QUADRIGA INITIATIVE
CRYPTO WATCHDOG & FRAUD RECOVERY PLATFORM
A COMMUNITY-BASED, NOT-FOR-PROFIT
UNKNOWN
JULY 2021
GLOBAL
FM GALLERY
DESCRIPTION OF EVENTS
"A blockchain-based distribution platform for NFT artworks." "Life is short, but for FM Gallery and outstanding NFT artists, art is eternal. It is FM Gallery's mission to explore the uncertainties of the present and the possibilities of the future, and to continuously discover new NFT artworks."
"ChainSwap is a bridge protocol that links the Ethereum and Binance Smart Chain (BSC) blockchains." "It supports Binance Smart Chain, Ethereum, Polygon, and Huobi Eco Chain." "The ChainSwap hacker identified and exploited a vulnerability in the ChainSwap smart contract. This vulnerability enabled them to steal and mint new tokens for various protocols that were using the bridge to trade across Ethereum and BSC."
Investigation by ChainSwap revealed "a bug in the token cross-chain quota code. The on-chain swap bridge quota is automatically increased by the signature node, which is intended to be more decentralized without manual control. However, due to a logical flaw in code, this led to an exploit by allowing invalid addresses which weren’t whitelisted to automatically increase the amount."
"The attacker managed to take control of the projects’ BSC contracts by exploiting ChainSwap. The attacker minted tokens directly to their address, then sold them on BSC’s most popular decentralized exchange, PancakeSwap." "[T]he attacker used the PancakeSwap exchange to convert the stolen tokens to WBNB, DAI, and other tokens."
"Kindly note that FMG mapping token(0x72a167c9783b7d4fff91d43a60e00d25957a50f8) on BSC is now invalid. We apologize for the inconvenience and will provide you with an update from Chainswap as soon as possible."
"We are sorry to annouce that Chainswap had been hacked, correspondingly FMG tokens on ChainSwap bridges were also affected."
"We are now working with @chain_swap team to assess the situation and strategize a best solution. We highly appreciate your patience and understanding."
"Chainswap said it had already repurchased a small amount of the affected tokens from the market and returned the contract wallet. The rest will be paid out in full by the Chainswap vault." "ChainSwap team has now prepared and executed a compensation plan in consensus with the affected projects." "In order to bring everybody a more rigorous, efficient bridge, the next development model of ChainSwap will be adjusted to ensure maximum safety."
"For now, Chainswap has temporarily closed its cross-chain bridge." "ChainSwap worked with the police and OKEx to identify the attackers, and managed to negotiate the recovery of Corra and Rai tokens. An initial email with the attackers suggested the attackers return $1 million."
“Sorry for the trouble, you sound genuinely like great people but money is money,” the attackers of the earlier exploit told ChainSwap.
"ChainSwap is excited to announce that we have successfully integrated with Anyswap and Chainswap bridge is now live. We thank our community for its patience during the last few weeks."
"FM Gallery is upgraded and renamed as M Space." "M Space (mspace.org) will provide digital creators with brand-new platforms and services. Its business scope includes but not limited to the sale and management of NFTs and other digital products. Via the customer base, expertise and block chain technology accumulated from their digital asset business, M Space aims to build a market where NFTs can be traded transparently. With the advantages of cooperation and promotion with excellent creators, M Space will continue to introduce more attractive high-quality products in the NFT market."
"M Space strongly believes that blockchain technology can tackle the pain points of the traditional industries, such as poor liquidity and unenvironmental protection of physical works, and reduce operating costs as well. In the future, NFT will play an active role in the field of digital assets to empower digital creators and provide more diverse ways of carrying and presenting high-quality works."
FM Gallery is a service which enables the sale and purchase of NFTs. Their token used ChainSwap to exist on multiple blockchains, which required some funds to be stored in the smart contract hot wallet.
The ChainSwap bridge was hacked, and the attacker was able to obtain the tokens, which were sold. A delayed announcement was posted, followed a couple weeks later by a rebranding of the FM Gallery project. There is no word whether any affected users have been made whole, as most other projects similarly breached have done.
HOW COULD THIS HAVE BEEN PREVENTED?
Theoretically, decentralized finance will eventually result in hackers having exploited every vulnerability that exists. However, it's impossible to know when that will occur and if a contract is truly secure, as opposed to there still being an exploit that just hasn't been noticed yet. For any complex smart contract, it's impossible to prove security and plenty of fully audited contracts have been exploited.
In this situation, there was luckily not much taken. Platforms should, generally, be prepared for the full loss of all assets stored in hot wallets (including smart contracts). Assets that do not need to be accessed quickly should be stored securely in a simple offline multi-signature wallet.
Chainswap Black Sunday, over 20 DEFI projects were stolen - 律动BlockBeats (Aug 24)
ChainSwap Exploit 11 July 2021 Post-Mortem | by ChainSwap | Medium (Aug 24)
MappableToken | 0x06c24002f43e3AF904EeEc581734EA3A7DbF355E (Aug 24)
ChainSwap Exploit Leads to Multi-Million Loss For DeFi Tokens - Decrypt (Aug 24)
@chain_swap Twitter (Aug 24)
Explained: The ChainSwap Hack (July 2021) - Halborn (Aug 24)
$8 Million Lost in Major ChainSwap Exploit | Crypto Briefing (Aug 24)
ChainSwap re-launch, we are live. ChainSwap is excited to announce that… | by ChainSwap | Medium (Aug 29)
Rekt - ChainSwap - REKT (Aug 29)
blocksec-incidents/2021.md at main · openblocksec/blocksec-incidents · GitHub (Aug 11)
Blind Box (Sep 17)
@fm_gallery Twitter (Sep 20)
@fm_gallery Twitter (Sep 20)
M Space (Sep 20)
Chainswap Post Mortem Deep Dive Into The Exploit (May 7)
Random Numbers Don’t Lie: A Closer Technical Look into Recent DeFi Hacks (May 7)
