Over the weekend, Uniswap liquidity providers were blindsided by a sophisticated scam involving Gnus.AI artificial intelligence network, GNUS, resulting in a staggering loss of $1.3 million. The team announced plans to release a new version of the Genius (GNUS) token and that users should no longer buy the old version.
The perpetrator replicated the GNUS token contract on Fantom and then transferred 100 million freshly minted tokens to their Ethereum address via the Axelar bridge. Subsequently, the fake tokens were dumped into the Uniswap liquidity pool, causing a devastating drain of 407 ETH, valued at $1.3 million at the time.
In response to the breach, the Genius team promptly acknowledged the incident via X (formerly Twitter). The CEO attributed the compromise to a breach of a development wallet during a Discord hack. This breach allegedly granted the hacker access to launch the counterfeit tokens on the Fantom blockchain, effectively minting them as authentic assets on Ethereum and Polygon.
Following the sell-off, the GNUS token plummeted by over 95%, plummeting from $22.86 to $0.79, as reported by Coinmarketcap.
Security analysts have noted that the attack does not qualify as a traditional ‘hack’ of Genius’ smart contracts, as the funds were extracted from the Uniswap pool’s liquidity providers through a standard swap, rather than directly from the platform itself. There are suspicions among researchers that the incident was a premeditated ‘rug pull,’ orchestrated to deceive liquidity providers while attributing the losses to an external hacker.
In a bid to stabilize the GNUS price, the CEO has pledged to inject $1 million back into the liquidity pool, contingent upon ensuring the prevention of future breaches.
We've figured out that the hackers got the devs 0x18 deployment wallet during a discord hack. Apparently the hackers can watch private messages on discord.
— SuperGenius.eth (@SuperGeniusEth) May 5, 2024
This 0x18 was not the owners of the smart contract, but enabled them to launch exact address on FTM of the Axelar Token… https://t.co/9ne2jWoLrf
Fantom’s Fortunes Fade
Once touted as a potential ‘ETH killer,’ Fantom has witnessed a decline in its prominence since its peak in early 2022, when it boasted over $7 billion in total value locked (TVL). Presently, its TVL has dwindled to a mere $120 million, ranking 37th on DeFiLlama’s list of largest blockchains.
Fantom’s woes were compounded by issues with Multichain, its primary bridge. Rumors surrounding the disappearance of Multichain’s CEO were followed by confirmed reports, prompting instability in stablecoins and ‘wrapped’ assets as the fate of their collateral remained uncertain.
In response, the Fantom Foundation has pursued legal recourse in Singapore, securing a default judgement against Multichain in a bid to partially recover lost assets.