The Custodial Stablecoin Rekt Test

Summary: Trail of Bits reports that custodial stablecoins reached $27.6 trillion in transaction volume last year, surpassing Visa and Mastercard combined, and proposes a "Rekt Test" of due diligence questions for issuers. The post cites the Bybit and Radiant Capital hacks, where compromised interfaces showed signers legitimate transactions while executing malicious ones, and the Multichain hack, where issuers froze $66 million of the $126 million stolen by acting within hours.
Why it matters: Unlike banks, stablecoin users have few protections if a breach hits an issuer's liabilities or ability to pay, so a single operational security failure at the issuer can make a holder's balance worthless. The Multichain case shows the recovery window is measured in hours, not the months a court order takes.

Read the original at Trail of Bits Blog ↗