- GMX, a decentralized crypto futures exchange, was hacked for $42 million.
- The attack targeted the protocol’s first version on the Arbitrum blockchain.
- All trading and key functions on both Arbitrum and Avalanche have been paused for security.
- The protocol’s team is investigating how the exploit happened and offered a 10% bounty for the stolen funds’ return.
- The newer version of GMX was not affected, but similar platforms may be at risk.
A Hacker exploited the decentralized futures exchange GMX on Wednesday, stealing about $42 million in digital assets from the platform’s first protocol version on the Arbitrum blockchain.
According to transaction records, the attacker moved assets from GMX at 1:34pm London time and quickly transferred approximately $9.6 million out from Arbitrum to Ethereum. Following the breach, GMX disabled trading and the minting and redeeming of its liquidity token, GLP, on both Arbitrum and Avalanche in order to prevent further losses. In a statement, the team said, “Core contributors are investigating how the manipulation occurred, and what vulnerability may have enabled it.”
Among the stolen assets were $10 million in Legacy Frax Dollars, $9.7 million in USDC, and smaller sums of Wrapped Bitcoin and Ether. Security firm Cyvers traced the origin of the attacker’s funds to the privacy platform Tornado Cash, and reported that a malicious smart contract was used to drain GMX’s funds. The exchange’s native token dropped by 28% after the incident and most recently traded at $11.20.
GMX addressed the hacker directly after the attack, sending an onchain message offering a 10% “white hat” bounty if the funds are returned within 48 hours. The protocol emphasized that the exploit only affected the first version and its GLP pool, and assured users that the second version’s smart contracts are secure. The first version’s contracts remain live, although most trading now takes place on version two, which launched in 2023.
There are concerns for other decentralized finance (DeFi) platforms that forked GMX’s first version, as these copies collectively hold more than $27 million. According to DeFi tracking service DefiLlama, these protocols may face similar risks if the flaw is widespread.
GMX continues to work with its security partners and has promised to release a full incident report once its internal investigation is complete.
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