On March 20, GameFi project Gala Games announced its recent lawsuit against pNetwork, the cross-chain interoperability bridge used by Gala on the BNB Smart Chain. Gala Games exploited after unauthorized wallet addresses minted over $2 billion in GALA in November 2022 festival And sold the tokens on PancakeSwap, draining $4.5 million from the liquidity pool and causing the price of GALA tokens to drop sharply.
The lawsuit alleges that the incident was caused by pNetwork's "negligent and tortious interference." On November 7, 2022, the blockchain analysis platform SlowMist claimed that the incident may have originated from the leakage of the plaintext private key of one of the three pNetwork-affiliated smart contracts on Gala. As SlowMist noted, the leaked private keys are publicly viewable on GitHub.
In a statement to Cointelegraph, a representative for pNetwork said: "As the pNetwork team, we would like to express our genuine surprise and concern when we heard that GALA Games Project recently announced that it is suing pNetwork. We would like to clarify that we have submitted a detailed report to the Swiss authorities three months ago , detailing the entire incident.”
The representative said the report included the full conversation and related documents, and claimed that the Gala Games team removed information about "their role in planning, supporting, and communicating the so-called white hat intervention." PNetwork reiterated: "We have been fully transparent and cooperating with the authorities on this matter, and we firmly believe that the truth will come out." Shortly after the incident, pNetwork claimed that its activities during the exploit were "white hat operations." The statement was disputed by cryptocurrency exchange Huobi Global. Gala Games claims that the alleged breach resulted in more than $25 million in damages and is seeking $27.7 million from pNetwork for "out-of-pocket costs, additional damages, punitive damages, and other relief arising from the breach ".
In a post-mortem analysis dated November 5, 2022, pNetwork stated that the development team noticed a "misconfiguration of the pNetwork-powered GALA token bridge" and that "ownership of the pGALA smart contract (deployed on the BSC) And was secretly taken over": "Losing ownership of the token smart contract opens up the possibility for an attacker to create new tokens and alter pGALA at will."
Additionally, pNetwork writes: "The person currently retaining ownership of the smart contract (from now on, referred to as the 'attacker') did not actually perform any hacking, but this situation highlights a high security risk that must be quickly mitigated."
Gala also claimed that on Nov. 5, 2022, pNetwork formulated a plan to return in full “the BNB assets collected from white hat transactions in the pool,” but allegedly failed to follow up on Nov. 11. Continue with the plan, 2022. In a Telegram post, pNetwork stated that the first part of its recovery plan involving GALA tokens is “completed,” but the second part involving BNB
Binance Coin Token “remains on hold.” None of the allegations have been proven in court. PNetwork said it "will continue to work closely with the Swiss authorities and provide any further information as required in order to resolve this matter in the best interest of all parties involved."
