector for a multi-million dollar theft.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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