GMX’s
$0
first-generation decentralized exchange (DEX) was forced to suspend trading on July 9 after it suffered a security breach that resulted in the loss of around $40 million worth of cryptocurrency.
GMX V1, which first launched on the Arbitrum
$0.4110
network in 2021 and later expanded to Avalanche
$21.14
, allows users to trade perpetual futures while liquidity providers earn fees through a token called GLP. This token is backed by a pool of assets that users deposit.
However, that pool was emptied after an attacker exploited a flaw in the system, which rendered GLP holders unable to redeem their tokens for the expected value.
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Data on GMX’s website showed that roughly $10 million in each Bitcoin
$118,641.95
and USDC
$0.9987
, about $8.5 million in Ethereum
$2,966.55
, nearly $1 million in USDT
$0.9986
, and a large amount of Uniswap
$8.49
and Chainlink
$15.61
tokens were stolen.
Suhail Kakar, a developer at TAC, explained on X that the exploit was a type of “re-entrancy” attack, where the smart contract was tricked into believing no funds had been withdrawn yet. This allowed the attacker to repeatedly create new GLP tokens using the same original funds.
Blockchain security firm PeckShield noted that the wallet used in the attack had been funded through Tornado Cash, likely to hide the trail. The stolen funds are currently stored in that wallet, while investigators attempt to track the transactions.
In response, GMX stopped all V1 trading on both Arbitrum and Avalanche, and also disabled GLP minting and leverage trading.
Resupply, a decentralized finance (DeFi) platform, confirmed a breach in one of its markets, which resulted in the loss of around $9.6 million worth of crypto assets. How did the incident happen? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
