Gala Games, the company behind the GameFi project, revealed on March 20 that it had just started legal action against pNetwork, demanding $28 million from them. Gala used this cross-chain interoperability bridge in BNB Smart Chain.
The case was initiated due to a million dollar scam that reportedly took place in November 2022 due to the compromise of a private key.
Gala Games was compromised in November 2022 when an illegal wallet address produced over $2 billion worth of GALA tokens and dumped them on PancakeSwap. This caused a significant drop in the price of GALA tokens and drained $4.5 million from the liquidity pool.
pNetwork, in a recent statement, described its shock at Gala’s recent move.
According to a postmortem study published by pNetwork on November 5, 2022, the development team discovered an “incorrect configuration of the pNetwork-powered bridge for the GALA token.” As a result, ownership of the pGALA smart contract (implemented in BSC) had been surreptitiously seized.
If an attacker loses control of the token smart contract, they could create new tokens or make arbitrary changes to pGALA.
On November 5, 2022, Gala claimed that pNetwork had planned to refund all the BNB assets gathered through the pool’s whitehat drain. However, on November 11, 2022, the company abandoned those plans. pNetwork claimed in a Telegram message that the first stage of its recovery plan, including GALA tokens, has been completed, while the second stage, involving BNB tokens, was on hold.
Gala: pNetwork negligence led to hack
According to the accusations made in the complaint, the event occurred as a direct consequence of “negligence and willful interference” on the part of pNetwork. Blockchain analytics platform SlowMist said on November 7, 2022 that the event could have been caused by a plaintext private key breach in one of the three smart contracts connected to pNetwork in Gala. According to SlowMist, anyone on GitHub could see the compromised private key.
According to the representative, the report contains full discussions and relevant documents. The representative also alleged that the Gala Games team deleted texts as part of their involvement in organizing, supporting, and spreading the so-called white hat intervention.
In a statement issued shortly after the event, pNetwork said that its actions during the exploit constituted a “white hat maneuver.” Cryptocurrency exchange Huobi Global has raised concerns about the validity of the announcement.
Gala Games is seeking $27.7 million in damages from pNetwork for “breach-related out-of-pocket expenses, additional compensation for injuries, punitive penalties, and other remedies” after claiming the alleged breach cost the company more than $25 million. .
The firm has stated that any damages, less legal expenses, will be converted to $GALA and burned if litigation is successful. Gala is also aware that numerous additional third parties were harmed by pNetwork’s activities and encourages such parties to contact the firm’s legal representatives in accordance with the firm’s allegations.
The claims have not been tested in a legal setting. PNetwork is committed to operating closely with the Swiss authorities and providing further information necessary to address this issue in the best interest of all parties involved.
