Well, it’s over. Kinto, the DeFi project that’s been struggling for months, finally announced it’s shutting down. The official word came through a post on X, formerly Twitter, late last week. The team said they’d basically run out of options. Every path to keep things going just led to a dead end.
The Final Decision
The statement was pretty blunt. They’re conducting what they call an “orderly wind-down.” I guess that means they’re trying to close up shop without causing even more chaos. The immediate effect on the market was, as you’d expect, brutal. The project’s token, K, took a nosedive. We’re talking an 85% drop in a single day. That’s just devastating for anyone still holding it.
They did outline a few key points for users, though. Everyone can still withdraw their assets, but there’s a deadline: September 30th. After that, who knows. They also mentioned that lenders on Phoenix will get about 76% of their principal back. It’s not everything, but it’s something. For the people affected hardest by that July exploit—the Morpho users—there’s a sort of goodwill fund. They can claim up to $1,100 each from it, money that’s coming directly from the founder.
The Root of the Problem
So what actually went wrong? It all seems to trace back to July. The founder, Ramon Recuero, called it a “black swan” event. A specific exploit, something about a CPIMP proxy, led to the loss of 577 ETH. The important thing to note is that their main wallets and their Layer-2 infrastructure weren’t directly hacked. But that exploit was enough. It forced them to take on debt, about a million dollars worth, in a last-ditch effort to stay afloat. It just didn’t work.
From there, it was a downward spiral. The token price never recovered from the initial 90% drop in July. Combine that with a tough market, and the chance of new fundraising just evaporated. The team hasn’t been paid since the summer. You can see why they finally had to call it.
User Backlash and Next Steps
Of course, the announcement wasn’t met quietly. Some users are furious, accusing the project of making money before pulling the plug. Kinto is pushing back hard on that, saying neither the team nor investors ever unlocked any of their tokens. They’re adamant this isn’t a rug pull, just a failure.
For users having trouble with withdrawals, the advice is to go to their Discord and create a help ticket. There’s also a bit of hope on the horizon. Researchers are apparently still trying to trace the stolen ETH. Kinto says if any of it is recovered, it’ll go straight to the victims. They’re also moving the remaining assets—around $800,000—into a foundation account to repay people.
And in a small piece of good news, they confirmed that a planned airdrop of ERA tokens is still happening. That’s supposed to be distributed around mid-October. It’s a minor consolation, but for some, it might be something.
It’s a messy, unfortunate end. Perhaps a reminder of how fragile these projects can be, even when they’re trying to do things the right way.
