Crypto Catastrophe: Kinto Token Collapses 81% After Its Ethereum Layer-2 Shuts Down!

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The Kinto token, the so-called “governance” token of the Kinto Network, has taken a nosedive of over 80%. Why? Because, surprise surprise, its Ethereum layer-2 blockchain is shutting down at the end of September. Apparently, all those “setbacks” finally caught up with them.

So what happened? Well, Kinto raised a measly $1 million in debt to restore trading on their “modular exchange” after some hack back in July. The hack drained about 577 Ether (ETH) – that’s roughly $1.6 million, in case you’re keeping track. Not a good look, right?

But wait, there’s more! Market conditions, which are somehow *always* awful, killed their chances of fundraising. So, Kinto’s team decided to pull the plug. As they so eloquently put it, “We’ve operated without salaries since July, and after the last financing path fell through, we have one responsible choice left: shut down cleanly and protect users/lenders as best as possible.” Oh, the drama! 🙄

“Every day that we go on, the funds dwindle further. We’ve operated without salaries since July, and after the last financing path fell through, we have one responsible choice left: shut down cleanly and protect users/lenders as best as possible.”

The $1.6 million hack was caused by a security hole in the ERC-1967 Proxy standard, a popular codebase from OpenZeppelin. This lets smart contracts upgrade without changing their address. And guess what? Several other projects also got burned by this same bug. Shocking, right? 🔥

But Kinto wasn’t *just* a victim of a hack. Oh no, one keen observer pointed out that Kinto’s ridiculously high annual percentage yield (APY) offerings on stablecoins were a little… *suspicious*. Even after the hack, they kept pushing these high yields, all while bleeding money. Genius move, right?

One of Kinto’s founders, Ramon Recuero, boasted back in April about K staking offering 130% APY in USDC. Yes, you read that right-130%. Why go to the bank when you can dive into the chaos of DeFi? Other platforms with sky-high yields have, well, *flopped* pretty spectacularly in the past. But sure, let’s keep pretending everything’s fine.

Just to add salt to the wound, the project was built on Arbitrum and used the Ethereum mainnet for settlements. They even offered trading in tokenized stocks like Apple, Microsoft, and Nvidia. No big deal, right? 😏

Kinto unveils recovery plan

As the ship sinks, Kinto says all remaining assets – including $800,000 of Uniswap liquidity – will be moved to the Foundation Safe and distributed to the “Phoenix” lenders. You know, the brave souls who took on the risk to help Kinto relaunch. They’ll get about 76% of their loan principal back. How generous! 🎩

And of course, they’re setting up a “goodwill grant” for the victims of the hack, offering $1,100 per affected address. Recuero’s even contributing more than $130,000 of his own funds. What a noble act… after totally ruining people’s investments, right? 🙃

Kinto has also promised to continue recovering lost assets. And if the recoveries exceed the victim amounts, they’ll generously share the excess with the community through Snapshot. So you can vote on whether they should keep it. Nice, huh?

But here’s the kicker: Kinto urged users to withdraw their assets by Sept. 30. After that, they’ll need to claim anything via some perpetual claim contract. Can’t wait to see how that goes. 😅

Kinto is Recuero’s second failed crypto project

Oh, did we mention that this is Recuero’s SECOND failed crypto project? His first, Babylon Finance, bit the dust back in November 2022, after a $3.4 million hack. Seems like this guy has a *special* talent for crashing and burning. The man is a true artist of failure!

Recuero said back then that his team couldn’t reverse the negative momentum after the hack. Fast forward to today, and guess what? Same story. Same result. *Chef’s kiss*.

K token falls nearly 80%

The Kinto (K) token has tanked 81.4% to $0.46 since the shutdown announcement, with its market cap barely scraping $1 million. For those counting, that’s a *massive* drop from its all-time high of $14.5 million on August 14. Not a great look for a project that only launched in April.

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2025-09-08 05:22