VUSD has announced via its Telegram channel that Onyx Protocol suffered a significant security breach, resulting in the theft of over $13 million in VUSD, as reported by Odaily. In response to the incident, the smart contract has been paused, and it has been confirmed that the VUSD codebase and reserves remain secure with no vulnerabilities.

The hacker subsequently liquidated the stolen VUSD into a liquidity pool, leading to an estimated secondary market liquidity loss of around $1.5 million. As per the terms of service, the malicious actor will be blacklisted, and VUSD plans to resume smart contract services once the investigation concludes, enabling participants to continue their arbitrage activities.

VUSD is fully backed by over-collateralized assets, allowing institutional users to redeem and mint VUSD at market prices. The team is actively collaborating with Onyx DAO and relevant authorities to track down the attacker and is considering the necessary licenses for future retail redemption. Notably, VUSD temporarily de-pegged after the Onyx theft, dropping to $0.6599.