DeFi protocols just lost $83 million to an attack financial regulators already warned about

Malicious actors exposed two decentralized finance (DeFi) lenders to over $84 million in losses over four days, using variations of a price-manipulation strategy previously targeted by US regulators.The larger incident hit Tectonic on the Cronos blockchain, where security firm GoPlus estimated roughly $75 million was affected.Three days earlier, Moonwell’s MAMO lending market on Base was left with about $9.1 million in residual debt following another attack involving an illiquid token.Illiquidity becomes a weaponThe Tectonic attacker appears to have exploited the protocol’s treatment of TONIC, a relatively thinly traded token that could be deposited as collateral and used to support borrowing.GoPlus described the incident as a price-manipulation and over-borrow attack in which the attacker repeatedly looped collateral and borrowing positions while pushing TONIC sharply higher within minutes.Tectonic assigned TONIC a collateral factor of about 20%, meaning every $100 of collateral recognized by the protocol could support roughly $20 in borrowing.As TONIC’s market price climbed, the value assigned to the attacker’s position increased automatically. GoPlus estimated that the manipulat...