Yala Reports Liquidity Challenges, Plans To Unveil Recovery Strategy By December 15th
In Brief
Yala confirmed a $7.64M exploit causing a temporary YU depeg, secured Bitcoin reserves, recovered most funds, and is working with partners on a recovery strategy to be detailed by December 15th.
Bitcoin-native liquidity protocol Yala released a statement noting concerns about recent liquidity disruptions and provided an updated report addressing a range of community questions. The announcement stated that on September 14th, an attacker used temporary deployment keys to set up an unauthorized cross-chain bridge and withdrew 7.64 million USDC, equivalent to roughly 1,636 ETH at that time.
The incident briefly caused a YU depeg, but it did not involve any core protocol vulnerabilities, and all Bitcoin reserves remained secure. To support system stability and safeguard user funds, the team supplied 5.5 million dollars of its own capital and obtained additional liquidity through Euler, which allowed YU to return to parity on September 23rd, and enabled normal protocol operations to resume.
The statement also noted that on October 29th, law enforcement in Bangkok detained the individual connected to the earlier incident. Most affected assets were retrieved, though they remain subject to legal review. A portion of the funds that had been converted to ETH prior to recovery, combined with market declines and expenditures made by the attacker, lowered the total effective value recovered. A more detailed update will be released when legally permissible.
The recent withdrawal of retail participation from decentralised finance (DeFi) has intensified concerns and added pressure to an already illiquid environment, influencing conditions for Euler as well. This has limited certain positions and liquidity previously used to support YU. Yala additionally stated that it is not integrated with Kamino’s lending products, and that the referenced wallet does not belong to the protocol or any associated team members.
According to the statement, current efforts are centered on user protection and Yala’s long-term operational strategy. The team is evaluating the capital required to stabilize the environment and is coordinating with law enforcement and funding partners to secure it. Given restricted liquidity across multiple protocols and assets, the process is expected to require time. Yala aims to present a defined plan by December 15th, outlining recovery options and subsequent operational steps.
Yala Faces Scrutiny After Sharp YU Stablecoin Depeg And Liquidity Constraints
The statement was released shortly after Yala’s YU stablecoin deviated sharply from its intended one-dollar value. Data from CoinMarketCap showed the token declining by 65.69% to approximately $0.20 over a 24-hour period. On November 14th, the research group YAM highlighted several indicators suggesting the project was under significant stress, noting that a wallet associated with the issuer had borrowed the full supply of USDC and YU available on Euler Finance and had not returned the assets. This prevented lenders from withdrawing their funds, as they remained locked, and Euler subsequently suspended the ability to open new borrowing positions involving those stablecoins.
Observers also noted that YU liquidity was limited across EVM-compatible networks. Although stablecoin pools appeared sizeable, roughly 90% of their composition consisted of YU rather than external assets. The remaining accessible liquidity, estimated at about one million dollars in USDC, was concentrated on Solana, where the stablecoin had maintained its peg.
On November 16th, Yala stated that it was aware of community concerns and was reviewing the situation, with further details to be provided. Information on Yala’s website listed 91.2 million YU categorized as circulating “legitimately,” and the protocol’s total value locked was reported to exceed 207 million dollars.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
