crypto Flash loan scams history

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Here’s a list of some of the biggest and most notorious flash loan attacks in DeFi history, along with how they were executed:

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1. bZx Protocol (February 2020)

• Loss: ~$350,000

• Method: Price oracle manipulation via a flash loan.

• Details:

  • Attacker borrowed ETH with a flash loan, manipulated the price of an asset on Uniswap, and tricked bZx’s lending protocol into thinking the collateral was worth more.

  • Then they withdrew more funds than they should have, profiting instantly.

• Lesson: Even experienced DeFi teams can overlook oracle vulnerabilities.

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2. PancakeBunny (May 2021)

• Loss: ~$45 million

• Method: Flash loan + price manipulation

• Details:

  • Attacker borrowed millions of dollars via a flash loan, manipulated the price of the BUNNY token, and exploited the protocol’s reward mechanism.

  • Profits came from artificially inflating reward payouts.

• Lesson: Flash loans can amplify attacks on token reward systems.

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3. Cream Finance (February 2021 & August 2021)

• Losses: $37.5M (Feb), $130M (Aug)

• Method: Flash loan + smart contract exploit

• Details:

  • Attackers used flash loans to borrow large amounts and exploit unprotected functions in Cream’s smart contracts.

  • Assets were drained instantly.

• Lesson: Even large, established DeFi platforms can have hidden vulnerabilities.

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4. Alpha Homora & Iron Bank (February 2022)

• Loss: $37 million

• Method: Flash loan + reentrancy attack

• Details:

  • Attacker exploited a reentrancy bug to withdraw more collateral than allowed.

  • Flash loans provided enough capital to maximize the attack in one transaction.

• Lesson: Smart contracts must update balances before transferring funds to avoid reentrancy.

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5. Spartan Protocol (2022)

• Loss: ~$30 million

• Method: Flash loan + price manipulation + liquidity pool exploit

• Details:

  • Manipulated the price in a liquidity pool using a flash loan, then withdrew funds at the inflated price.

• Lesson: Flash loans make it possible to manipulate low-liquidity pools without personal risk.

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Key Takeaways from All These Attacks

1. Flash loans remove the “capital barrier,” letting attackers borrow huge amounts instantly.

2. Many exploits rely on price oracle manipulation or smart contract vulnerabilities.

3. Prevention requires:

• Audited contracts

• Multi-oracle price feeds

• Anti-reentrancy patterns

• Continuous monitoring

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