On Mar. 20, GameFi project Gala Games announced it had recently filed a lawsuit against pNetwork, the cross-chain interoperability bridge used by Gala on the BNB Smart Chain. Last November, Gala Games was exploited after an unauthorized wallet address minted over $2 billion in GALA and dumped the tokens on PancakeSwap, draining $4.5 million from the liquidity pool and causing a substantial plunge in GALA’s token price.
The lawsuit alleges that the incident was the result of “negligence and tortious interference” from pNetwork. On Nov. 7, 2022, blockchain analytics platform SlowMist alleged that the incident may have stemmed from a plain text private key leak in one of three pNetwork affiliated smart contracts on Gala. The leaked private key, as told by SlowMist, was publicly viewable on GitHub.
“The lawsuit states that (i) pNetwork admitted that it mistakenly leaked a governance key when deploying this pGALA bridge, which such key was later used by an attacker to breach the pGALA contract on the BNB chain, […]”
In a statement to Cointelegraph, a representative for pNetwork stated:
“As the pNetwork team, we would like to express our genuine surprise and concern upon hearing the recent announcement by the GALA Games Project to sue pNetwork. We would like to clarify that, three months ago, we had already submitted a comprehensive report to the Swiss authorities detailing the entire incident.”
The representative said the report included full conversations and relevant documentation, and alleged the Gala Games team deleted messages in “their role in planning, supporting, and communicating the so-called white hat intervention.” pNetwork reiterated: “We have been fully transparent and cooperative with the authorities in this matter, and we firmly believe that the truth will come to light.” Shortly after the incident, pNetwork claimed that its activity during the exploit was a “white hat move.” The statement has been challenged by cryptocurrency exchange Huobi Global.
Gala Games claim the alleged breach led to over $25 million in damages and is seeking $27.7 million from pNetwork for “out-of-pocket costs due to the breach, additional compensation for injuries, punitive damages and other relief.”
“In the event that the suit succeeds, Gala has stated that any damages, less legal fees, will be converted to $GALA and burned. Gala is also aware of the damage that pNetwork’s actions caused many other third-parties, and invites these other injured parties to…
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