Kinto shutdown: The Kinto token collapsed after the Kinto team announced its Ethereum layer-2 will wind down on Sept. 30, following a $1.6 million hack and failed fundraising; users are urged to withdraw assets before closure and expected recoveries aim to reimburse roughly 76% of loan principal.
Kinto announces shutdown effective Sept. 30 — withdraw assets now
K token fell over 80% after the shutdown announcement; market cap near $1M (CoinGecko data).
Recovery plan: $800,000 of Uniswap liquidity moved to Foundation Safe; Phoenix lenders to recover ~76% of principal.
Kinto shutdown: Kinto token collapses after Sept. 30 wind-down announced; withdraw assets now — learn recovery steps and lender compensation.
What caused the Kinto shutdown?
The Kinto shutdown was triggered by a July security breach that drained ~577 ETH (about $1.6 million) via an ERC-1967 Proxy vulnerability, compounded by failed fundraising and deteriorating market conditions. The team says continuing operations would further deplete remaining funds, so it opted to close and prioritize asset protection.
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How did the hack and fundraising failures combine to force closure?
The July exploit targeted an upgradeable-contract pattern (ERC-1967 Proxy), a common OpenZeppelin-derived codebase. Kinto raised $1M in debt to restore trading but said market conditions prevented additional funding. The team operated without salaries since July and chose a measured wind-down to protect users and lenders.
Source: Kinto
Kinto’s governance token, K (Kinto token), has fallen sharply after the shutdown announcement. The protocol had also offered very high APYs — K staking reached advertised yields near 130% in USDC earlier in the year — a factor some observers cite when assessing sustainability.
The project operated as an Ethereum layer-2 built on Arbitrum, using Ethereum mainnet for final settlement. Its modular exchange combined centralized-exchange efficiency with decentralized security design and supported tokenized equity trading in assets such as Apple, Microsoft and Nvidia.
How will Kinto distribute remaining assets?
Kinto said all remaining assets, including ~$800,000 of Uniswap liquidity, will be transferred to a Foundation Safe. The plan prioritizes “Phoenix” lenders who provided support for relaunch efforts; those lenders are expected to recover roughly 76% of loan principal.
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Kinto and founder Ramon Recuero also announced a goodwill grant program for hack victims, providing $1,100 per affected address. Recuero pledged more than $130,000 of personal funds toward victim relief. The team will continue asset recovery activities and will propose any excess distribution via Snapshot voting.
The Kinto team urges users to withdraw assets by Sept. 30. After that date, remaining balances will require claims through a perpetual claim contract the team plans to deploy. Users should export and secure private keys and withdraw on-chain assets promptly.
Kinto (K) plunged 81.4% to $0.46 after the shutdown announcement, with market capitalization falling near the $1 million mark, according to CoinGecko data. The token reached a market-cap peak of $14.5 million on Aug. 14; K launched publicly in April.
This shutdown highlights the systemic risk posed by common upgradeable-contract patterns (ERC-1967 Proxy) and the fragility of projects that rely on aggressive yield strategies. It underscores the importance of security audits, capital adequacy, and conservative APY offerings in DeFi product design.
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