“‘Yearn Incident’ Sparks Sell-Off in Bitcoin, Ether, and XRP as December Kicks Off”

Bitcoin, Ether, XRP Slide as Yearn Exploit Sparks Market Sell-Off

Major cryptocurrencies fell in early Asian trading on Monday after DeFi platform Yearn Finance reported an “incident” in its yETH liquidity pool, extending the market’s painful November losses.

Bitcoin (BTC) dropped over 3% to around $87,000, while Ethereum (ETH) fell 5%. Solana (SOL), Dogecoin (DOGE), and XRP all declined more than 4%, according to CoinDesk data.

The sell-off followed Yearn’s X alert, which confirmed an issue in the yETH pool but reassured that its V2 and V3 Vaults remained secure. Social media chatter and blockchain security reports indicated that an attacker exploited a vulnerability to mint a large amount of yETH in a single transaction, draining roughly 1,000 ETH ($3 million) from the pool. The stolen ETH was routed through mixers.

YETH is a user-governed liquidity pool token composed of Ethereum Liquid Staking Derivatives (LSTs). According to blockchain security firm PeckShield, the protocol lost $9 million in the exploit, with 1,000 ETH sent to Tornado Cash and the attacker retaining about $6 million in tokens.

The Yearn incident comes days after Korean exchange Upbit suffered a multi-million dollar hack, highlighting ongoing vulnerabilities in crypto security despite heavy institutional inflows.

The early Asian session downturn triggered over $400 million in liquidations of leveraged crypto futures, mainly long positions, according to Coinglass, catching many traders off guard.

November ended with steep losses: Bitcoin fell 17.5% for the month, its largest drop since March, despite a late-month rebound from nearly $80,000 to over $90,000. Ether tumbled 22%, marking its worst monthly performance since February.

Institutional demand weakened as well. U.S.-listed spot BTC ETFs saw $3.48 billion in net outflows in November, the second-largest on record, while Ether ETFs posted a record $1.42 billion in outflows, according to SoSoValue.

The Yearn exploit underscores persistent security risks in DeFi, showing that even as institutional capital inflates crypto valuations, vulnerabilities remain a significant threat.