Reports from the crypto community on April 23 highlighted an unusual activity on Velvet Capital’s trading platform: active users were prompted to approve wallet access to the protocol and sign a malicious transaction.
Following internal investigations, Velvet Capital issued an alert, advising investors to deny all wallet connect requests from the application until further notice. Investors who may have inadvertently approved the fraudulent request were urged to revoke wallet access to the protocol immediately to prevent potential loss of funds.
The platform also noted it has deactivated the application to mitigate any additional losses for investors.
About two hours after the alert was issued, the platform stated that they were collaborating with the tech team and security researchers to identify the root cause of the issue. They asked that affected users open a ticket on Discord and provide transaction details to the Velvet Capital team for resolution.
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The team later provided an update via its X handle stating that as of 6:50 am UTC, no users had reported any losses and that it had identified the issue.
According to the team, the platform’s smart contracts were unaffected, and “the issue occurred on the front end.” They noted that the funds of any user who did not interact with the prompt and sign the malicious transaction are safe.
Update:
No known users were impacted, if you interacted with Velvet on April 23 after 12:30am UTC and believe you were impacted – please create a ticket on Discord.
The team promptly identified the issue and, together with top security researchers, investigated the malicious…
— Velvet.Capital (@Velvet_Capital) April 23, 2024
Velvet resumed its operations after
Velvet resumed operations and continued developing its DeFi platform rather than shutting down permanently. By 2025, the project had expanded across several networks, including Ethereum, BNB Chain, Base, Solana, Sonic and Bitlayer, while adding intent-based trading and AI-assisted execution.
The project has since evolved from its earlier asset-management focus into a broader DeFAI trading and portfolio-management ecosystem, combining DeFi execution with AI tools.
As of 2026, Velvet describes its platform as an on-chain trading terminal supporting spot trading, perpetuals and yield strategies across multiple chains. Its website says the platform has more than 100,000 users and has facilitated more than $500 million in on-chain trading, although these are company-reported figures
Velvet expanded into AI-powered trading
By 2026, Velvet had moved considerably beyond the product it operated when the phishing incident occurred.
The company now promotes an AI Copilot and DeFAI infrastructure that allows users to research tokens, analyze markets and execute trades through natural-language instructions. Its platform supports spot and perpetual trading, portfolio management and automated DeFi strategies.
Velvet’s 2026 roadmap also includes additional automation features such as copy trading, wallet and social-media tracking, more advanced order types, AI-powered portfolio management and an eventual Velvet blockchain designed for DeFAI applications.
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