A coordinated oracle manipulation attack on two Morpho PT-reUSD markets triggered ~$36.39M in liquidations, with the attacker reportedly earning ~$1.3M.

The attacker used TWAP purchases of Pendle YT-reUSD to push down the PT-reUSD price, triggering liquidations of highly leveraged positions. One 15-minute TWAP fell to 0.9647, causing borrowers to become eligible for liquidation.

12 borrowers with ~$36.1M in positions were liquidated. The attacker reportedly captured 96% of the liquidated collateral, while reUSD itself remained unaffected and no bad debt was incurred.

Morpho said it is investigating whether the PT market price was intentionally manipulated and working with the relevant teams on a safer oracle configuration.

The incident highlights risks with using short-term TWAP oracles for long-dated, low-liquidity Pendle markets, where relatively small price movements can trigger large-scale liquidations.

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