A software glitch caused Coinbase Wrapped ETH (cbETH) to drop to $1 in value on the platform instead of around $2,200, a mispricing that lasted just a few minutes and left DeFi lender Moonwell with nearly $1.8 million in bad debt.
The technical glitch occurred because a system update caused the platform to value cbETH solely based on its relationship to ETH (around 1.12), forgetting to take into account the actual USD price of Ethereum.
Therefore, according to the summary of events, the protocol interprets cbETH to be worth approximately $1.12.
The problems started when a governance proposal enabled new Chainlink oracle configurations on the Moonwell Marketplace on the Base and Optimism networks. An oracle is a tool that obtains real-time data before adding it to the blockchain.
In lending protocols such as Moonwell, users deposit assets such as cbETH as collateral and borrow other tokens as collateral. If the collateral falls below the required threshold, the bot automatically liquidates the position, repays the debt and seizes the collateral at a discount.
Once cbETH appeared to plummet from over $2,000 to just over $1, liquidation bots were quick to act. Since the protocol deemed the token nearly worthless, the liquidator was able to seize 1 cbETH by repaying a debt of approximately $1.
Risk manager Anthias Labs said 1,096.317 cbETH ($2.44 million) was seized, borrowers’ collateral disappeared, and the protocol experienced bad debt across multiple markets.
Distorted pricing also allowed a small group of users to deposit minimal collateral and borrow cbETH at artificially low valuations, further increasing losses.
Moonwell reduced supply and borrowed the cap within minutes to stem the losses. However, correcting the prophecy requires a governance vote and a five-day time limit, making an immediate fix impossible.
This incident once again reminds people that price oracles are infrastructure and a key point of failure for DeFi applications. When they fail, smart contracts perform exactly as they were programmed, but the balance sheet absorbs the consequences.
Meanwhile, security auditor Krum Pashov noted that the GitHub commit associated with the proposal was co-authored by AI coding assistant Claude Opus 4.6, sparking debate over whether automatic “vibe coding” resulted in faulty oracle logic.
🚨Claude Opus 4.6 wrote vulnerable code that led to smart contract exploitation, causing $1.78 million in losses
The price of the cbETH asset is set at $1.12 instead of $2,200. The project’s PR shows that the commit was co-authored by Claude – is this the first hack of vivi-coded Solidity code? pic.twitter.com/4p78ZZvd67
— Pashov (@pashov) February 17, 2026
