Velocore, a decentralized exchange (DEX) on the zkSync and Linea blockchains, was exploited, resulting in losses of approximately $10 million.
The incident was initially reported by threat researcher and author “Officer’s Notes”. It highlights the continued vulnerabilities of the cryptocurrency sector.
Velocore investigates hacking
Velocore reported that hackers targeted liquidity provider tokens. This is essential to the operation of the exchange. Following the breach, hackers have already transferred more than 700 Ethereum (ETH) through the chain to the Ethereum mainnet.
According to Velocore’s documentation, the exchange has passed security audits conducted by Zokyo, Hacken, and Scalebit. Nonetheless, hackers have succeeded in exploiting decentralized exchanges.
At the same time, Linea Blockchain suffered a temporary halt in block production due to a hack. This pause lasted about an hour before normal operations resumed. The cause of this confusion is still unclear.
Read more: Cryptocurrency Project Security: A Guide to Early Threat Detection
Fortunately, Velocore’s stable pool was not affected, allowing funds to be withdrawn from these reserves. The team is working with security experts and has contacted centralized exchanges (CEXs) to freeze stolen assets to mitigate further damage.
“We have identified an exploit mechanism and are setting up an on-chain negotiation process. A posthumous article is in the works. They leave clues and track down the exploiters. More updates coming soon. Velocore on the Telos mainnet has not been affected and is working with the Foundation while its functionality is frozen. We will guide you to safely withdraw all your funds in the future,” Velocore updated.
Community members who lost their funds are demanding refunds from Velocore. However, compensation or refund plans have not yet been discussed.
This incident is part of a larger trend. Just a few days ago, Japanese cryptocurrency exchange DMM Bitcoin reported massive losses of $305 million due to a security breach. These successive hacks highlight ongoing security concerns in the sector. So far in 2024, excluding the DMM Bitcoin incident, the industry has lost over $473.22 million due to various exploits.
In particular, the cryptocurrency industry suffered losses of more than $52 million through 21 separate incidents in May 2024.
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