Axie Infinity’s Ronin Network Lost $625M Due To A Crypto Hack

The gaming-focused Ronin Network reported a loss of more than $625 million in USDC and ETH on Tuesday. The exploit affected Ronin Network validator nodes for Sky Mavis, the publishers of the popular Axie Infinity game, and the Axie Dao, according to a blog post published by the Ronin Network’s official Substack.

An attacker “created fake withdrawals” from the Ronin bridge across two transactions using “hacked private keys.” While the Ronin sidechain has nine validators that require five signatures for withdrawals to protect against these types of attacks, the blog post mentions that “the attacker discovered a backdoor through our gas-free RPC node, which they abused to obtain the signature for the Axie DAO validator.” According to the blog post, the losses totalled 173,600 Ethereum and 25.5 million USDC, which is currently worth more than $625 million.

According to Sky Mavis, the Ronin attack was made possible in part by a shortcut taken by the company in November of last year to relieve an “immense user load” on its network, months after the game exploded in popularity in the Philippines and other countries where players relied on it as a full-time job. The system was shut down in December, but the permissions that made it possible were never revoked.

In August 2021, a hacker stole $611 million by exploiting the cross-chain DeFi protocol Poly Network. The overwhelming majority of the funds were returned.
The Ronin attacker’s Ethereum address is new, having received ETH from Binance one week ago.

According to Etherscan records, the attack occurred last Wednesday. The attacker’s address still holds the majority of the funds, but 6,250 ETH has been transferred to other addresses. Both the Ronin Bridge and the Katana AMM have been stopped while investigations continue.

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