Notional Finance Escrow Contract Loses $1.7M as Funds Move to Tornado Cash

A Notional Finance escrow contract appears to have been exploited for roughly $1.7 million, with the stolen stablecoins converted into Ether and deposited into Tornado Cash within hours of the drain.

The affected assets included approximately 69,242 DAI and 1.658 million USDC, putting the combined loss near $1.73 million. Two addresses tied to the theft were identified as 0xC954...De69 and 0xDaCC...Ce38.

Stablecoins Converted Into 689 ETH

The stolen DAI and USDC were consolidated and swapped into approximately 689 ETH before the funds moved into Tornado Cash.

Notional’s escrow architecture is responsible for functions including deposits, withdrawals, account balances, collateral used for trading, settlement and liquidations. The available onchain evidence identifies an escrow contract as the source of the drained assets, but a technical root cause has not yet established which function or authorization path allowed the withdrawal.

The available transaction trail points to unauthorized withdrawals from the Notional escrow contract, while the precise failure mechanism has not yet been established. Crypto Adventure contacted Notional Finance for confirmation of the affected contract, the root cause and any potential user exposure, but had not received a response at publication time.

Tornado Cash Receives the Stolen ETH

The conversion into ETH moved the stolen value out of DAI and USDC before the attacker deposited the resulting assets into Tornado Cash. Mixer deposits break the direct public link between the originating wallet and subsequent withdrawal addresses, making later tracing dependent on additional onchain activity or interactions with identifiable services.

Similar laundering paths have followed other recent DeFi thefts. The attacker behind the Hinkal exploit converted roughly 797,000 USDC into ETH before routing 410 ETH through Tornado Cash and another portion into Bitcoin through THORChain.

The movement also comes days after the much larger Tectonic exploit on Cronos, where unauthorized borrowing produced an estimated $74 million loss and attacker-linked ETH has since begun entering Tornado Cash.

Notional Previously Wound Down V3 After Balancer Losses

Notional suffered a separate major disruption in November 2025 when the Balancer V2 exploit created bad debt across leveraged vaults on Ethereum and Arbitrum. The damage forced a full wind-down of Notional V3, with affected leveraged-vault users losing their positions and ETH lenders taking haircuts.

Notional subsequently launched its Exponent product in January 2026 as a new leveraged-yield architecture.

The latest theft addresses had converted the drained stablecoins into approximately 689 ETH and deposited the funds into Tornado Cash by early September 4.

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