The decentralized identity protocol IoTeX confirmed it is investigating unusual activity from one of its token safes this weekend, after onchain analysts flagged a potential security incident. According to a Saturday post on X, the team is working around the clock to assess and contain the situation.

IoTeX stated that early loss estimates are lower than rumors suggest and it has coordinated with major exchanges to freeze funds. “The situation is under control. We will continue to monitor closely and provide timely updates to the community,” the project said.

Consequently, the native IOTX token price slid more than 8% to around $0.0049, data shows. Meanwhile, onchain investigator Specter claimed a compromised private key drained roughly $4.3 million in assets like USDC and wrapped Bitcoin.

The analyst revealed the stolen funds were swapped for Ether and about 45 ETH was bridged to Bitcoin. This rapid movement across chains appeared to be an attempt to complicate recovery efforts.

However, experts note that most crypto projects do not recover from such breaches. Nearly 80% struggle due to mismanaged responses, according to Web3 security leaders referenced in reports.

Immunefi CEO Mitchell Amador said unprepared teams often have delayed decisions and poor communication. Consequently, serious exploits can lead to users withdrawing funds and long-term credibility damage that projects rarely overcome.

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