Game Developer to Investigate Theft of $650 Million in Crypto
A Vietnamese-cryptocurrency platform that hosts a popular online game announced last week that it is investigating a security breach in its network that resulted in more than US$600 million in crypto being stolen.
The incident is one of the largest hacks recorded in the video game sector.
Ronin Network, a program used by players in the non-fungible token (NFT) based game Axie Infinity, was infiltrated by hackers who made off with 170,360 ether (a cryptocurrency much like bitcoin) valued at over $600 million as well as 25.5 million USD Coin, a cryptocurrency that is pegged to the U.S. dollar.
An NFT is a digital file, such as a photo or video, that can be traded. Its sales history is recorded and stored on what is called a blockchain. Each NFT is attached to a unique token, which allows an individual to prove that they are the file’s current owner.
Axie Infinity has an in-game economy that runs on NFTs that take the form of digital pets known as Axies, who by and large resemble colourful quadrupedal blob monsters. Much like the popular game Pokémon, players can breed and battle their pets with each other.
Ether is used as currency to purchase and sell Axies with other players, with the game’s Vietnamese-based developer Sky Mavis taking a commission on every transaction.
In its press release, Ronin stated that hackers gained access to its players’ ether stores by acquiring five out of the nine validator signatures needed for the network to recognize a deposit of withdrawal request.
Now with the means to fool the network into complying with their withdrawal requests, the hackers took off with over $600 millionin cryptocurrencies that had been stockpiled by the game’s player base.
As a precaution, Ronin stated that they have temporarily closed the ‘Ronin Bridge’ in order “to ensure no further attack vectors remain open” while the system’s security vulnerabilities are being addressed.
As Axie Infinity is based on a “play-to-earn” (P2E) model, in which players must make an initial financial investment in order to progress and potentially earn rewards, the game appears to be a form of gambling. If a player fails to properly raise their blob monster or if they invest in one that other players do not want, they ultimately suffer a financial loss.
Additionally, as the in-game economies in P2E games are largely dependent on attracting new players and maintaining their long-term financial interest, they have drawn comparisons to Ponzi schemes.
Although on the flip-side, with a keen understanding of the game’s mechanics and shrewd investment planning, players can actually profit off of P2E games to the point that they can financially sustain themselves in real life.
For the moment, however, with Axie Infinity players currently unable to make withdrawals from the Ronin Network, the game’s economy will almost certainly take a serious hit.
In addition to addressing its security vulnerabilities, Ronin announced that it is working alongside “various government agencies to ensure the criminals get brought to justice.”
And as for the players whose ether was stolen from them, Sky Mavis stated that it “is committed to ensuring that all of the drained funds are recovered or reimbursed.”