- GMX lost $42M in an exploit on Arbitrum, impacting several assets.
- 10% bounty for hackers returning funds; hacker began asset return.
- Market reaction was immediate, with GMX token price dropping 28%.
GMX experienced a significant security breach on its decentralized exchange, losing $42 million on the Arbitrum blockchain. The incident prompted swift action from the GMX team, who engaged with the hacker and initiated defensive measures on affected platforms.
Incident Details
GMX’s decentralized exchange recorded a loss of $42 million from its GLP V1 pool after an exploit on Arbitrum. GMX leadership offered a $5 million bounty to the hacker, prompting initial fund returns. The attack leveraged a re-entrancy vulnerability which previously plagued DeFi protocols.
The hacker responded to GMX’s bounty offer, agreeing to return the funds. They converted the stolen assets into Ethereum, causing a 14% increase in ETH’s price. GMX suspended trading and GLP pool activities to mitigate further risks.
The exploit affected several cryptocurrencies including USDC, FRAX, and WBTC, which were converted to Ethereum. This caused a 28% drop in GMX token value. Security observers, including SlowMist, analyzed the breach, emphasizing the need for robust contract protocols.
Response and Implications
The financial impact includes a temporary suspension of trading and other activities on GMX V1, reflecting the exploit’s severity. An immediate pause in related services was executed to secure remaining assets against further exploitation.
Past incidents in cryptocurrency history involve similar vulnerabilities exploited across DeFi protocols. Experts argue enhancements in contract security across GMX platforms, notably GMX V2, which are not susceptible to this kind of breach. Long-term, the incident may affect trust in decentralized finance systems, highlighting the importance of continuous technological improvements.
“The GMX team promptly offered the attacker a $5 million white-hat bounty, equivalent to 10% of the stolen amount, in exchange for return of the remaining funds within 48 hours.”
