What happened?
The Layer 2 network of Shiba Inu, called Shibarium, suffered a coordinated flash loan attack that exploited its bridge to Ethereum. This led to the drainage of nearly $3 million in tokens, including ETH, SHIB, and KNINE tokens. The attacker was able to take control of two-thirds of the validation process by flash-loaning 4.6M BONE tokens, which allowed them to finalize fraudulent checkpoints.
Who does this affect?
This attack affects the users and investors of Shibarium, especially those who held ETH, SHIB, and KNINE tokens on the network. K9 Finance’s DAO was also impacted, as $700,000 in KNINE tokens were affected. Security firms Hexens, Seal 911, and PeckShield, who are now involved in the investigation, were also affected indirectly.
Why does this matter?
This incident matters because it has serious market implications. It has shaken the trust of the users in the security of the Layer 2 network Shibarium, which may result in the loss of users or devaluation of the network’s tokens. Moreover, such attacks spotlight the security vulnerabilities in cryptocurrency networks, potentially affecting their overall reputation and user trust. These incidents can have significant consequences on the volatility and stability of the associated currencies.