Gala Games Employs New “Blocklist Protocol” to Freeze 4.4 Billion Hacked Tokens Within 45 Minutes of Attack
In Brief
In May 2024, Gala Games experienced an assault, causing $200 million worth of its GALA token to be created and partially traded off, but the attacker later returned over $22 million in Ethereum.
In May 2024, blockchain gaming provider Gala Games was the target of an assault that caused $200 million worth of its native GALA token to be created and partially traded off, shocking the cryptocurrency community once again. But just one day after the incident, the claimed assailant unexpectedly gave the Gala Games back over $22 million in Ethereum (ETH).
The Gala Attack and the Quick Reaction
A whopping 5 billion tokens, worth more than $200 million at the moment, were minted on May 20th by an unapproved entity. The platform claims that before the team could act, the hacker was able to sell off some 600 million of the newly created tokens. The remaining 4.4 billion tokens were frozen 45 minutes after the team became aware of the issue.
Eric Schiermeyer, co-founder and CEO of Gala Games, updated people on the issue via social networking sites like X (previously Twitter) and Discord. Schiermeyer made the audacious assertion that the group had located the supposed assailant’s residence. However, in order to preserve the integrity of the ongoing inquiry, no more information was given.
The Money Came Back to Gala Games
Things took an unexpected turn of events when the gaming platform was able to retrieve 5,913.2 ETH, or around $22.3 million, from the attacker’s wallet. Gala Games noted the importance of regulatory assistance and the efficacy of their combined efforts by attributing this successful comeback to their prompt and effective reaction as well as the participation of National regulatory agencies.
The new “GalaChain’s blocklist protocol” feature, which Gala Games disclosed, allowed them to essentially freeze the 4.4 billion GALA tokens that were still in the attacker’s control. Several community members believed that the assault was executed by a safety contractor who unintentionally revealed their wallet’s private key by connecting without a VPN, even though the identity and technique of the vulnerability have not been formally proven.
The Next Steps for the Gaming Platform
Following the event, Gala Games declared that they would use the returned ETH to purchase back and burn the corresponding GALA tokens. Schiermeyer mentioned in a Discord post that he didn’t see any other use for the ETH and that they would probably buy and burn it on Galaswap. Users were also informed by the game studio that the GALA Ethereum contract and their GalaChain assets were secure.
Gala Games got assistance from business partners, including DWF Labs, a venture capital and cryptocurrency proprietary trading company, throughout the upheaval. DWF Labs reported that it had bought 28 million GALA tokens on the open market to assist in stabilizing the token’s value, which had dropped by 14% as a result of the exploit, and voiced support for the Gala team.
Legal Conflicts and Cryptocurrency Frauds of Q1 2024
The gaming platform exploit took place in the midst of a legal dispute between Wright Thurston and Eric Schiermeyer, the company’s co-founders. The two filed lawsuits against each other in August 2023, accusing the other of stealing and mishandling GALA tokens.
Schiermeyer was accused by True North United Investments of corporate waste, conversion, and unjust enrichment. As a result, True North sought to remove Schiermeyer from his position as president and director of Blockchain Game Partners (BGP), the business that produces Gala Games. The legal feud between the co-founders, coupled with the recent exploit, has undoubtedly contributed to the significant drop in the value of GALA, which at one point plummeted by 72% from its 2023 peak.
Photo: GALA price, CoinMarketCap
Unfortunately, the Gala Games incident is not an isolated case in the crypto world. The first quarter of 2024 witnessed a surge in attacks targeting decentralized finance (DeFi) institutions and cryptocurrency services. According to reports, the total amount of money lost due to hacks and fraud-related incidents in January alone was close to $127 million, representing a sixfold increase compared to January 2023.
Notable attacks during this period included the $81.5 million theft from South Korean platform Orbit Chain, the $37 million loss suffered by Estonian crypto-payments service Coinspaid, and the $3.4 million exploit of the DeFi project Gamma Strategies. Many of these attacks have been linked to state-sponsored hacking groups, such as the North Korean Lazarus group, which has been attributed to over $1.9 billion in thefts between 2021 and 2023.
Lessons Learned for the Gala Games
The Gala Games exploit, and the surge in crypto-related attacks highlight the pressing need for robust security measures and heightened vigilance within the industry. Cybercriminals are relentlessly targeting DeFi institutions and cryptocurrency services, motivated by the potential for substantial financial gains.
Although the recovery of money in the Gala Games incident is a good thing, the attack’s wider ramifications remain. The possibility for an unapproved entity to create billions of tokens and momentarily disrupt the market prompts apprehension over the established security measures and the likelihood of such occurrences in the future.
Moreover, the legal battle between the Gala Games co-founders has shed light on the internal conflicts and governance challenges that can arise within cryptocurrency projects. Transparency, accountability, and effective leadership are crucial for maintaining trust and confidence among users and investors.
According to SwissMoney, the cryptocurrency industry must prioritize security and implement stringent measures to safeguard user assets and prevent future exploits. This may involve adopting advanced security protocols, conducting regular audits, and fostering collaboration between projects, law enforcement agencies, and regulatory bodies.
Additionally, projects should establish robust governance frameworks and clear lines of authority to mitigate internal conflicts and ensure effective decision-making processes.
Why Are These Cases Important?
The partial recovery of assets was made possible by Gala Games’ prompt response and the assistance of law enforcement authorities; yet, this occurrence serves as a clear warning of the dangers present in the cryptocurrency ecosystem.
The legal battle between the Gala Games co-founders underscores the importance of effective governance and leadership within cryptocurrency projects. Clear communication, transparency, and accountability are essential for maintaining the trust and confidence of users and investors.
Ultimately, the cryptocurrency industry must remain vigilant and adaptable, consistently reassessing and fortifying its security protocols to stay ahead of ever-evolving threats. Only through a collective effort and a commitment to best practices can the industry overcome the challenges posed by cybercriminals and ensure a secure and sustainable future for decentralized finance and blockchain technology.
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Viktoriia is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
More articles
Viktoriia is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
