Velocore, a decentralised exchange (DEX) operating on the zkSync and Linea blockchains, suffered a significant security breach. The hackers reportedly transferred over 700 ETH to the Ethereum mainnet, which is worth over $2.6 million, via a third-party bridge.
The breach was initially reported by a threat researcher known as “Officer’s Notes”. Velocore revealed that the hackers targeted its liquidity provider tokens, which are critical for the exchange’s operations. Despite undergoing security audits from Zokyo, Hacken, and Scalebit, Velocore was compromised.
During the incident, the Linea Blockchain halted block production for an hour. This disruption was Linea’s “last resort” to protect users and prevent additional funds from being bridged out, as the firm stated. Velocore’s stable pools were unaffected, and users could withdraw their funds normally.
Velocore is working with centralised exchanges (CEXs) to freeze the stolen assets and mitigate further damage. The team has identified the exploit mechanism and initiated an on-chain negotiation process. They are preparing a detailed analysis and tracking the hacker using available clues.
“We’ve identified the exploit mechanism and are setting up an on-chain negotiation process. A detailed analysis is in the works. Tracking the hacker 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.”
Community members affected by the hack are demanding refunds, but Velocore has not yet outlined any compensation plans.
Despite security audits by reputable firms, the Velocore hack demonstrates that vulnerabilities in the crypto sector remain a major issue. The temporary halt in block production on the Linea Blockchain during the hack adds to the incident’s complexity, raising questions about the robustness of blockchain security protocols.
This hack is part of a series of security breaches in the crypto industry. Recently, DMM Bitcoin, a Japanese crypto exchange, reported a $305 million loss due to a security breach. In 2024, excluding the DMM Bitcoin breach, the crypto industry has lost over $473.22 million to various hacks. In May 2024 alone, there were 21 incidents resulting in over $52 million in losses. These figures highlight the urgent need for improved security measures across all platforms.