From a blockchain network connected to the popular Axie Infinity online game in one of the biggest crypto attacks to date.
Hackers stole about $600 million from a blockchain network connected to the popular Axie Infinity online game in one of the biggest crypto attacks to date.
Computers known as nodes operated by Axie Infinity maker Sky Mavis and the Axie DAO that support a so-called bridge — software that lets people convert tokens into ones that can be used on another network — were attacked, with the hacker draining what’s known as the Ronin Bridge of 173 600 Ether and 25.5 million USDC tokens in two transactions. The breach happened on March 23, but was only discovered Tuesday, according to Ronin, the blockchain that supports Axie Infinity.
“The fact that nobody notices for six days screams aloud that some structure should be in place to watch illicit transfers,” said Wilfred Daye, head of Securitize Capital, the asset-management arm of Securitize Inc.
The price of Ron, a token used on the Ronin blockchain, dropped about 22% after the hack was disclosed. AXS, a token used in Axie Infinity, fell as much as 11%, according to CoinMarketCap.
In its blog, Ronin said it’s in touch with major cryptocurrency exchanges and with blockchain tracer Chainalysis to monitor the move of the stolen funds. Ronin also said it’s working with law enforcement. Ronin didn’t immediately return requests for comment.
The stolen funds went to two cryptocurrency exchanges, according to blockchain forensics firm Elliptic. Several exchanges acknowledged the hack without confirming that the funds had been moved there.
Huobi tweeted that it would “fully support Axie Infinity in the aftermath of the attack. Sam Bankman-Fried, who runs the FTX cryptocurrency exchange, said in an email that it would assist on the blockchain forensics. Binance Holdings Ltd. and OKX issued similar statements, with Binance also saying it’s “working with certain law enforcement agents on potential leads,” without giving details.
The Ronin hack follows the February attack on the Wormhole bridge, which resulted in more than $300 million in losses that one of Wormhole’s sponsors, Jump Crypto, reimbursed. Other crypto bridges have suffered from so-called rug pulls when their founders disappeared and had issues when their key developers have gone rogue.
“In this case the issue was that the bridge was highly centralised — the theft came as a result of someone hacking the ‘validator nodes’ of the Ronin Bridge,” said Tom Robinson, co-founder of Elliptic. “Funds can be moved out of the bridge if five of the nine validators approve it. The hacker managed to get hold of the private cryptographic keys belonging to five of the validators — so that was enough to steal the crypto assets.”
Hacks at bridges can threaten the entire ecosystem of decentralized apps, called dapps, from games to lending services. A bridge would typically take a user’s Ether and put it in a smart contract. Then it would issue the user an equivalent amount of so-called wrapped Ether, which can be used on this particular non-Ethereum blockchain — like Ronin or Solana — to invest into dapps. If the underlying Ether is stolen, the wrapped Ether becomes worthless, effectively leaving dapps and their users with massive losses.
“If a bridge has the ability to mint tokens, it’s like taking control of the minting machines,” Yat Siu, co-founder of Animoca Brands, an investor into gaming studio Sky Mavis, said in an interview before the hack. “Bridges are authorities at this point, and if they are designed badly or have vulnerabilities, they become a huge risk to the ecosystem.”
To save the entire Solana ecosystem from a direct hit, Jump Crypto bailed out Wormhole last month. Sky Mavis and Ronin haven’t announced any similar plans yet.