Popular metaverse coin project Gala Games (GALA) has filed a $28 million lawsuit against pNetwork. The lawsuit stems from a million-dollar exploit that allegedly took place in November 2022 due to a private key leak. The development had a negative impact on both metaverse coin prices.
Lawsuit from Gala Games to pNetwork, prices are falling!
cryptocoin.com As you follow, in November 2022, an unauthorized wallet address minted over $2 billion tokens in GALA and sold the tokens on PancakeSwap, drawing $4.5 million from the liquidity pool and causing a significant drop in GALA’s token price. Gala Games was attacked afterwards. Metaverse coin project Gala Games announced on March 20 that it is suing pNetwork in connection with this attack. Following this news, pNetwork (PNT) price saw a drop of up to 10%.
However, GALA, the token of the claimant metaverse coin project Gala Games, was also negatively affected by the development. At press time, the token has lost about 6% of its value.
Claims of the parties to the case
The lawsuit claims that the incident was the result of pNetwork’s ‘negligence and unjustified interference’. On November 7, 2022, Blockchain analytics platform SlowMist claimed that the incident may have been caused by a plaintext private key leak from one of three smart contracts connected to pNetwork at Gala. As SlowMist said, the leaked private key was publicly viewable on GitHub. In this context, SlowMist made the following statement:
The lawsuit states that pNetwork admitted to accidentally leaking a management switch while deploying this pGALA bridge. This key was then used by an attacker to breach the pGALA contract on BNB Chain.
A pNetwork representative said: “As the pNetwork team, we would like to express our genuine surprise and concern upon hearing the latest announcement made by the GALA Games Project to sue pNetwork. “We would like to make it clear that three months ago we submitted a comprehensive report to the Swiss authorities detailing the whole incident,” he said.
The representative said the report included all the interviews and related documents, claiming that the Gala Games team deleted the messages because of their ‘role in planning, supporting and communicating the so-called white hat intervention’. “We have been fully transparent and cooperating with the authorities on this issue and we strongly believe that the truth will come to light,” pNetwork said. Shortly after the incident, pNetwork claimed its activity during the exploit was a ‘white hat act’. The statement was questioned by cryptocurrency exchange Huobi Global.
History of litigation between Metaverse coin projects
Gala Games alleges that the alleged violation caused over $25 million in damages and is seeking $27.7 million from pNetwork for “out-of-pocket expenses, additional compensation for injuries, punitive damages, and other benefits due to the violation.” If the case is successful, Gala stated that any damages will be converted to GALAy and burned, after legal costs are deducted. Gala also explained, “We are aware of the harm pNetwork’s actions have caused to many other third parties, and we invite these other injured parties to contact the legal team.”
In a post-mortem analysis dated November 5, 2022, pNetwork said, “Misconfiguration of the pNetwork-powered bridge for the GALA token was noticed by the developer team, and due to the misconfiguration, ownership of the pGALA smart contract was secretly taken over.” It further explained, “The loss of ownership on the token smart contract opens up the possibility for the attacker to issue new tokens and change the pGALA at will.”
By the way, none of the allegations were proven in court. pNetwork stated that it will “continue to work closely with the Swiss authorities and provide further information as needed to resolve this issue in the best interests of all parties involved”.
