The Squid Crypto Protocol was hacked and $3 million stolen after it was backed by Ripple

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News of Ripple saw an amazing development, when the Squid Crypto project completed a 6 million dollar investment led by North Island Ventures and with the participation of Ripple on May 25, 2026, but the joy was short-lived; In less than 24 hours, the attacker was able to extract $3 million from the protocol.

The hack targeted a third-party liquidity aggregator embedded in the Squid cross-chain swap architecture, and did not affect contracts that had security checks. For its part, an official response from Squid ended this breach, stressing that the group does not know who sent the group responsible for draining the funds.

Squid works as a public exchange (meta-DEX) and on-chain integration, facilitating multiple networks through fluid integration. A $6 million investment was made to help expand the architecture, enabling Ripple to act as a permanent partnership with its integrated payment system, but the deal failed within a single issue.

Ripple News: How did the Squid Crypto hack happen? Vulnerability of the third party

The problem was a small piece of water that Squid recently added to support swaps, an area outside of the protocol’s central agreement. The attacker used price changes or errors in the configuration of access permissions within the domain to directly remove their assets, bypassing the security controls that govern Squid’s main contracts.

This incident shows a regular pattern that has been repeated in the history of DeFi hacks; Searches only affect the specified components, not the entire dependent value. Since the module in question was part of a third-party integration, its trust logic, permission logic, and oracle dependencies were not subjected to the same scrutiny as the original Squid code.

The Squid Router team quickly issued a statement disassociating itself from the incident, explaining that the damage came from a third-party Gnosis Safe module called the SquidRouterModule, which the team did not build, install, or even operate. They emphasized that core router nodes were not affected, and that all Squid users and modular integrators are safe.

The team noted that the module has integrated Squid with other protocols without directly affecting them, and urged the community not to confuse the two due to similar names. He also confirmed that Squid users do not need to take any action at this time.

A note The Squid Crypto Protocol was hacked and $3 million stolen after it was backed by Ripple appeared for the first time Cryptonews Arabic.

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