The address that drained BSquared Network had held the required smart contract role since early 2025. That access was only revoked after the funds were already gone. On-chain investigator Specter flagged the detail quickly, and the implication is hard to ignore: this may not have been an outside attacker who found a crack in the code.
BSquared Network, a Bitcoin layer 2 protocol, was exploited for $3.89 million on the same day AFX Trade lost more than $24.15 million to a separate attack. The back-to-back hits landed despite months of industry-wide security upgrades that followed Kelp DAO's breach in April.
How the money moved
According to Lookonchain, the attacker extracted 8.59 million B2 tokens worth roughly $3.86 million. Those tokens were immediately sold for 5,409 WBNB and 156 BNB, netting around $89,680 in stablecoin value on top. From BNB Chain, the funds were bridged to Ethereum and converted into ETH and USDT.
The trail did not stop there. At least 200 ETH, worth over $387,000, has since been routed toward ZCash via Near Intents and HOT Protocol, with the funds sitting in Near Intents' bridged wallet at the time of writing. Mixing assets through ZEC is a classic move to cut traceability before cashing out, and it signals the attacker is in no rush to move fast.
The team's response and what it means for B2 holders
BSquared's team confirmed that unauthorized access to the smart contract's upgrade authority was the vector. B2 staking was suspended immediately pending additional security reviews. The team also committed to full compensation for all affected users, which at least gives stakers something to hold onto.
They sent an on-chain message to the suspected hacker: return at least 10% of the stolen funds, roughly $386,000, within 24 hours to a specified address, and no legal action would follow. That window has now passed. There is no public confirmation the funds were returned.
The B2 token dropped over 40% in the hours after the exploit, bottoming out before partially recovering. At press time it was trading at $0.4351, down about 17% on the day. The MACD was still showing bearish momentum, and the token's correlation with BNB was tightening post-exploit, which limits upside if broader BNB sentiment stays soft. Whether the compensation plan is enough to rebuild confidence among stakers is a different question entirely.
This article is for informational purposes only and does not constitute financial advice. Crypto assets carry significant risk; always do your own research before making investment decisions.
