Abracadabra (MIM) collapse — what creditors were owed and recovered (2026)
The approved wind-down plan swaps the reclaimable collateral into ETH and pays it out through a claim contract. Borrowers get their collateral minus their MIM debt at $1 per MIM; MIM holders share what is left pro rata, which the plan put at about $0.04 per MIM, or roughly 4% of face value. The payout is in ETH, so its dollar value will move until it is claimed. As of 22 October 2026 no distribution had been announced on the project’s public channels.
Case facts
| Customers lost access | |
|---|---|
| Insolvency filed | No formal proceeding was opened |
| Business | Token or stablecoin issuer |
| Jurisdiction | No jurisdiction established |
| Procedure | No formal process |
| Owed to creditors | $22,000,000 |
| Distributed so far | Nothing |
| Recovery | —No distributions yet — The estate has not paid creditors anything. |
| Cause | Hack or theftBad debt left by three hacks in 2024–2025, on the team’s own account; unexplained treasury movements are disputed |
| Case status | Ongoing |
What happened
Abracadabra is a decentralised lending protocol that let users borrow its dollar stablecoin, Magic Internet Money (MIM), against crypto collateral held in contracts it calls Cauldrons. MIM lost its peg in June 2026, and on 29 September 2026 the team that had taken over stewardship of the protocol that month proposed winding it down, saying MIM had no viable path back to $1.
According to the proposal, MIM held outside protocol addresses totalled nearly $22 million, while the collateral that could actually be reclaimed to back it was worth about $900,000, an effective backing of about four cents per MIM. The bad debt of roughly $21 million comes from the protocol’s hacks: about $6.5 million in January 2024, $13 million in March 2025 and $1.8 million in October 2025, all recorded in this site’s hack registry. Some collateral sits in immutable Cauldrons that the team cannot touch and stays withdrawable by its owners, and about $1 million in Stargate-based Cauldrons was at risk from LayerZero’s planned retirement of a relayer.
The first Snapshot vote, which closed on 30 September, missed its hard-coded quorum of 3 billion votes, three times the total vote supply. A refined proposal redefined the quorum as 30% of supply and passed on 15 October 2026 with about 396 million votes in favour, cast by two addresses, and none against. It sets a balance snapshot no earlier than 20 October, after which claims open; after six months unclaimed funds go to MIM holders who claimed, up to $1 per MIM, and then to borrowers.
There is no court process and no claims register, so the figure here is the MIM supply stated in the proposal, not an admitted claims total. Protos reported that the trading commentator Mikko Ohtamaa called earlier treasury activity “looting”: MIM sales from the treasury on Curve in June that he said raised about $0.5 million as the peg slipped, and about $8.3 million moved out of Abracadabra-controlled Safes on 14 July without explanation, roughly 2,142 ETH of it to a Binance deposit address, as flagged by Pharos. The wind-down proposal does not mention those funds, and the team has not publicly responded.
Sources
- Abracadabra Snapshot, refined wind-down proposal (passed 15 October 2026)Primary · retrieved 2026-10-22
- Abracadabra Snapshot, first wind-down proposal (closed 30 September 2026)Primary · retrieved 2026-10-22
- Protos (30 September 2026)Secondary · retrieved 2026-10-22
- Unchained (30 September 2026)Secondary · retrieved 2026-10-22
- Web3 Is Going Just GreatAggregator · retrieved 2026-10-22
Changes to this entry
- Added after the wind-down vote passed on 15 October 2026. Headline is the MIM supply stated in the proposal; update once claims open and a payout figure is published.
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iTokenly Crypto Failure Registry, "Abracadabra (MIM) collapse — what creditors were owed and recovered (2026)", iTokenly, accessed 2026-10-23, https://itokenly.com/failures/abracadabra-mimhttps://itokenly.com/failures/abracadabra-mimPermalinks never change. If an entry is renamed, the old address keeps working.
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