Yala’s Bitcoin-backed stablecoin, YU, is under pressure after an attempted exploit pushed its value far below its intended $1 peg. The incident, which unfolded early Sunday, saw YU plunge to just $0.20 before partially recovering. As of writing, the token trades around $0.78, still far from regaining stability.
The Yala team confirmed the attack on YU in a series of posts on X, describing it as an “attempted attack” that briefly disrupted the peg. Partnering with blockchain security firm SlowMist, Yala said it had identified vulnerabilities and was rolling out fixes.
“All user assets remain safe,” the team emphasized, clarifying that Bitcoin collateral remains either in vaults or under self-custody.
Dear Yetis,
We want to keep you informed about a recent security incident at Yala. A breach resulted in the unauthorized transfer of funds; however, the situation is fully contained and under control. We have identified the stolen assets on-chain and are actively working with…
— Yala (@yalaorg) September 14, 2025
To contain the fallout, Yala temporarily paused key features like Convert and Bridge. Other protocol functions, the team added, remain active. The move reflects an effort to stabilize the system while preventing additional risks from cascading through the platform.
“Users are strongly advised to avoid making any transactions or operations related to YU and YBTC until the new plan is rolled out. Acting now may potentially complicate follow-up handling and delay fund recovery,” Yala shared on X.
Reminder:
Users are strongly advised to avoid making any transactions or operations related to YU and YBTC until the new plan is rolled out. Acting now may potentially complicate follow-up handling and delay fund recovery.
Thank you for your patience, cooperation, and continued…
— Yala (@yalaorg) September 16, 2025
Deeper Than First Thought
Blockchain analysts, however, painted a more complex picture. Data from Lookonchain suggested that an attacker was able to mint as much as 120 million YU on Polygon, bridging and offloading part of the haul for roughly $7.7 million in USDC.
The attacker reportedly converted those funds into ETH and scattered them across multiple wallets, with tens of millions of YU still sitting unredeemed across chains. YU is designed as a Bitcoin-collateralized stablecoin, backed by overcollateralized BTC reserves.
Update: All funds are safe. Bitcoin deposited to Yala remains self-custodial or in vaults, with none lost.
We’ve identified issues and, as a precaution, paused some product features. Please wait for our green light before re-engaging.
A full post-mortem and action plan will…
— Yala (@yalaorg) September 14, 2025
With a reported market cap of $119 million, the project is relatively young compared to giants like Tether or USDC. Yet, its liquidity pools are shallow. On Ethereum, for example, only around $340,000 in USDC backs active trading. That thin liquidity has made YU more vulnerable to sharp swings during stress events.
As part of ongoing security enhancement and system upgrades, the Convert and Bridge functions will be temporarily unavailable to ensure full stability while improvements are applied.
All other protocol functions remain unaffected, and user assets remain safe. We’ll share more…
— Yala (@yalaorg) September 14, 2025
The broader stablecoin market, meanwhile, is nearing a $300 billion milestone, showing just how important trust and liquidity are for projects hoping to compete at scale. For Yala, the immediate challenge will be restoring user confidence. Peg stability is the very foundation of a stablecoin, and until YU consistently trades close to $1, questions about its resilience will linger.
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