Swan Treasury, a blockchain asset management protocol, is estimated to have lost about $625,000 after an attacker used a compromised off-chain signer key to obtain STY tokens at a deep discount on BNB Chain and then sell them for profit.

Security firm Defimon Alerts said the incident was tied to unauthorized access to the protocol’s signing credentials, not to a flaw in the smart contracts’ signature verification logic. The attacker was able to produce signatures that the protocol accepted as legitimate because they matched the hardcoded signer address used by the affected contracts.

How the exploit worked

According to Defimon Alerts, the leaked key corresponded to the _signer address hardcoded in Swan Treasury’s ZhaiquanBuy contract. With that key, the attacker could generate valid signatures for their own wallet and bypass the protocol’s intended limits on token purchases.

The attack centered on the buy() function, which determines how much STY a user receives based on a signed discount value. Defimon Alerts said the attacker created a valid signature with the discount parameter set to one, allowing STY to be bought at roughly one-hundredth of the intended price.

Discounted purchases and token sales

Using a PancakeSwap flash loan of about 19,700 USDT, the attacker acquired nearly 687,000 STY through the discounted purchase path, according to the security firm. Defimon Alerts added that the operation extended beyond the initial buy transaction.

The firm said valid signatures were also forged for the protocol’s claim() and transfer() functions on related contracts. That reportedly gave the attacker additional access to STY, which was then sold into the STY/USDT liquidity pool. After the position was unwound, the attacker is estimated to have realized about 625,000 USDT in profit.

Defimon Alerts noted that STY was trading at around $2.87 at the time of the incident.

Why analysts point to key compromise

In its technical review, Defimon Alerts said every ecrecover result seen during the exploit matched Swan Treasury’s expected hardcoded signer address rather than any address controlled by the attacker.

That detail is central to the firm’s conclusion. Because the signatures resolved to the protocol’s designated signer, the contracts treated the transactions as valid. Defimon Alerts said this points to compromise of the private signer key itself, rather than a bug in the way signatures were checked on-chain.

The distinction matters because it suggests the exploit path came from leaked privileged credentials instead of an error in the underlying cryptographic verification process.

What remains unclear

At the time of publication, Swan Treasury had not publicly explained how the signer key was exposed. It also had not confirmed whether any additional mitigation measures had been put in place following the incident.

The case adds to a broader pattern of crypto losses driven by compromised privileged keys rather than direct smart contract vulnerabilities. The next confirmed step will likely be any public explanation from Swan Treasury on the source of the key exposure and what protections, if any, have been implemented to prevent a repeat.

Source: crypto.news