Moby Trade Exploit: Settlement Logic Gone Wrong

What Went Deeply Wrong

In January 2025, Moby Trade—a rising DeFi options platform—suffered a $2.5 million exploit due to a flawed expiry settlement mechanism in its smart contracts. The attacker manipulated how expired options were processed by forcing incorrect internal states, which allowed them to extract collateral repeatedly with minimal cost.

The faulty logic didn’t verify if the expiration event had truly passed or been validated by an oracle. Instead, it allowed users to trigger the expiration and settlement almost simultaneously, using multiple accounts and rapid re-entry. Under the hood, it trusted “last known” values rather than fetching live price feeds, and certain stop-loss liquidation processes failed to synchronize price and position validity.

As a result, the attacker created a tight loop using multiple wallets and expired multiple fake options, draining liquidity pools used by real traders without ever needing to post full collateral after the initial attack transaction. Because everything occurred within one block, no observer was able to act quickly enough to stop the attack, and the transactions executed atomically.

Tactical Shifts Inspired by Failure

This exploit exposed a critical issue for time-dependent DeFi protocols: never trust internal time-based states without outside confirmation. Moby's contract relied too heavily on internal calculations and block timestamps, both of which can lag reality or be manipulated subtly by attackers with precise timing.

Post-exploit, Moby implemented a two-step change: First, expiration now requires confirmation from a Chainlink-based oracle to validate the timestamp and price snapshot. Second, it added a mandatory delay between option expiry and any resulting settlement call—even for the same account—reducing atomic settlement risks.

In addition to technical solutions, the governance upgraded risk models to disallow any self-triggered financial event to settle without a buffer and network-confirmed snapshot. These changes not only removed single-caller exploits but also pointed toward safer on-chain option architectures. The team also launched 24/7 anomaly monitoring and formally capped maximum collateral per contract to contain blast-radius during edge-case attacks.