A critical exploit on the Arbitrum network resulted in a $1.5 million loss, highlighting vulnerabilities in Layer-2 security. The breach involved a deployer account with elevated privileges, which was compromised to deploy a malicious contract, draining funds from the USDG and TLP projects. The attacker swiftly moved the stolen assets to Ethereum and obscured their trail using the Tornado Cash mixer, complicating recovery efforts. This incident underscores the risks associated with privileged account security in decentralized finance. It also emphasizes the need for robust operational security measures, such as multi-signature wallets and hardware security modules, to prevent similar exploits. The rapid movement of funds to privacy mixers like Tornado Cash raises further concerns about regulatory compliance and asset recovery challenges in the crypto space.