K9 Finance warns it may sever ties with Shibarium

Asset staking platform K9 Finance, an official partner of Shibarium, has threatened to sever ties with the Shiba Inu team. The warning comes after the September breach of the Shibarium bridge, which caused significant losses for the DeFi platform and its users. 

K9 Finance has given the Shiba Inu team a deadline of January 6, 2026, to fully compensate affected users, or risk a formal review of their partnership, according to a message from its decentralized autonomous account (DAO) official X account published on Thursday.

The September hack cost K9 Finance more than $700,000 in KNINE tokens, in addition to other crypto assets including Ethereum (ETH), Shiba Inu (SHIB), LEASH, ROAR, and TREAT. 

After the attack, the Shiba Inu team offered the hacker a reward of 50 ETH and the promise of no criminal prosecution in exchange for not returning the stolen funds. At the same time, K9 Finance issued a 5 ETH bounty for the return of frozen tokens.

K9 Finance DAO issues ultimatum to Shibarium devs

According to K9 Finance, the platform adhered to all protocols requested by Shiba Inu during the post-hack recovery process. The team claims it kept communication channels with the Shiba Inu team open throughout the months following the attack, but that correspondence eventually ceased.

As reported by Cryptopolitan in mid-September, the attack began with a flash loan used to acquire 4.6 million BONE tokens. This temporarily granted the attacker control over two-thirds of validator voting power on Shibarium’s Layer-2 network. 

The hacker used the vulnerability to extract 224.5 ETH, valued at roughly $1.03 million, and 92.6 billion SHIB, worth about $1.27 million. Other tokens, including Doge Killer (LEASH), Shiba Inu’s TREAT, and Shifu (SHIFU), were also stolen but were moved days after the breach, according to blockchain records.

The breach came from a compromised checkpoint where the perpetrators inserted a fraudulent Merkle root. After this malicious root was added, the attacker executed a large transaction to drain approximately $1 million, which ballooned to $2.8 million at the time of this reporting. 

Out of the twelve validator signing keys, ten approved the hacker’s malicious root state and withdrew the assets, with only validators run by K9 Finance and UnificationUND shunning the request.

“If no complete restitution is provided by that date, the DAO will formally convene and vote on our future relationship with Shibarium, including whether continued business on the chain remains viable for the long-term health of the K9 ecosystem,” the organization’s statement concluded.

Shiba Inu down 36% after Shibarium smart contract hack

The hack and the ensuing dispute rattled the broader Shiba Inu ecosystem, leading to a 36% price downturn in the SHIB token, which was trading at $0.00000826 on Saturday morning. The price level is a few points above its year-to-date low of $0.00000753, although the coin is 70% below its year-on-year highs.

Following news of the exploit, SHIB initially spiked to $0.0000148 but fell to $0.0000137 within 24 hours, a 7.4% decline. Yet, despite the turbulence in the Shibarium ecosystem, there are indications that Shiba Inu’s fundamentals may be improving. 

One positive metric is token burn activity, which saw its rate increase by 170% on Friday, bringing the total tokens burned since inception to over 410.75 billion. The number of SHIB tokens held on exchanges dropped to 288.75 trillion from this month’s high of 366.1 trillion, and could mean the market is exhibiting stronger buying interest towards Christmas.

Whales, or large investors, have increased their holdings significantly, currently controlling 96.67 billion tokens, up from this week’s low of 1.36 billion.

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