Ethereum Layer 2 Taiko Halts Network After $1.7M Exploit, Token Falls 11%

Taiko, an Ethereum layer-2 network, has temporarily stopped block production after it suffered a bridge exploit. The hackers were reported to have stolen around $1.7 million in assets.

As a result, the via X

Another security firm, Blockaid, had highlighted the flaw in the bridge’s source-signal proof validation at the start of the exploit.

🚨Blockaid’s exploit detection system has identified an ongoing exploit on @taikoxyz ERC20 Vault on Ethereum (~$1M+)

More details in 🧵

— Blockaid (@blockaid_) June 21, 2026

The network, in response, immediately stopped new block production. They also suspended withdrawals through their main bridge and asked centralized exchanges to pause TAIKO token deposits.

Lookonchain shared that the attacker moved nearly 2 million TAIKO tokens, worth about $189,000, to an exchange wallet. The hacker is also said to control 870 ETH, valued at $1.52 million.

Source: Lookonchain via X

Taiko moves to contain damage

Despite the attack, the network acted as fast as it could to limit further losses. The team identified the attacker’s wallet address and worked with exchanges to track and potentially freeze suspicious funds. 

Later on, they confirmed the issue had been contained, stating that withdrawals have been paused.

“The incident is now contained. We’ve paused the Bridge and the ERC20Vault and confirmed withdrawals through them are fully stopped,” the network said.

Interestingly, some network activity remained stable after the exploit. Data showed its DeFi TVL increased to $3.84 million while bridged TVL stayed close to $12.85 million. Weekly transactions were also maintained at about 324,630.

Crypto hacks continue to rise

The Taiko incident is the latest in the list of crypto security breaches this year. In June alone, Secret Network suffered a $4.67 million exploit, and then a liquidity pool on PancakeSwap lost almost $1.1 million. Other victims include Humanity Protocol, Raydium AMM, RetoSwap, and Aztec Connect.

Data shows that the second quarter of 2026 is now the most hacked period in crypto history. Around 70 separate attacks resulted in about $746 million in losses.

TRM Labs reports also estimated that unlawful cryptocurrency transactions reached about $158 billion in 2025, the highest level seen in the last five years. This highlights how security breaches have become much more common in the crypto industry.

Source: TRM Labs

Source:: Ethereum Layer 2 Taiko Halts Network After $1.7M Exploit, Token Falls 11%