Hacker Returns $22M to Gala Games Post GALA Token Exploit

Table of Contents

• Exploited Funds Returned
• Swift Response and Blocklist Protocol
• Governance and Future Actions
• Market Reaction and Stabilization Efforts

The hacker who exploited Gala Games' system to mint and sell 600 million GALA tokens returned $22 million in Ether after swift action and federal law enforcement involvement.

Exploited Funds Returned

Gala Games has recovered approximately $22 million in Ether following a severe exploit on May 20. The breach involved an unidentified hacker minting 5 billion new GALA tokens through compromised internal controls. The attacker subsequently sold 600 million of these tokens on decentralized exchanges, acquiring nearly 6,000 ETH tokens in the process. 

On May 21, the hacker's wallet returned 5,913.2 ETH, valued at around $22.3 million, to a wallet controlled by Gala Games. Jason Brink, President of Blockchain at Gala Games, confirmed the transaction by sharing on-chain data showing the returned funds. The data indicated the address labeled as the Gala Games Exploiter had returned ETH worth approximately $22.37 million at current prices.

Swift Response and Blocklist Protocol

In a blog post dated May 21, Gala Games attributed the recovery of the funds to their “swift, effective response and the involvement of Federal law enforcement agencies.” Immediately upon detecting the suspicious transfer of $200 million in GALA tokens, Gala activated their new GalaChain’s blocklist protocol, a security feature designed to halt the circulation of compromised tokens, successfully freezing 4.4 billion of the 5 billion newly minted GALA tokens within 45 minutes. 

CEO Eric Schiermeyer disclosed that the team collaborated with agencies such as the FBI and DOJ to identify the hacker.

Governance and Future Actions

Gala Games clarified that this incident was isolated to the Ethereum network. They announced plans for a new Founder’s Node ecosystem governance vote to determine whether the blocklisted GALA tokens should be considered burned, aligning with Gala’s dynamic supply distribution model as outlined in the Gala Ecosystem Blueprint. 

The unexpected return of the ETH tokens leaves Gala with an unplanned $23 million windfall. Schiermeyer mentioned in a Discord post that the team is likely to use the returned ETH to buy back and 'burn' an equivalent amount of GALA tokens. Burning tokens refers to the permanent removal of tokens from circulation, reducing the total supply and potentially increasing the value of the remaining tokens.

Market Reaction and Stabilization Efforts

The market has responded positively to these developments. DWF Labs announced it had purchased 28 million GALA tokens on the open market to stabilize the token’s value and protect its investment. As a result, GALA has experienced a 0.4% increase in 24 hours, reaching $0.043, and a 9.3% rise over the past week.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.