A decentralized finance (DeFi) protocol based on Ethereum, Loopring has recently been hacked, within it is a layer-1 solution based on ZK-rollup, and it suffered a $5 million loss. This attack was directed to the ‘Guardian’ two-factor authentication (2FA) service used by the firm to boost the security of the smart wallet application that is dubbed as “Ethereum’s most secure wallet”.
In the Guardian service, customers that have a particular wallet can invite other wallets that are trusted to engage in security performance such as aiding in the freezing of a corrupted wallet or in the case of loss of the seed phrase, to help recover the wallet.
A hacker found a way around Loopring’s Official Guardian service and carried out recoveries on wallets that used the single guardian, according to the firm. Wallets that had multiple guardians or had deployed another type of guardian or a third-party one were not impacted by the attack.
Having analysed the data of the blockchain, it became known that there are two wallets related to the violation: one of the wallets was completely drained, with an approximate cost of $5 million in tokens.
Subsequently, on the social media platform X, Loopring declared that it is working with Mist Security to determine the vulnerability of the 2FA service. For users’ protection, Loopring has decided to cease all Guardian and 2FA functions at the moment. This action has ensured there is no more access by unauthorised persons.
Loopring is also trying to catch the unknown hacker and, in its turn, has called for more people to provide it with any relevant information.
Since the leakage was made public, Loopring’s native token LRC has dropped by roughly 5% in the last day and is currently trading at $0.2171, a fact indicative of the market downturn as a result of the breach.
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