Unleash Protocol has temporarily suspended all operations after detecting a major security incident in which an attacker gained administrative control of its governance contracts and executed unauthorized fund withdrawals.
In a statement released by the team, Unleash confirmed that an externally owned address managed to obtain control of the protocol’s multisig governance system.
With this access, the attacker performed an unauthorized smart contract upgrade, enabling them to withdraw assets without approval from Unleash’s core contributors or community.
The incident resulted in the loss of multiple digital assets, including WIP, USDC, WETH, and stIP and vIP tokens. Following the withdrawals, funds were transferred through third-party bridging services and moved onward to external wallets to obfuscate their trail.
Unleash emphasized that the breach was isolated to its own protocol, stating that there is no evidence of any compromise to Story Protocol infrastructure, validators, or smart contracts.
Early findings indicate the root cause lies in administrative permission controls, rather than vulnerabilities in the broader ecosystem’s technology stack.
The development team acted swiftly by pausing all protocol operations to prevent any further exploitation.
Unleash has also engaged third-party forensic blockchain analysts and security auditors to investigate the full sequence of events and determine how governance access was compromised.
“We take this incident with the utmost seriousness and fully acknowledge the impact on our users,” the team wrote, noting that a deep review of multisig signer activity, key management, and governance processes is underway.
Users were advised to avoid interacting with Unleash Protocol contracts until further notice while the investigation progresses. The team is currently preserving all on-chain evidence and coordinating with industry partners to explore potential recovery and remediation options.
Unleash pledged to maintain transparent communication throughout the investigation and to provide detailed updates once accurate findings and a recovery plan are established.