Hacking News
Flash Loan Attack Exposes DeFi Money Laundering Risks
Blockaid has warned that a flash loan exceeding $1 billion could expose financial institutions to money laundering and sanctions risks. An attacker used Aave lending markets to finance a September exploit that drained about $250,000 from Balancer V1. The incident exposed weaknesses in compliance systems that monitor account balances rather than track how funds move between wallets. Aave suffered no direct losses, but the attacker used the funds to repay loans within the same transactions, enabling additional borrowing of $788 million. Blockaid flagged the attacker's address hours before the exploit after tracing its funding to Tornado Cash, a crypto mixing service.