Fireblocks has partnered with Gala Games to compensate users affected by the pGALA token inflation incident, with compensation totaling $50 million.
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Fireblocks has partnered with Gala Games to compensate users affected by the pGALA token inflation incident, with compensation totaling $50 million.
On April 3, Huobi issued an official announcement stating that it has reached a compensation plan with Gala Games for users affected by the pGALA inflation attack, with total compensation amounting to $50 million.
Navigating Web3 tides with focused insightsOn April 3, Huobi issued an official announcement stating that it has finalized a compensation plan with Gala Games for users affected by the pGALA inflation attack, amounting to $50 million. According to the announcement, the compensation will be jointly borne by Huobi and Gala Games. Huobi will provide affected users with $25 million worth of cash and benefits, including 15 million USDT and $10 million in equivalent rights and benefits. Similarly, Gala Games will also offer $25 million in node-based compensation to affected users. The compensation program is set to launch within this week.
The pGALA incident originated when pNetwork colluded with hackers to exploit a cross-chain bridge vulnerability on the BSC chain, minting one billion dollars' worth of pGALA tokens and dumping them from liquidity pools, resulting in illicit profits estimated at over ten million dollars. Due to the sharp decline in token price on-chain and pNetwork’s intentional concealment of the incident for malicious profit-taking, Gala Games, Huobi, and other third parties suffered significant losses. Previously, pNetwork—the instigator of the event—claimed it would airdrop 12,977 BNB (proceeds from improper gains via excessive pGALA minting) to affected users, but this has yet to materialize. In addition to the aforementioned compensation plan, Huobi has now reached consensus with Gala Games to jointly file legal action against pNetwork to recover losses.
Uncovering the Truth Behind the pGALA Incident: Huobi Joins Gala Games in Legal Action Against pNetwork
In the early hours of November 4, 2022, the multi-chain routing protocol pNetwork minted over $1 billion worth of pGALA tokens on the BNB Chain and sold them through PancakeSwap, causing the price of GALA tokens on the BNB Chain to plummet from $0.04 to $0.0000045.
Subsequently, due to the massive price discrepancy between on-chain prices and centralized exchanges, large amounts of capital rushed in to buy GALA tokens on the BNB Chain and deposit them into centralized exchanges for sale. Because of pNetwork's deliberate concealment, Huobi remained unaware and failed to promptly shut down its deposit channel. As a result, the price of GALA tokens within the platform dropped sharply from $0.04 to $0.0003, leading to substantial losses for both users and Huobi.
Starting at 9:00 AM on November 4, Huobi released five consecutive announcements regarding the handling progress of the GALA Token on-chain anomaly, doing everything possible to mitigate user losses. In contrast, pNetwork did not release a post-incident analysis of the pGALA accident until 2:00 AM on November 6 and has continuously avoided fulfilling its earlier promise to distribute improperly gained proceeds to users.
According to the report, at 1:52 AM on November 4, the team noticed a configuration error in the GALA pNetwork cross-chain bridge. Due to this misconfiguration, ownership of the pGALA smart contract deployed on BSC had been secretly taken over. The pool involved contained $400,000, and at that time, the attacker who obtained control of the smart contract did not initiate any attacks. At 3:11 AM, pNetwork contacted Gala Games to decide on suspending cross-chain bridge activities and conducted a white-hat operation to drain the pGALA/BNB PancakeSwap pool. At 4:13 AM, pNetwork inflated 27,814,200,000 uncollateralized pGALA tokens to drain the aforementioned liquidity pool, then minted another 27,814,200,000 uncollateralized pGALA tokens.
As noted above, at 4:28 AM on the same day, Gala Games and pNetwork tweeted about the issue, warning community members not to purchase GALA tokens on the BNB Chain. After their warnings proved ineffective, at 4:29 AM, pNetwork stated that to prevent deposited funds from being attacked by potential attackers, they chose to continue draining the pool. At 6:16 AM, Gala Games and pNetwork decided to stop draining the liquidity pool. By then, pNetwork’s actions had recovered 12,977 BNB. It wasn’t until 7:03 AM that Huobi finally disabled the GALA deposit function on the BNB Chain.
Huobi’s public statement titled “Clarification on the Truth of the GALA Incident,” released at 7:03 PM on November 6, revealed that the pNetwork team never indicated they would exploit the GALA token vulnerability by inflating a massive number of tokens, completely concealing their attack behavior from exchanges. Just fifty minutes after contacting the exchange, they exploited the contract flaw to mint 55.6 billion tokens and launched the attack, leaving no time for exchanges to react. Post-incident investigations found that the vulnerability stemmed from a key left exposed in the contract by a pNetwork engineer 67 days prior, creating the conditions for the subsequent disaster. After analysis, Huobi concluded that pNetwork’s actions were not a so-called white-hat attack, but rather a hacker attack aimed at malicious profit, with "white-hat" merely serving as an illegal pretext to evade legal responsibility.
Thus, the full picture of the incident has now been reconstructed. Ultimately, the event was caused by pNetwork’s “negligence, infringing interference, and intentional concealment.”
According to previous reports by Cointelegraph, GameFi project Gala Games announced on March 20 that it has filed a lawsuit against pNetwork, the cross-chain bridge used by GALA on the BNB Smart Chain. Gala stated that the pGALA incident has resulted in losses exceeding $25 million, and they are seeking $27.7 million in damages to cover related losses and compensation. If the litigation succeeds, any recovered funds (after deducting legal fees) will be converted into $GALA and burned. Additionally, they are inviting more affected third parties to contact their legal team to join the claims process.
Huobi has now contacted Gala Games’ legal team and will jointly file a lawsuit against pNetwork to recover losses and firmly protect its brand reputation and user interests. Huobi will disclose further details through upcoming official announcements.
User Interests First: Huobi Reveals pGALA Will Be Converted to New Token ROCK
Despite suffering significant losses in this incident, Huobi continues to prioritize “user interests” and is making every effort to safeguard user assets. Beyond issuing timely announcements and implementing measures to minimize user losses, Huobi has engaged in multiple communications with pNetwork and Gala Games and pursued legal avenues for redress. However, due to pNetwork’s inaction, accountability and compensation could take considerable time—further increasing losses for affected users and the platform.
To address this, after four months of negotiations, Huobi and Gala Games recently announced a strategic partnership. Based on integrating Gala’s Layer1 public chain, they will provide top-tier projects within the Gala ecosystem with premium investment and listing support, and collaborate on ecosystem development, brand synergy, project development, and community consensus. Leveraging their respective strengths in ecosystems, resources, and brands, the two parties will jointly launch the pGALA inflation victim compensation plan, doing their utmost to recover user losses as quickly as possible while protecting their brand reputations.
Regarding the upcoming compensation plan, a relevant Huobi executive revealed: Huobi will support the conversion of pGALA tokens into the new token ROCK (Rock DAO), and will be the first globally to list ROCK upon completion of the swap. The token is initiated by Gala Games and co-developed with Huobi and TRON as a Web3 gaming ecosystem token. The total supply of ROCK is approximately 6.02 billion, of which 1.4 billion will serve as the Rock DAO reserve fund, never entering secondary market circulation and reserved solely for governance and voting purposes. Gala Games will hold 700 million, and Huobi will hold 700 million. Further details will be released in official announcements later.
Throughout the entire pGALA compensation process, Huobi and Gala Games have consistently demonstrated responsibility and commitment to user interests. It is hoped that in response to such incidents, more exchanges and projects in the crypto industry will step forward to take responsibility and defend user rights, working together to promote healthy industry development.
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