Flow (FLOW) has been left out of the broader market recovery, with the token experiencing double-digit declines over the past 24 hours.
This drawdown occurs as the network continues its remediation efforts after a recent exploit.
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Why is the FLOW token price falling?
The cryptocurrency market is up nearly 2.3% today, with all top 10 assets trading in the green. Bitcoin (BTC) has soared to over $90,000, and Ethereum (ETH) has soared to over $3,000.
However, FLOW failed to benefit from the overall market rally. The altcoin has fallen nearly 14% in the past 24 hours, according to data from BeInCrypto Markets, ranking it the second-highest daily decline on CoinGecko.
What’s worth noting is that this decline is not limited to today. Like the broader market, FLOW has faced challenges over the past few months.
However, the decline intensified on December 27th due to a security incident in the network. The price plummeted more than 50% in one day, hitting an all-time low of $0.079 on Binance. Major Korean exchanges Upbit and Bithumb temporarily suspend deposits and withdrawals on FLOW
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“Flow (FLOW) has been designated as a trading alert asset by member exchanges of the Digital Asset Exchange Alliance (DAXA). Deposit and withdrawal services for Flow (FLOW) have already been suspended. If the service is resumed, only withdrawals will be resumed, and the resumption of deposit services will be announced at a later date in accordance with the procedures following the trading alert designation,” reads a translation of Upbit’s notice.
Flow Foundation moves into recovery phase after $3.9 million abuse
On December 27th, attackers moved approximately $3.9 million in assets from the Flow network after exploiting an execution layer vulnerability. The team contained the incident and prevented further losses.
The Flow Foundation emphasized that the incident did not disrupt existing user balances.
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“The funds confirmed to have leaked are manageable amounts that do not threaten the network’s solvency or user funds. The immediate priority is remediation and safe reopening,” the foundation wrote.
Initially, Flow proposed restoring the network to a pre-exploitation checkpoint. However, after receiving significant feedback from the validator and developer community, the Foundation revised its approach and introduced a new remediation plan.
This approach avoids network rollbacks and reorganizations with the goal of preserving legitimate user activity. The foundation says more than 99.9% of accounts are unaffected and will be fully operational upon reboot.
“Upon network restart, accounts identified as recipients of fraudulently minted tokens will be temporarily restricted as a precautionary measure…The Flowcore developer team will offer node operators a software upgrade that will allow the Community Governance Council to temporarily remediate fraudulent assets,” the post added.
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The Foundation subsequently announced that its verifiers had approved the software upgrade and the network had moved into the remediation and testing phase. As part of the flow network recovery plan, Phase 1 is scheduled to begin at 6 a.m. Pacific Time.
At that point, the Cadence environment will return to normal operations, but accounts affected by the attacker’s poisoning efforts will remain temporarily restricted.
EVM environments are also restricted to read-only mode. The Foundation says more than 99.9% of Cadence accounts will regain full functionality at this stage.
While this development reflects the team’s sustained efforts to restore normal operations, it remains unclear whether the recovery process will be sufficient to restore market confidence and support price recovery.
