Balance Coin (BLC), an algorithmic stablecoin designed to maintain a $1 peg, lost more than 99% of its value following a suspected exploit on July 22. The token fell from close to its intended dollar peg to an all-time low of $0.001209. Blockchain security firm PeckShield estimated approximately $915,000 was lost during the suspected attack involving 42DAO and GemJoin on BNB Chain. TenArmor reported detecting two suspicious transactions that created unauthorized BLC tokens from a null address. The incident reflects a recurring pattern in the crypto market where unauthorized token minting enables attackers to extract liquidity and cause severe price declines.
Attackers Minted Unauthorized BLC Tokens via GemJoin Transactions
TenArmor detected two suspicious transactions connected to GemJoin and 42DAO, the decentralized organization associated with the Balance Protocol ecosystem. According to on-chain activity, the first transaction created approximately 4.5 million BLC tokens from a null address. The newly minted tokens were transferred to PancakeSwap V2, where they were exchanged for Binance-pegged USDT (BSC-USD) and Binance Bitcoin (BTCB).
A second transaction occurred around two hours later. The attacker used the same method to mint an additional 5,900 BLC before extracting more assets from the available decentralized exchange liquidity. A detailed post-incident report from 42DAO has not been made public yet. The exact technical weakness and full extent of the damage remain unclear.
Unauthorized Minting Flooded PancakeSwap Liquidity Pools
The unauthorized minting greatly increased the number of BLC tokens available for sale. As the newly created tokens entered trading pools, the additional selling pressure pushed the stablecoin far below its intended $1 value. The price collapse occurred on July 22 when Balance Coin reached its all-time low of $0.001209.
Similar Exploits Hit MAPO and Stake DAO in Recent Months
The Balance Coin collapse is the latest example of unauthorized token creation causing heavy losses in the crypto market. In May, MAPO reportedly fell 96% after attackers exploited a bridge vulnerability to create unauthorized tokens and sell them through decentralized exchanges. Stake DAO also experienced an exploit in which an attacker allegedly minted trillions of vsdCRV tokens before exchanging them for Ether.
Although these incidents involved different vulnerabilities, they shared a similar outcome. Attackers gained the ability to create tokens outside the expected supply process, sell them into available liquidity and cause severe price declines.
FAQ
What caused Balance Coin to lose 99% of its value on July 22?
Balance Coin fell from close to its $1 peg to an all-time low of $0.001209 following a suspected exploit involving unauthorized token minting. TenArmor detected two suspicious transactions that created approximately 4.5 million BLC tokens from a null address in the first transaction, followed by an additional 5,900 BLC minted around two hours later. The newly created tokens were sold on PancakeSwap V2, flooding liquidity pools and causing severe selling pressure.
How much was lost in the Balance Coin exploit?
Blockchain security firm PeckShield estimated approximately $915,000 was lost during the suspected attack on BNB Chain involving 42DAO and GemJoin.
What similar exploits occurred in the crypto market recently?
In May, MAPO reportedly fell 96% after attackers exploited a bridge vulnerability to create unauthorized tokens. Stake DAO also experienced an exploit in which an attacker allegedly minted trillions of vsdCRV tokens before exchanging them for Ether. All three incidents involved unauthorized token creation outside the expected supply process.
