The Shibarium bridge, which connects Shiba Inu’s Layer 2 network to Ethereum (ETH), suffered a flash loan attack on Friday, resulting in the loss of roughly $2.4 million in ETH and Shiba Inu (SHIB). The attack forced Shiba Inu developers to take emergency measures, including pausing staking and unstaking on the network.
How the Attack Happened?
Shiba Inu developers said the attacker took out a flash loan to borrow 4.6 million BONE tokens, the governance token of Shibarium. With these tokens, the attacker got control of 10 out of 12 validator keys, basically giving them a two-thirds majority on the network.
From there, they swept 224.57 ETH and 92.6 billion SHIB from the bridge and sent it straight to their own wallet. On top of that, they also grabbed KNINE tokens worth around $700,000 from K9 Finance. Attempts to sell these tokens were blocked when the K9 Finance DAO blacklisted the attacker’s wallet, making the tokens unsellable.
In a post on X, Kaal Dhairya, a top developer in the Shiba Inu ecosystem, described the attack as “sophisticated (probably planned for months)”. He confirmed that authorities had been contacted and said that the team is willing to consider a bounty if the stolen funds are returned.
Developer Response
The Shiba Inu team jumped into action to stop things from getting worse:
- They paused staking and unstaking, which froze the borrowed BONE tokens anyway because those tokens already had an unstaking delay.
- They also moved the stake manager funds into a hardware wallet that’s controlled by a trusted 6-out-of-9 multisig team, just to be safe.
- Security firms Hexens, Seal 911, and PeckShield were brought in to investigate the breach.
Dhairya added that the source of the breach is still unclear, noting that it is not yet known whether the compromise came from a server or a developer machine. He emphasized that the team is in “damage control mode”.
Market Impact
The attack caused BONE’s price to spike from $0.165 to $0.294 within an hour before settling around $0.202, and is currently down by 5%, settling at $0.19. SHIB went up 4.5% in the last 24 hours, showing how the market reacted to the news; it is currently down by 5%.
Shiba Inu developers told the community that once they confirm validator control is secure and complete the key transfers, all stake manager funds will be fully restored.
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