Gala Games Suffers $240M Exploit, Alleges Internal Control Mess
Gala Games acknowledged the attack, which resulted in 5 billion GALA tokens being minted and swiped. Gala Games faulted its internal control mess for aiding the attack, resulting in a loss of 5 billion tokens via the Gala smart contract.
Gala Games labeled the exploit an isolated incident where the attacker swiped tokens valued at $240 million.
An early Tuesday, May 21, post on X by OxQuit reported a compromised admin address behind the minting of 5 billion GALA valued at $200M.
The post by the pseudonymous developer of the smart contract revealed that the exploiter was systematically selling GALA tokens.
Gala Games Attacker Swipes $240M Tokens
GALA Games chief executive Eric Schiermeyer issued an update with a post published to the Gala Discord server nearly two hours following the hack discovery. The executive confirmed the exploit and assured the team that within 45 minutes of discovering the attack, it secured and eliminated unauthorized access to the attacked Gala contract.
Schiermeyer assured the community that the ETH contract for $GALA remained secure and protected via a multi-sig wallet. He added that the ETH contract did not suffer a compromise.
Ultimately, the actor behind the exploit sold 600M of $GALA using decentralized exchange (DEX) Uniswap valued at $29M. The exploit news weighed heavily on the $GALA, with the price plunging by 20% from $0.048 to $0.038 within an hour amid the accelerated selling pressure.
Gala Games Freezes 4.4 Billion Tokens
Schiermeyer replicated the update to the Gala Games X account, confirming the freezing of the wallet involved. The freeze affected 4.4 billion GALA tokens, implying they were effectively burned. One cannot transfer and sell the frozen tokens, thus considered destroyed.
Schiermeyer admitted the internal controls were in a mess that should not have happened. The executive revealed that the team was undertaking steps to avert the recurrence of the exploit.
Schiermeyer confirmed working with the US authorities, including the Department of Justice (DOJ) and Federal Bureau of Investigation (FBI), as they zero in on the culprit.
A subsequent tweet by Gala Games labeled the attack as isolated, though it did not offer a detailed explanation.
Earlier, OxQuit attributed the attack to rogue Gala Games admin for the systematic sale of the tokens.
The developer faulted the systematic sale of exploited tokens, lamenting the absence of decentralization in the protocol. The post expressed support for design to avert evil, particularly proposing outlaw contracts where admin privileges allow arbitral minting of tokens without restrictions.
GALA Joins Arweave in Red Zone
Meanwhile, the GALA token regained from the sudden drop to test $0.04362 to register a slight increment. The rebound is attributed to the market-wide surge where Ethereum rallied 20% following Bloomberg revising the likelihood of spot Ethereum approval to 75%.
GALA is leveraging the residual effects of the resurgent global crypto market that, at press time, is 8.1% up to test $2.75 trillion, as per CoinGecko data. The market swing is offsetting the impact of the GALA tokens’ exploit, limiting the dip to 5.5% as the token exchanges hands at $0.04132.
The dip has eroded the value of GALA, whose market capitalization is estimated at $1.686B as per CoinGecko. GALA is the most significant loser, joining Arweave (AR) in the red zone at press time 08:30 UTC, down by 4.7% to $45.99 as per CoinGecko.
The exploit-fueled selling pressure has eroded GALA’s seven-day run to only a 0.20% increase. GALA token underperforms the global crypto market, which rallied 16.10% in the past week. Similarly, it trails Layer 1 cryptos that have grown by 14.80% in the past week.
Gala Games Internal Squabbles
The exploit reignites the internal low where Schiermeyer leveled charges against fellow co-founder Wright Thurston in 2023, alleging their role in stealing GALA tokens valued at $130M.
The lawsuit revealed the movement of GALA tokens from the company wallet to 43 wallets that Thurston controls. The stolen tokens would later sell between September 2022 and May last year.
Thurston would file a countersuit accusing Schirmer of neglecting his advisory input when executing transactions that involved multi-dollar sell-off of company assets.
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