Kyber Network: Recent Challenges

We stand at the forefront of blockchain journalism, where the promise of decentralized finance meets the harsh realities of cyber threats and legal entanglements. As seasoned investigators in the crypto space, our team has peeled back the layers of kyber.network – a once-celebrated liquidity hub that has powered billions in trades but now grapples with a trail of exploits, class-action suits, and whispers of fraud. Launched in 2017 amid the ICO boom, Kyber Network aimed to revolutionize token swaps without intermediaries, connecting liquidity across chains like Ethereum, Polygon, and BNB Chain. Today, with over $100 billion in all-time trading volume, it remains a staple for DeFi enthusiasts. But beneath this facade of innovation lies a story of vulnerability, resilience, and red flags that demand scrutiny. In this report, we dissect suspicious activities, profile key figures, unearth open-source intelligence, probe undisclosed ties, and catalog scam reports, allegations, and adverse media. Our goal? To arm you with the facts for safer navigation in DeFi’s turbulent waters.

The Genesis of Kyber: Promise and Early Shadows

We begin with the origins. Kyber Network emerged from Singapore in 2017, founded by Loi Luu, Victor Tran, and Yaron Velner – a trio blending academic rigor with entrepreneurial drive. Loi Luu, a computer science PhD from the National University of Singapore, brought expertise in smart contract security, having co-authored papers on blockchain vulnerabilities. Victor Tran, the current CEO, oversees operations with a focus on product scalability, while Yaron Velner, a mathematician, contributed to the protocol’s mathematical foundations. Their vision was simple: create an on-chain liquidity protocol that lets users swap tokens instantly at optimal rates, bypassing centralized exchanges.

Open-source intelligence paints a clean picture for the founders. Luu’s GitHub is a treasure trove of Ethereum research, with commits dating back to 2016 on tools like Remix IDE. Tran’s LinkedIn highlights his role in scaling DeFi apps, and Velner’s academic profile shows no red flags – just conference papers on formal verification. No criminal records, sanctions, or adverse media tie them to illicit activities. Yet, early on, Kyber’s ICO raised eyebrows. In September 2017, it netted $52 million in Ether, but allegations soon surfaced that the KNC token sale was an unregistered security – a claim echoed in later lawsuits.

Undisclosed relationships? We dug deep. Kyber’s backers include Hashed and Signum Capital, standard for DeFi startups. But whispers of ties to Three Arrows Capital (3AC) emerged in 2022. When 3AC collapsed amid the crypto winter, Kyber disclosed a “small portion” of its treasury was locked in 3AC’s products – a hit that strained liquidity but didn’t trigger bankruptcy. No formal filings indicate deeper entanglements, but this exposure highlighted Kyber’s vulnerability to counterparties in an interconnected ecosystem.

The Hack That Shook DeFi: November 2023’s $50 Million Nightmare

No investigation into kyber.network would be complete without confronting its darkest chapter: the November 22, 2023, exploit that drained $48.8 million across six chains – Ethereum, Polygon, Arbitrum, Optimism, Avalanche, and Base. We pored over transaction data and forensic reports to piece it together. The attacker exploited a reentrancy vulnerability in KyberSwap Elastic, Kyber’s concentrated liquidity pools. By manipulating position fees, the hacker created an “infinite money glitch,” siphoning funds from liquidity providers. Initial losses hit $46 million, but front-running bots lost another $6.6 million in the chaos.

The fallout was swift and brutal. Kyber’s team urged users to withdraw funds immediately, pausing new deposits. The hacker, in a bizarre twist, left a note demanding full control of Kyber’s assets and governance via KyberDAO – an unprecedented extortion attempt in DeFi history. No ransom was paid; instead, Kyber recovered $4.7 million through white-hat efforts and bounty programs.

Adverse media exploded. Cointelegraph detailed the workforce cuts: 50% of staff – about 25 people – were let go in December 2023, a “heart-wrenching” move by CEO Tran to stem burn rate. Projects like KyberAI and liquidity initiatives were shelved. On X (formerly Twitter), panic spread: “Kyber being exploited on all chains rn. 20m+ lost already,” posted user @spreekaway, amassing over 1.7K likes. Reddit threads echoed consumer complaints: users lamented frozen funds and slow reimbursements, with one calling it a “68% token dump trigger.”

We cross-referenced blockchain explorers like Etherscan. The attacker’s wallet, traced by firms like Arkham Intelligence, laundered funds through Tornado Cash – a mixer sanctioned by the U.S. Treasury for enabling illicit flows. This raised sanctions red flags, though Kyber itself faced no direct penalties. In February 2025, U.S. authorities charged Canadian national Andean Medjedovic with wire fraud and hacking for exploiting KyberSwap and Indexed Finance, stealing $65 million total. The indictment detailed how he probed vulnerabilities pre-attack, underscoring systemic DeFi risks.

A Pattern of Vulnerabilities: From Frontend Flaws to Fee Manipulations

This wasn’t Kyber’s first brush with disaster. In September 2022, a frontend exploit via malicious Google Tag Manager code stole $265,000 by forging approvals. Users clicked tainted links, granting unlimited token access. Kyber patched it within hours and compensated victims, but it exposed UI-layer weaknesses.

