The latest crypto hack has targeted a gaming-focused blockchain network that supports the popular video game Axie Infinity. Hackers made off with around $625 million worth of Ethereum and USDC, two cryptocurrencies, in one of the biggest crypto hacks of all time.
The hackers breached the Ronin Network, an independent and Ethereum-compatible blockchain developed by Axie Infinity publisher Sky Mavis. Axie Infinity co-founder Jeff Zirlin discussed the hack on stage during a keynote address at the NFT LA conference.
“We realized that the Ronin network has been exploited for 173,000 [Ethereum] and about $25 million in USDC,” Zirlin said under a screen with the words “State of the NFT Union: Where we are today and what’s next.” USDC is a so-called stablecoin whose value is tied to the US dollar.
“It’s one of the biggest hacks in history,” he added, vowing to keep building. “We believe in a future of internet that is open and owned by the users.”
Last year, an anonymous hacker stole approximately $600 million in cryptocurrency from the Poly Network, a decentralized financial network, in what was called the largest crypto heist in history. The hacker later returned it.
John Reed Stark, a former head of the Security and Exchange Commission’s Office of Internet Enforcement, told CNN that the latest hack “is a sobering reminder of how vulnerable Web3 marketplaces are to cyberattacks.” (Web3 refers to the idea of a decentralized internet powered by the blockchain, the technology that underpins various cryptocurrencies.)
“The entire web3 marketplace is so full of chaos and lawlessness, we may never know the truth of what happened,” Stark said. “And unlike US financial firms that have to report cyber attacks fairly, accurately, quickly, etc., NFT and other Web3 marketplaces don’t have to report anything at all.”
Axie Infinity is a successful web3 game where players use NFT digital pets, called Axies, to interact with the game’s community. Players can use their axes to battle other players and breed new axes. In 2021, the game’s creator raised $152 million in Series B funding led by the famous VC fund Andreessen Horowitz.
According to a blog posted to the Ronin network’s official Substack on Tuesday, the system has halted activity on networks that allow players to convert assets in the Axie Infinity universe and convert currency between the Ethereum and Ronin blockchains. Players holding digital funds on the Ronin network are currently unable to transact.
Beginning March 23, attackers compromised private keys used to validate transactions on the network, according to the company’s blog post. These keys allowed the malicious actors to forge fake withdrawals. The activity went unnoticed until a user was unable to withdraw money and submitted a report.
The network promised to “ensure that no user’s funds are lost,” according to the blog post. Most of the stolen funds currently remain in the hacker’s crypto wallet, the company said.
“We are working with law enforcement, forensic cryptographers and our investors to ensure that all funds are recovered or refunded,” the network tweeted.
At the NFT LA conference, some attendees who just learned about the hack were unfazed by the news.
“I don’t think the coin is going down that bad,” said Justin Seeley, who owns Axie Infinity NFTs and tokens, referring to Axie Infinity’s Ronin token which had plunged 20% on news of the hack.
“Twenty percent… that’s not too bad. Other projects would have fared much worse, added Ben Wright, who also says he is invested in Axie
“We are in crypto; 20% is nothing,” Seeley said.
Other NFT play-to-earn (P2E) games at the conference were surprised to hear the news
“Axie got hacked!” two workers told each other in disbelief at a booth for Polker, a P2E poker game.
“It worries me, but I like it,” said Conor Thacker, Polker’s chief executive. “The more exploits that happen now, the less will happen in the future.”