Ripple-Backed Squid Protocol Hacked for $3M Hours After Funding Round

Key Facts

1Squid protocol raised $6 million with backing from Ripple before suffering a security breach.

2The protocol lost half of its raised funds ($3 million) in a hack occurring less than 24 hours after the raise.

In a move highlighting the escalating security risks within the decentralized finance (DeFi) sector, the Ripple-backed Squid protocol has suffered a major security breach. According to reports, the protocol lost $3 million, representing half of its recently raised $6 million in capital. This exploit occurred less than 24 hours after the project successfully closed its funding round with backing from Ripple, raising immediate concerns regarding the software safety standards of emerging projects.

This incident arrives at a sensitive time for Ripple as it seeks to expand its investment ecosystem, following a string of DeFi exploits earlier this year. Compared to previous major events, such as the $190 million Nomad bridge hack per Chainalysis data, Squid's loss is technically smaller in scale but significant as a percentage of its total treasury. Cybersecurity experts on social media suggest the vulnerability may be linked to smart contract execution logic triggered immediately upon liquidity deployment.

Investors should watch for official statements from Ripple regarding potential compensation plans or revised security audit requirements for partner projects. Looking at the economic calendar, the market is awaiting the FOMC Minutes on May 20, 2026, which could impact broader risk appetite for digital assets. Confidence in new DeFi ventures remains under pressure until a full technical post-mortem of the breach is released.