Velvet Capital, a decentralized finance (DeFi) asset management protocol backed by Binance Labs, has been forced offline following a phishing attack, raising concerns among users about potential security breaches.

Reports from the crypto community on X alerted users to suspicious activity on Velvet Capital's trading platform on April 23. Users attempting to access the front-end were prompted to approve wallet access, indicating a potential security breach.

In response, Velvet Capital swiftly initiated internal investigations and issued a cybersecurity alert, advising investors to refrain from approving any wallet connect requests from the application until further notice. Users who may have unknowingly approved fraudulent requests were urged to revoke wallet access to prevent any potential loss of funds.

Founder Vasily Nikonov announced the temporary closure of the website on Telegram, emphasizing the need for maintenance and investigation into the issue. Collaborating with tech teams and security researchers, Nikonov sought to regain control of the platform from hackers.

While investigations are ongoing, Nikonov assured users that smart contracts remained unaffected, and funds on Velvet Capital were secure. However, users who confirmed transactions on the platform since April 23 at 5:39 am UTC were advised to monitor their accounts closely and report any suspicious activity to the Velvet Capital team for remediation.

The incident echoes similar front-end hacks experienced by DeFi protocols Aerodrome and Velodrome in November 2023. These platforms also issued warnings to users and initiated investigations following unauthorized access to their front ends.

Despite the swift action taken by Velvet Capital, concerns remain about the security of user funds and the potential impact of the phishing attack on the platform's reputation. As investigations progress, users await further updates and assurances regarding the safety of their assets on the platform.