Abracadabra blames hacks for shutdown amid ‘looting’ claims
Embattled DeFi project Abracadabra has proposed “an orderly wind down,” blaming a string of security incidents which leave its stablecoin Magic Internet Money (MIM) with “no viable path back to parity.”
The vote, set to close Wednesday evening, has received just two votes at the time of writing: 100 million SPELL votes for and just 0.5 million against.
According to the proposal, the one-time $6 billion protocol has 22 million of outstanding MIM supply against just $900,000 worth of “actionable backing,” leaving the supposedly dollar-pegged stablecoin worth just $0.04.
However, Trading Strategy co-founder and DeFi commentator Mikko Ohtamaa calls the move “treasury looting.”
An X post points to a governance proposal in June and subsequent transfers as “questionable DAO activity.”
Read more: Magic Internet Money loses its sparkle as DeFi platform hacked for $6.5M
‘Series of hacks’
Launched in 2021, Abracadabra has seen its fair share of security incidents in a particularly dangerous sector.
While not a hack, the 2022 unmasking of Abracadabra-linked 0xSifu as a longtime fraudster and co-founder of QuadrigaCX, was a major hit to the project’s reputation and credibility.
Read more: Wonderland leader should’ve never trusted Michael Patryn with $1B crypto
That same year, the DegenBox looped-leverage supercharger for the ultimately doomed UST wiped out approximately $1 billion worth of Abracadabra’s TVL.
Since then, a $6.5 million hack in January 2024, followed by two more in March and October 2025, for $13 million and $1.7 million, respectively, left the protocol with a total of $21 million worth of bad debt.
Treasury ‘looting’
Abracadabra’s stablecoin, MIM, has been depegged since June, when the DAO approved a “strategic transition and stewardship” of assets to a group “led by Anubis” (a particularly unsavoury choice of name for those who know their DeFi history).
The proposal ostensibly aimed to “revitalize Abracadabra as a leading DeFi protocol, restore growth across the ecosystem, strengthen governance, and establish a clear roadmap for the long-term success of $SPELL and the broader Abracadabra platform.”
With just two votes cast, totalling over 5 billion SPELL, the proposal passed without opposition.
Read more: DeFi lending protocol Abracadabra exploited for $13M of ETH
In early July, less than three months before the eventual wind-down proposal, the project’s X account promised a roadmap “to help restore [MIM] peg and improve protocol health.” It hasn’t posted since.
Following the vote, Ohtamaa points out sizable treasury sales of MIM on June 8 and 11 on Curve. The sales allegedly netted the sellers approximately $0.5 million “while MIM was already losing its peg.”
Then, the following month’s “treasury extraction” saw over $8 million moved to a Binance deposit address and an unlabelled address.
Read more: Inside the fallout from PeckShield’s Synnax Labs audit
The proposal to wind down operations doesn’t address these funds. Neither does it take them into account for redemption calculations, directly valuing outstanding MIM via the “actionable” remnant collateral.
It simply states that there is “no way to repeg MIM” and “no perspective of ever getting the protocol to function again or see any growth.”
Balancer DAO to dissolve
Another long term DeFi experiment comes to an end as Balancer’s DAO voted in favour of BIP-928 to cease operations.
Read more: Balancer exploit drains $129M in DeFi disaster
The decision came less than a year after a devastating $130 million hack and the failure of efforts to return to profitability. BAL holders will receive a pro-rata share of the DAO’s $9 million treasury beginning in May next year.
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