The Shiba Inu ecosystem faced a significant disruption due to a hacking incident that was detailed by the development team on Saturday. The report highlighted the mechanics of the attack, along with the assets that were affected and the immediate measures taken by the team to mitigate damage.
The incident was characterized as a “Flash Loan Attack” on Shibarium, Shiba Inu’s Layer 2 network. According to the official social media account associated with the SHIB token, the attacker utilized a flash loan to acquire 4.6 million Bone ShibaSwap (BONE), the governance token of Shibarium. This maneuver temporarily granted the attacker validator voting power, enabling the deployment of harmful software on the network. The Shiba Inu team emphasized that without the utilization of the flash loan, the attacker would not have secured the necessary two-thirds majority to carry out their malicious activities.
Flash loans are a unique financial instrument in the cryptocurrency space, allowing individuals to borrow assets without collateral, provided that the funds are returned within the same blockchain transaction. While typically employed for cost-effective arbitrage between markets, these loans have increasingly been exploited in more nefarious ways by cybercriminals.
After the attack, the perpetrator repaid the flash loan using assets stolen from the bridge. The malicious act drained approximately 224.57 Ethereum (ETH), valued at around $1.03 million, alongside 92.6 billion Shiba Inu tokens (SHIB), amounting to about $1.27 million. Additional tokens within the Shiba Inu ecosystem, including Doge Killer (LEASH), Shiba Inu TREAT (TREAT), and Shifu (SHIFU), were also affected, although these assets have not yet been moved or liquidated.
In response to the compromise, Shiba Inu’s team took swift action by pausing all staking and unstaking functions to safeguard community assets. They also moved stake manager funds to a more secure hardware multisig address, requiring multiple signatures for transactions, thus enhancing security. Furthermore, the team has engaged with blockchain security firms, including PeckShield, to conduct a comprehensive forensic investigation into the attack.
Kaal Dhairya, a prominent member of the Shiba Inu ecosystem, expressed a willingness to engage with the attacker in hopes of recovering the stolen funds. Dhairya indicated, “If the funds are returned, we will not press any charges and are willing to consider a small bounty.”
As for the market implications following the attack, the price of SHIB was noted at $0.00001370, reflecting a decrease of 3.18% over the past 24 hours, based on data provided by Benzinga Pro. This incident raises important questions about the security of decentralized finance (DeFi) protocols and the ongoing challenges faced by cryptocurrency projects in maintaining the integrity and safety of their ecosystems.
