Full Sail, a decentralized finance protocol operating on the Sui blockchain, has announced it will permanently wind down following a security incident that resulted in the loss of approximately $91,000 in user funds. The breach was linked to a suspected compromise of oracle infrastructure provided by Switchboard.

The protocol disclosed that an attacker removed the funds from three of its automated vaults. Direct liquidity pool positions were not affected. Full Sail confirmed the loss of funds over the weekend and immediately paused deposits and withdrawals while it investigated the cause and scale of the damage.

Incident Details and Oracle Involvement

The attack occurred around August 29 and stemmed from issues in Switchboard’s Move-based oracle implementations. Oracles supply external data such as asset prices that DeFi protocols rely on for automated functions. According to Full Sail, the attacker gained control over the authorization of oracle price updates by inserting a controlled key into a live feed.

Reported prices were then driven to roughly 100 times below market value. The attacker deposited into the vaults at the distorted rates, restored prices to normal levels, and withdrew significantly more than the amount deposited. Full Sail stated that its own administrative keys were not compromised and that the failure originated in Switchboard’s infrastructure.

Switchboard confirmed it was investigating a potential compromise and suspended its networks on Aptos, Sui, IOTA, and Movement as a precautionary measure.

Impact on Other Protocols

The same oracle issue affected other platforms. Virtue, a stablecoin lending protocol on the IOTA network, reported losses of about $455,000. The incident impaired the collateral backing its VUSD stablecoin and led to the liquidation of positions for 45 users. Virtue has frozen borrowing, deposits, withdrawals, liquidations, and flash loans while it continues remediation efforts.

Wind-Down Measures and User Compensation

In its formal announcement, Full Sail stated it is disabling new deposits and liquidity provider reward claims with immediate effect. Regular pools will shift to withdrawal-only mode once final security reviews are complete. The protocol will publish detailed instructions for withdrawals and claims in the coming days.

Full Sail plans to use its remaining protocol-owned liquidity to cover losses. The team has committed to addressing any shortfall so that community depositors are repaid first. The protocol has indicated that the absence of further technical details or compensation commitments from Switchboard will not delay the repayment process for its users.

Full Sail approached Mysten Labs, the organization behind the Sui network, for financial assistance, but the request was declined. Switchboard has not issued a compensation pledge or provided a detailed public account of the code failure as of early September.

Next Steps for Affected Users

Users are advised to await official guidance from Full Sail on claims and withdrawals. The protocol has stressed that it will never request seed phrases or private keys and that updates will come only through its verified channels. A more detailed incident report is expected in the near term as the wind-down proceeds.