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News/Gala Games Recovers from $200M Hack with DWF Labs Acquisition and Hacker Funds Return

Gala Games Recovers from $200M Hack with DWF Labs Acquisition and Hacker Funds Return

Van Thanh Le

May 22 2024

4 weeks ago4 minutes read
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Gala Games Hack: Crypto Gaming Giant Loses $200M in Daring Exploit

The $200 million hack of Gala Games, a prominent player in the crypto gaming sector, serves as a stark reminder of the vulnerabilities in the digital asset space. This incident, which involved the exploitation of smart contract vulnerabilities and minting mechanisms, not only led to significant financial losses but also prompted a broader discussion on security practices within the crypto industry.

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Key Takeaways

  • The hack exploited vulnerabilities in Gala Games' smart contract infrastructure, leading to the unauthorized minting of $200 million worth of tokens.
  • Gala Games responded swiftly with damage control measures, including securing their contracts and communicating openly with their community.
  • The incident has spurred Gala Games to enhance their security protocols and collaborate more closely with the crypto community and law enforcement.
  • DWF Labs, a Gala Games partner, bolstered GALA's value by acquiring 28 million tokens with a value of around $1.2 million from the open market to aid in stabilizing the token and facilitating recovery efforts. 
  • A significant portion of the stolen funds was returned, with the hacker sending back approximately $22 million worth of Ether.
  • This move resulted in an 11% price surge within the last day, effectively restoring GALA's value following the hack-induced decline.  

Overview of the $200 Million Gala Games Hack

The saga began with a sophisticated attack targeting Gala Games, a prominent player in the crypto gaming sector. The breach was a result of internal control failures, which allowed the hacker to gain unauthorized access to the network.

The attacker exploited vulnerabilities within Gala Games' smart contract infrastructure, leading to the unauthorized minting of 5 billion (GALA) tokens (worth around $200 million). This exploitation was critical in escalating the severity of the breach.

The immediate financial repercussions were severe, with the hacker selling approximately 600 million GALA for nearly 6,000 ETH. 

The Hacker's Methodology

The hackers meticulously exploited a flaw in the minting mechanism of Gala Games' smart contracts. This allowed them to generate vast amounts of GALA tokens illegitimately, which they then moved to various wallets under their control.

After acquiring the tokens, the hackers quickly liquidated approximately $29 million worth of GALA through several decentralized exchanges. This rapid movement and sale of assets caused a temporary but significant dip in the token's market value.

Gala Games has not officially disclosed the exploit's source or method, but some community members allege that Gala mentioned the incident involved a security contractor who made an error while accessing the wallet without a VPN.

Gala Games' Response to the Crisis

Following the $200 million hack, Gala Games acted promptly, resolving the exploit within 45 minutes of detection by activating the blocklist protocol, freezing all tokens in the unauthorized wallet; and announcing an urgent migration to a new V2 contract, advising all token holders to move their holdings immediately.

The company's CEO, Eric Schiermeyer, immediately confirmed the incident and detailed the containment steps on various communication platforms including Discord and social media.

In the aftermath, Gala Games maintained transparency with its community. A statement on Twitter confirmed that the impacted wallet was frozen and reassured users that the incident was isolated and under control. The company also engaged with the community to discuss potential resolutions, including governance votes on token management.

To prevent future breaches, Gala Games has initiated a comprehensive overhaul of its security systems. This includes the implementation of enhanced multi-signature wallet protections, stricter access controls, and regular audits of its smart contracts. The company is also collaborating with law enforcement agencies like the FBI to track down the perpetrators and ensure robust legal follow-up.

Impact on Gala Games and the Crypto Industry

The immediate aftermath of the hack saw a sharp 15% decline in the value of the GALA token, plummeting from $0.047 to $0.038 within just two hours. Gala Games intends to reimburse users who incurred high transaction fees due to the incident.

The hack has significantly tarnished Gala Games' reputation, casting doubts among users and partners about the platform's security. Amid the chaos, DWF Labs, a partner of Gala Games, purchased 28 million GALA tokens (approximately $1.2 million) on the open market to stabilize the token's value and support recovery efforts. 

On May 21, the hacker returned 5913.2 ETH valued at $22.3 million, close to the proceeds from the previous day's sale of 600 million GALA tokens. This action was part of a broader trend where hackers, after exploiting blockchain vulnerabilities, return the funds, possibly to avoid harsher penalties or out of remorse. Gala's co-founder and CEO, Eric Schiermeyer, stated in a May 20 communication that the purported assailant had been identified, along with "his home address."

Following the DWF Labs recovery efforts and hacker’s returned funds, GALA's price increased by 11% in the last 24 hours to $0.046, recovering from the initial drop caused by the hack.

Gala will vote on burning the 4.4 billion GALA tokens that were frozen by upgrading the contract, implementing a hotfix to remove the illegitimate supply, and performing a token burn to send these tokens to an unretrievable address.

Conclusion

The $200 million hack of Gala Games serves as a stark reminder of the vulnerabilities present in the rapidly evolving crypto and gaming sectors. Despite the swift response and significant recovery efforts by Gala Games, the incident underscores the critical need for enhanced security measures and robust protocols to safeguard digital assets. 

As the industry continues to grow, both companies and users must remain vigilant, continuously updating and fortifying their systems against such sophisticated attacks. This event not only highlights the challenges within the crypto space but also the resilience and quick adaptability of companies like Gala Games in the face of adversity.

FAQs

What happened in the $200 million Gala Games hack?

A hacker exploited vulnerabilities in Gala Games' smart contract infrastructure, particularly the minting mechanisms, to steal approximately $200 million worth of GALA tokens.

How did the hacker exploit the Gala Games system?

The hacker manipulated the minting process to generate $200 million worth of GALA tokens, and then sold $29 million of these through decentralized exchanges.

What immediate actions did Gala Games take after the hack?

Gala Games swiftly responded by securing and removing unauthorized access to the GALA contract, freezing the wallet with the remaining tokens, and communicating the incident to the community.

Has any of the stolen funds been returned?

Yes, the hacker returned approximately $22 million worth of Ether (ETH) to Gala Games, which was close to the market value of the tokens sold.

Are there ongoing investigations into the hack?

Yes, Gala Games is cooperating with the FBI, the U.S. Department of Justice, and international authorities to track down the perpetrator and investigate the breach.

What long-term measures is Gala Games taking to prevent future hacks?

Gala Games is enhancing their security protocols, collaborating with the community and the broader industry, and initiating educational efforts to safeguard against future security incidents.

This article has been refined and enhanced by ChatGPT.

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