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In November 2022, due to pNetwork's "negligent and tortious intervention", unauthorized wallet addresses used the Gala Games vulnerability to mint more than 2 billion US dollars of GALA tokens out of thin air, and transferred them to PancakeSwap, withdrawing 450 from the liquidity pool. million US dollars, resulting in a sharp drop in the price of GALA tokens. According to previous news from the blockchain analysis platform SlowMist, the incident may have been caused by the leakage of a plaintext private key in the three pNetwork-affiliated smart contracts on Gala, and the leaked private key can be publicly viewed on GitHub.
According to the lawsuit, pNetwork admitted that while deploying the pGALA bridge, it mistakenly disclosed an administrative key that was later used by attackers to break out of the pGALA contract on the BNB chain.
Gala stated that due to the above-mentioned breach of contract that caused a loss of more than US$25 million, they will claim US$27.7 million from pNetwork to pay related losses and compensation. If the lawsuit is successful, any losses (less legal fees) will be converted to $GALA and destroyed. At the same time, it also stated that it would invite more relevant victimized third parties to contact its legal team for joint claims.
Among the many victimized third parties, the one with the largest losses should be the encryption exchange Huobi. According to previous reports, the additional issuance of pNetwork caused the GALA token on the BNB chain to drop directly from 0.04 USD to 0.0000045 USD. There was a huge price difference between the GALA price on the chain and the centralized exchange, and a large amount of funds poured into the purchase of GALA tokens on the BNB chain. Tokens and recharge to the centralized exchange for sale. Without knowing it, Huobi failed to close the recharge channel in time, and the price of GALA tokens on the platform also dropped from US$0.04 to US$0.0003, resulting in huge losses for relevant users and Huobi.
According to Huobi’s announcement of “Truth Explanation for the GALA Incident”, the pNetwork team has never stated that it will attack the GALA token loophole by issuing a large number of Tokens, and completely concealed its attack behavior from the exchange. In ten minutes, the contract loophole was used to issue 55.6 billion tokens to carry out the attack, and the exchange was not given any reaction time during the attack. After the investigation, it was found that the vulnerability was caused by pNetwork engineers who mistakenly left the key in the contract 67 days ago, leaving hidden dangers for subsequent tragedies.
In the announcement, Huobi also stated: pNetwork’s behavior is not a so-called white hat attack, or a hacker attack with malicious profit as the ultimate goal. We believe that this is a premeditated hacking attack planned by the pNetwork team, and the white hat attack is just an illegal excuse sought by the pNetwork team to avoid legal sanctions.
It is reported that after the incident, Huobi issued five consecutive announcements to recover the losses of this incident, and communicated with pNetwork and Gala Games many times, expressing that it will cooperate with global partners to take all legal measures including class action and reporting. The means of investigation and criminal prosecution of pNetwork's main managers should be fully responsible for this incident.
At present, Huobi has contacted the legal team of Gala Games and will join hands with them to defend the rights and interests of users through legal means. Huobi said: It will continue to pay attention to the relevant progress of the GALA incident, put "user asset security" in the first place, build a safer, transparent, and compliant trading environment, and comprehensively promote the healthy development of the industry.
