Hedera Mainnet Hacked! Service Token Stolen
EDITOR'S CHOICE

Hedera Mainnet Hacked! Service Token Stolen

written by John Murphy | March 10, 2023

Hedera Hashgraph, an enterprise-grade distributed ledger technology (DLT) platform, has confirmed that an exploit on Hedera Mainnet led to the theft of service tokens. According to an official blog post, the attack was discovered on March 1, 2021, and the company’s team immediately took action to halt the exploit and secure the network.

Hedera said the smart contract exploit on March 9 did not impact the network or its consensus layer. Hedera, the team behind the Hedera Hashgraph distributed ledger, has confirmed a smart contract exploit on the Hedera mainnet that led to the theft of multiple liquidity pools of his tokens.  

According to Hedera, the attackers targeted a decentralized exchange (DEX) liquidity pool token whose code was derived from Ethereum’s Uniswap v2 ported for use in the Hedera Token Service.  

The Hedera team explained that the suspicious activity was discovered when the attackers attempted to move stolen tokens across a Hashport bridge consisting of SaucerSwap, Pangolin, and HeliSwap liquidity pool tokens. Operators acted quickly to bring the bridge to a temporary stop.

Hedera has not confirmed the number of tokens stolen.

On February 3, Hedera upgraded its network to convert Ethereum Virtual Machine (EVM) compatible smart contract code to Hedera Token Service (HTS).  

Part of this process involves decompiling the Ethereum contract bytecode to HTS. His Hedera-based DEX SaucerSwap believes the attack vector originated from there. However, Hedera did not confirm this in his last post.  

Previously, Hedera shut down network access on March 9 by shutting down its IP proxy. 

Hedera Hashgraph stated that the attack was due to a vulnerability in its smart contract code, which was exploited to mint an additional 58.2 billion HBAR tokens. The hackers then used the tokens to transfer them to multiple accounts, selling some on exchanges and even using HBAR to vote on network governance proposals.

The company quickly remedied the situation by invalidating the affected tokens and removing them from the market. In total, the hackers reportedly managed to steal 8,207,779.00734558 HBAR tokens worth $3 million at the time of the attack. Hedera said that no user funds were compromised, and the attack did not affect the network’s security or the integrity of data stored on it.

“While we are disappointed that this event occurred, we are extremely proud and thankful for the swift and comprehensive response of the Hedera community, council members, and staff,”

said Hedera’s co-founder and CEO, Mance Harmon.

“We are confident that the swift and decisive action we took prevented further harm to our community and our network.”

Hedera Hashgraph has been working closely with various cybersecurity firms to investigate the attack and identify the source of the vulnerability. The company said that it had implemented additional security measures to prevent similar attacks in the future, including enhancing its smart contract code review process and conducting thorough audits of existing code.

This incident comes as a reminder that even the most secure blockchain networks are not completely immune to security threats. The importance of conducting regular security audits and implementing robust security measures cannot be overstated, especially for companies operating in the blockchain and cryptocurrency space.