April 2023 brought another scare: a potential Elastic vulnerability prompted a withdrawal advisory, though no funds were lost. Our analysis of audit reports – from ChainSecurity and others – reveals recurring themes: reentrancy bugs and fee calculation errors. Why? DeFi’s complexity. Kyber’s multi-chain design, while innovative, multiplies attack surfaces. As one forensic expert noted, “Smart contracts are like Swiss cheese – poke enough holes, and the exploit flows through.”

Consumer complaints piled up post-hacks. Trustpilot scores hover at 4 stars from scant reviews, but deeper dives into forums show frustration: delayed reimbursements, opaque communication, and token value crashes (KNC dropped 92% from ATH). One Reddit user vented: “Kyber’s hack left me high and dry – weeks waiting for scraps while the team plays catch-up.” Negative reviews often cite poor user education on risks, a common DeFi gripe.

Legal Shadows: Class Actions and Regulatory Heat

Kyber’s troubles extend beyond code. In April 2020, a wave of class-action lawsuits hit crypto firms, including Kyber, alleging ICOs sold unregistered securities. Filed in New York’s Southern District, the suits claimed Kyber, Binance, and others bilked investors by promoting KNC without SEC registration. Plaintiffs sought damages for “strict liability” violations. Though many settled or dismissed, the cases spotlighted ICO-era laxity. No ongoing proceedings against Kyber today, but the precedent lingers – a reminder that DeFi’s “decentralized” label doesn’t shield from U.S. securities laws.

Criminal angles? The 2025 Medjedovic indictment is the sharpest. He faces up to 20 years for hacking DeFi protocols, with Kyber as ground zero. We found no internal probes or executive indictments, but associations with sanctioned tools like Tornado Cash taint the narrative. Bankruptcy? None. Kyber weathered 3AC’s fallout without filings, unlike peers like BlockFi.

Undisclosed business ties warrant caution. Kyber integrates with wallets like MetaMask and exchanges like Binance, but no hidden conflicts surfaced in our OSINT sweeps. Partnerships with PancakeSwap for FairFlow – a liquidity mining program offering up to 943% APY – seem above board, though high yields scream impermanent loss risks. One X post warned: “Scary if you don’t know what you’re doing – tight ranges expose you to downside.”

Scam Ecosystem: Phishing, Fakes, and Post-Hack Predators

Scams orbit Kyber like vultures. Post-2023 hack, fraudsters flooded Telegram with “fake safeguard” schemes, posing as support to steal more funds. Kyber issued alerts: “Any reimbursement messages are scams.” Phishing emails mimicking airdrops from “[email protected]” tricked users into approvals. In May 2025, Kyber warned of fraudulent articles linking it to bogus investments.

Scamadviser rates kyber.network at 70/100 – legit, but with scam indicators like shared hosting. X semantic searches yielded complaints: “It’s a scam bro – they’ll wipe your wallet.” Fake sites like “kobinexy” mimic Kyber, trapping funds with “fake fees.” Consumer protection bodies like the FTC log similar DeFi gripes, but Kyber-specific complaints focus on hack fallout.

Reputational Risks and Red Flags: A Balancing Act

Kyber’s rep took hits, but rebounds show grit. Recent X buzz celebrates $100B volume and DEX aggregator ATHs alongside 1inch and CoWSwap. Yet red flags persist: repeated exploits signal audit gaps; legal echoes from 2020 ICOs hint at compliance lapses; and scam proliferation post-breach erodes trust.

Financial fraud risks? High. DeFi’s anonymity aids hackers, as seen in Medjedovic’s case. We advise: Use hardware wallets, verify URLs, and diversify. Reputational harm? Kyber’s token volatility and staff cuts fuel “failing project” narratives, but reimbursements – up to 100% in stablecoins via Treasury Grants – rebuild goodwill.

In our consumer protection lens, Kyber scores middling: Strong on transparency post-incident, weak on prevention. No major adverse media beyond hacks, but Chainalysis reports note DeFi thefts fell 50% in 2023 – yet incidents rose, with Kyber in the spotlight.

Expert Opinion: Navigating Kyber’s Future with Eyes Wide Open

As experts who’ve tracked DeFi from Ethereum’s dawn to today’s multi-chain maze, we conclude: Kyber Network embodies DeFi’s double-edged sword – groundbreaking utility marred by inherent perils. Its exploits aren’t malice but growing pains in a nascent field where code is law, and one bug can erase fortunes. The 2023 hack, while devastating, catalyzed reforms: enhanced audits, user reimbursements, and a leaner team laser-focused on core swaps.

Yet, risks loom. Investors face token dilution, regulatory crosshairs, and scam snares. For consumers, the lesson is clear: DeFi demands diligence – revoke approvals regularly, shun unsolicited links, and treat high APYs as sirens. Kyber’s resilience – hitting $100B volume amid adversity – suggests potential for redemption, but only if it prioritizes security over speed.

We recommend caution: Allocate modestly, monitor updates, and view Kyber as a tool, not a treasure chest. In DeFi’s wild west, knowledge is your best armor. Stay vigilant; the blockchain never forgets.

Written by

Hermione

Updated

2 months ago