Due to potential security breaches, the decentralized cryptocurrency exchange, LeetSwap, temporarily suspended its trading operations on August 1st. The suspension comes from suspicions that hackers infiltrated the exchange’s liquidity pools.
To tackle the situation, LeetSwap revealed on Twitter that it is collaborating with on-chain security experts. This partnership aims to retrieve the funds currently frozen due to the halt.
However, LeetSwap has kept detailed information regarding the breach under wraps. Nevertheless, blockchain detectives from the crypto community have put forth theories on the probable modus operandi of hackers. Igor Igamberdiev, the research lead at Wintermute, an algorithmic market maker, suggests a plausible attack strategy.
According to him, the perpetrators likely exploited an unprotected smart contract function. This strategy enabled them to inflate the price of a specific token artificially. Consequently, they could syphon a staggering 342.5 ETH from LeetSwap’s liquidity pools. The stolen Ether translates to over $630,000 at the current market rate.
LeetSwap took to its social platforms again about ninety minutes post the announcement of the trading halt. They assured their users that they were diligently working with security specialists. Their prime focus is to figure out a viable strategy to retrieve the frozen liquidity.
Significantly, this incident trails the controversial “rug pull” carried out by the deployer of a memecoin named BALD, built on the same Base network. This unscrupulous act drained millions of dollars worth of BALD tokens from unsuspecting users’ accounts.
As the crypto world grapples with such incidents, the LeetSwap episode serves as a stark reminder of the security challenges in the nascent decentralized finance (DeFi) space.
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