Axie Infinity, the popular blockchain game, has lost over $600 million worth of crypto to hackers. It is believed that the platform is now working with law enforcement to get to the bottom of how crypto assets worth more than $600 million were stolen.
How The Hack Happened
The hackers exploited a connection between Ronin’s blockchain and other crypto coins, called Ronin Bridge, and used it to steal the crypto assets. This attack remained unknown since last week and was only discovered when a player in the game tried to withdraw their crypto but was unable to do so. During their inquiry, the hack was uncovered.
According to Sky Mavis, the game’s developers, the hackers used the previously unknown backdoor into the system to move Ronin tokens into Ethereum. The hackers then accessed private keys and used them to bypass Ronin’s transaction validation system, which should have stopped them.
Where Are The Tokens?
The tokens are now in an Ethereum wallet, controlled by those behind the hack. The information in the Ethereum wallet can be publicly viewed. However, it is not possible to determine who holds the coins. For now, they have not seen any movement. The criminals may try to launder the coins later by splitting them up and trying to mix them using tumblers. Later they might try to cash out via exchanges.
DeFi Losses
The DeFi sector experienced huge losses in 2021 valued at nearly $2.3 billion. The main reason for this is that it is still relatively new, but has experienced massive growth. Consequently, there has not been enough time to test the networks for vulnerabilities, which hackers often exploit to steal crypto. Due to its decentralized nature, these transactions are not reversible. It also makes it harder for law enforcement to hold hackers accountable since they do not leave a trail of their details.
However, Axie Infinity can still work with exchanges to ensure that the tokens are held if the hackers try to move them to a centralized exchange.
Updates on the Hack
According to a recent update from the Axie Infinity COO, they are still conducting a forensic overview to understand the whole situation. The COO revealed that the hack was made possible via a social engineering attack and human error. As such, the code was still solid. He added that they were committed to ensuring all stolen funds were recovered or reimbursed to those affected. For now, the Ronin Bridge remains closed.
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