$10 Million Hack Hits Decentralized Exchange Velocore

Velocore, a decentralized exchange (DEX) on the zkSync and Linea blockchains, has been exploited, resulting in a loss of approximately $10 million.

This incident was initially flagged by “Officer’s Notes,” a threat researcher and writer. It highlights the persistent vulnerabilities in the crypto sector.

Velocore Investigates the Hack

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

According to Velocore’s documents, the exchange had passed security audits conducted by Zokyo, Hacken, and Scalebit. Despite this, the hackers managed to exploit the decentralized exchange.

Concurrently, the Linea Blockchain experienced a temporary halt in block production during the hack. This pause lasted about an hour before normal operations resumed. The reasons behind this disruption remain unclear.

Read more: Crypto Project Security: A Guide to Early Threat Detection

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

“We’ve identified the exploit mechanism and are setting up an on-chain negotiation process. A post-mortem article is in the works. Tracking the exploiter with clues left behind. More updates soon. Velocore on the Telos mainnet has not been affected, and we are working with the foundation while functionalities are frozen. We will provide guidance on safely withdrawing all funds in the future,” Velocore updated.

The community members that lost the fund demand refund from Velocore. However, the project has not discussed the compensation and refund plans yet.

This incident is part of a larger trend. Just days earlier, DMM Bitcoin, a Japanese crypto exchange, reported a staggering $305 million loss due to a security breach. These successive hacks underline the sector’s ongoing security challenges. So far, in 2024, excluding the DMM Bitcoin incident, the industry has lost over $473.22 million to various exploits.

Particularly, the crypto industry lost over $52 million through 21 distinct incidents in May 2024.