Kinto Token Crashes 81% as Ethereum Layer-2 Project Shuts Down

Kinto, an Ethereum Layer-2 (L2) network, has announced it will shut down after struggling to recover from a major crypto hack earlier this year. The decision triggered an 81% crash in the Kinto token price leaving investors shocked and the community questioning the project’s future. According to the team, funding dried up following the hack, making long-term sustainability impossible. The Ethereum L2 shutdown highlights growing concerns around security and financial resilience in smaller blockchain ecosystems.

Background (Hack & Financial Loss)

Kinto’s downfall traces back to a major hack in February 2025, where attackers drained nearly 577 ETH, worth millions of dollars at the time. The incident not only wiped out part of the network’s treasury but also shattered investor confidence. Without adequate insurance or strong venture backing, the project struggled to secure new funding in the months that followed. 

Developers admitted that the hack created a long-term financial gap, leaving Kinto unable to support growth or restore trust among partners. While larger Ethereum Layer-2 platforms often bounce back with institutional support, smaller players like Kinto face harsher realities. The lack of financial recovery after the crypto hack shutdown eventually forced the team to make the difficult decision to wind down the project entirely.

Shutdown Announcement & Timeline

The Kinto team confirmed the Ethereum L2 shutdown in an official statement shared on X, explaining that the project will wind down operations in the coming weeks. 

According to the announcement, the network will remain functional until September 30, 2025, giving developers and users time to manage withdrawals and complete pending transactions. After this date, key infrastructure will gradually be retired. The team emphasized that the closure was not a sudden decision but the result of months of financial strain following the February hack. By publishing a clear timeline, Kinto aims to provide affected users with guidance during the final stages of the crypto network wind-down.

Token Crash & Market Reaction 

Following the shutdown announcement, the Kinto token price suffered a dramatic collapse, plunging 81% within hours. The sharp sell-off reflected the market’s immediate lack of confidence in the project’s survival. Traders rushed to exit their positions, driving liquidity down across exchanges that still listed the token. For many investors, this confirmed that the project’s earlier Ethereum L2 hack had left scars that could not be healed. 

Community sentiment on social platforms such as X and Telegram turned negative, with users expressing frustration over transparency and risk management. Some analysts noted that small rebounds were unlikely given the project’s closure timeline. The crypto market reaction underlines how quickly investor trust can vanish when security breaches and funding failures combine, especially in experimental blockchain ecosystems like Layer-2 solutions.

Related: BingX Resumes Operations After $43M Hack, Users Report Issues With KOKO Token

User Recovery & Refunds

• Kinto announced plans for a recovery and refund process.

• Remaining assets will be used to compensate token holders.

• A donation-based pool may be created with support from partners.

• Details on claim steps and timelines are not yet confirmed.

• Investors remain uncertain, raising calls for stronger crypto investor protections.

Industry Impact & Lessons for Ethereum L2s

• The Kinto shutdown has triggered debate in the Ethereum L2 sector.

• Larger L2s like Arbitrum and Optimism remain strong with institutional backing.

• Smaller projects face challenges of security, funding, and transparency.

• Analysts highlight lack of insurance and audits as key weaknesses.

• Developers are urged to prioritize trust, governance, and open communication.

• The case shows how hacks + financial struggles can collapse even promising L2s.

What’s Next 

Kinto’s shutdown is more than just another crypto exit—it’s a reminder of how fragile smaller Ethereum Layer-2 projects can be when security failures collide with financial strain. While the team has promised some form of recovery for affected users, the uncertainty has already damaged trust. For investors and developers alike, the lesson is clear: in today’s competitive blockchain landscape, sustainability and user protection are as vital as innovation. The Kinto story will likely stand as a case study in risk for future L2 projects.

FAQs

Why is Kinto shutting down its Ethereum L2?

Kinto is shutting down because the project couldn’t recover from its February 2025 hack, where 577 ETH was stolen. The loss of funds and investor trust meant Kinto could no longer secure enough financing to continue operations.

How much did Kinto token price fall?

After the shutdown announcement, the Kinto token dropped by 81% in a single day. Prices collapsed across exchanges as traders rushed to sell, and no major recovery has been reported.

Will Kinto users get refunds?

Yes, but the process is still unclear. Kinto said it will use remaining assets to refund token holders and may create a donation pool with partners. Claim steps and payout amounts are not yet confirmed, so users should wait for official upd