On May 5th, the Genius (GNUS) artificial intelligence network fell victim to a token minting attack, resulting in a staggering loss of approximately $1.27 million. This incident once again highlights the ongoing challenges faced by the blockchain ecosystem in achieving optimal security.
The breach began with the attacker gaining unauthorized access to the private account of the GNUS team, which interestingly started with the identifier 0x18. Within this account, the attacker discovered crucial information, including the salt data for the token. This allowed them to create a counterfeit token for the Fantom network within the Axelar bridge protocol. In total, they managed to mint 100 million fake GNUS tokens, which were then transferred to Ethereum and subsequently sold on the market.
The CEO of GNUS, who goes by the name “SuperGenius,” took to the social media platform X to shed light on the incident. They revealed that the 0x18 account was compromised after the attacker successfully infiltrated the team’s private Discord communications. SuperGenius expressed their surprise, stating, “apparently the hackers can watch private messages on discord.”
To address the exploit and minimize the damage caused, GNUS promptly announced their intention to release a new version of their token. They also issued a warning to users, advising them against purchasing the old version. Additionally, GNUS has committed to providing compensation to token holders who suffered losses as a result of the attack.
As an initial measure, the team has pledged to deposit $500,000 worth of Ether from their funds into a liquidity pool for the new token once it is launched. The remaining compensation, amounting to $500,000 in fees owed, will be locked until February 2025.
While the vulnerability of blockchain networks to potential exploits remains a concern, there is evidence to suggest that such attacks have decreased as security practices mature. A report by CertiK on April 30th highlighted that crypto users experienced the lowest number of losses from exploits in April 2021.
Nevertheless, the GNUS incident serves as a stark reminder of the vulnerabilities within the blockchain ecosystem and the urgent need for enhanced security measures. Such exploits underscore the importance of robust security protocols, thorough audits, and unwavering vigilance. By addressing these challenges head-on, the industry can work towards creating a more secure environment that instills trust in token users and holders.
