Initia Halts L1 After $605,000 USDC Outflow, Team Says

Initia halted its Layer 1 chain after roughly $605,000 in USDC flowed out, with the team’s preliminary investigation pointing to compromised rollup infrastructure keys used to fabricate cross-chain transfers. The incident centers on the protocol’s cross-chain transfer path rather than the base L1 itself, and the halt was taken as a precaution while the team assesses the damage. Initia has not disclosed the full scope of affected funds beyond the USDC outflow, and it is unclear whether other assets or rollups were impacted. The event matters because it highlights key-management risk in rollup and interoperability infrastructure, where a single compromised key can mint or move funds across chains. Next, watch for Initia’s full post-mortem, any key rotation or contract migration, and whether the chain resumes with cross-chain transfers re-enabled.