Neobank's AVICI Token Crashes 49% After $1.1 Million Crypto Card Hack

A security exploit targeting a neobank's crypto card system drained $1.1 million in user funds, sending the platform's native AVICI token to a record low before a partial recovery.

A crypto-focused neobank suffered a $1.1 million security breach targeting its card payment infrastructure, triggering a steep 49% collapse in its native AVICI token from its 24-hour peak. The exploit, which occurred over the weekend, represents one of the first major attacks specifically targeting crypto card issuance systems rather than exchange wallets or smart contracts.

The breach exploited vulnerabilities in the neobank's card authorization system, allowing attackers to drain funds from user accounts linked to crypto-backed debit cards. Unlike traditional exchange hacks that target hot wallets, this attack focused on the settlement layer between fiat payment rails and cryptocurrency reserves, highlighting a new attack surface as crypto cards gain mainstream adoption.

AVICI token holders saw the value of their holdings plummet to an all-time low within hours of the exploit becoming public. The token, which serves as both a governance mechanism and a rewards vehicle for the neobank's card users, had been trading near $0.42 before dropping to $0.21. By Saturday evening, it had recovered slightly to $0.28 as the platform announced emergency security measures.

The neobank immediately suspended all card transactions and froze withdrawals pending a full security audit. In a statement posted to social media, the platform's security team confirmed that the exploit had been contained and that no additional funds were at risk. The company pledged to reimburse affected users from its insurance fund, though it did not specify a timeline for repayments.

This incident arrives as crypto card spending recently surpassed $1 billion globally, driven by stablecoin adoption for everyday purchases. Security researchers have long warned that the integration points between traditional payment networks and cryptocurrency systems create unique vulnerabilities that neither crypto exchanges nor traditional banks are fully equipped to address.

The attack bears similarities to a recent exploit that hit The Sandbox's bridging infrastructure, though the methods differed significantly. While bridge hacks typically exploit smart contract flaws, this neobank breach appears to have targeted API endpoints and authorization logic in the card processing layer, suggesting attackers are diversifying their techniques as crypto financial services expand.

For everyday users, the incident underscores the risks of holding significant balances in crypto card accounts rather than self-custody wallets. Unlike traditional bank cards, where consumer protections and FDIC insurance provide recourse, crypto card users often face uncertain reimbursement timelines and must rely on platform-specific insurance funds that may be insufficient for large-scale breaches.

Industry observers expect regulators to scrutinize crypto card providers more closely following this exploit. The European Union's Markets in Crypto-Assets regulation and similar frameworks in other jurisdictions mandate specific security standards for crypto service providers, but card infrastructure often falls into a regulatory gray area between banking and crypto oversight, leaving security protocols fragmented across jurisdictions.