Gala Games Exploiter Returns $22M in ETH Following $200M Exploit

Blockchain gaming platform Gala Games has retrieved about $22 million worth of Ethereum (ETH) from the person responsible for a recent “security incident.” The attacker minted $200 million worth of Gala (GALA) tokens on May 20 and sold a small portion before the wallet was frozen. The Gala Games team announced they would use Gala Swap to convert the ETH back to their native token, GALA.

Gala Games Freezes GALA Tokens Worth 4.4 Billion

On May 21, the attacker’s wallet sent back 5913.2 ETH, equivalent to $22.3 million, to Gala Games. The company said ETH’s recovery came after the team’s “swift, effective response and the involvement of Federal law enforcement agencies.”

Not at my computer so I can’t confirm the address, but it looks like the $GALA exploiter has just returned the ETH they got from the hack! https://t.co/IfnfcQTlqL

— Jason Brink aka BitBender (@BitBenderBrink) May 21, 2024

Gala Games employed GalaChain’s blocklist protocol feature to effectively freeze 4.4 billion GALA from the 5 billion minted within 45 minutes. President of Blockchain at Gala Games, Jason Brink, shared a link to the on-chain data of the stolen fund return transaction.

Team Identifies the Exploiter

Eric Schiermeyer, Gala’s co-founder and CEO, stated in a May 20 post that the alleged attacker had been identified. He also said the team had obtained “his home address.”

The company has not publicly confirmed the identity or method of the exploit. However, certain community members claim that Gala had hinted at the involvement of a security contractor who slipped up after connecting to the wallet without a VPN.

Schiermeyer said: 

“This shouldn’t have happened and we are taking steps to ensure it doesn’t ever again. We believe we have identified the culprit and we are currently working with the FBI, DOJ and a network of international authorities.”

Gala Games to Buy Tokens and Burn Them

Schiermeyer shared in a Discord post that the team will likely buy back and burn the equivalent GALA tokens using the returned ETH. 

He wrote:

“I don’t see anything else we should do with the eth. We will probably buy and burn on galaswap. As usual the community will decide how we proceed.”

Furthermore, the platform announced the initiation of a governance vote. It aims to determine whether the blocklisted 4.4 billion GALA tokens will be considered “burned,” effectively removing them from circulation. The approach seeks to tackle the consequences of the incident and ensure the security of the Gala ecosystem.

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DWF Labs Buys 28 Million GALA

As part of the recovery effort, Gala received support from DWF Labs, a crypto market maker and one of their partners. DWF Labs said it purchased 28 million GALA tokens on the open market. Given the valuation of $0.043 per GALA, DWF Labs’ acquisition is approximately valued at $1.2 million. 

Here at DWF Labs, we are committed to supporting our portfolio companies through thick and thin 🤝🏽

We were saddened to hear about the recent security breach at @GoGalaGames, which led to unauthorised transactions involving $GALA tokens.

In response to this incident, we have… https://t.co/e4caYjvABQ

— DWF Labs (@DWFLabs) May 21, 2024

DWF Labs said it bought tokens to help keep the token’s value steady and support Gala during tough times. Moreover, this transaction aims to reduce selling pressure in the market and increase investor confidence.

GALA Price Rises 8%

Source: CoinMarketCap

Following the hack, GALA’s price suddenly fell from $0.047 to $0.038. However, the market received a significant boost with the support of DWF Labs and Gala Games’ mitigation strategies. At the time of writing, GALA is trading at $0.045, representing an increase of 8.56% in the last 24 hours.