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DEX Velocore falls victim to $10M exploit – Here are the details

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The crypto-sector welcomed the month of June 2024 with yet another major incident.

DEX Velocore falls victim to $10M exploit - Here are the details

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  • Velocore, a DEX on zkSync and Linea blockchains, suffered an exploit resulting in a $10 million loss
  • Activity on ZkSync and Linea remained unaffected though

Velocore, a decentralized exchange (DEX) operating on the zkSync and Linea blockchains, was exploited today, leading to an estimated $10 million loss. The incident was initially flagged by Officer’s Notes, a threat researcher and writer, highlighting persistent vulnerabilities in the crypto sector.

Hackers get to work

Velocore reported that hackers targeted its liquidity provider tokens, which are integral to the exchange’s operations. Following the breach, the hackers transferred over 700 ETH across chains to the Ethereum mainnet.

Source: X

Despite Velocore passing security audits conducted by Zokyo, Hacken, and Scalebit, the hackers managed to exploit the decentralized exchange. Concurrently, the Linea Blockchain saw a temporary halt in block production during the hack, lasting about an hour before normal operations resumed. The reasons behind this disruption remained unclear at the time of writing.

Fortunately, Velocore’s stable pools were unaffected, allowing for the withdrawal of funds from these reserves. The team is currently working with security experts and it has contacted centralized exchanges (CEXs) to freeze the stolen assets in an effort to mitigate further damage.

According to Velocore, the team has identified the exploit mechanism and is now establishing an on-chain negotiation process. A post-mortem review is being prepared too, with the team also tracking the exploiter using the clues left behind.

Here, it’s worth noting that Velocore on the Telos mainnet remained unaffected. They are collaborating with the foundation while functionalities are frozen.

Source: X

As expected, community members who lost their funds were quick to demand a refund from Velocore. At press time, however, the project was yet to address its compensation and refund plans.

Collateral damage

Velocore’s native token VC was also affected by news of this exploit. At the time of writing, VC was down by 5%, with the altcoin trading at $0.02267. Subsequently, as news of the hack broke out, volumes hiked by over 600% too.

For their part, protocols zkSync and Linea remained relatively unaffected by this update. The overall number of transactions remained relatively the same for both networks. Moreover, the daily active addresses on the network also remained stable despite this unfortunate episode.

Source: Artemis

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Himalay is a full-time journalist at AMBCrypto. A Computer Science graduate, Himalay writes about crypto with a special focus on the latest coin-based updates. He is a fan of gonzo journalism, transgressive fiction, heavy metal, and Manchester United.
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