Huobi collaborates with Gala Games to support affected users, compensating $50M
Huobi has announced a compensation plan in collaboration with Gala Games to offset damages for victims of the pGALA incident on Huobi, amounting to $50M. According to the announcement, this compensation will be shared between Huobi and Gala Games. Huobi will provide $25M in cash and benefits to users, including 15 million USDT and 10 million equivalent owner equity compensation. Similarly, Gala Games will offer node licenses valued at $25M as compensation.
The pGALA incident is believed to stem from a collaboration between pNetwork and hackers to mint $1 billion worth of pGALA tokens on the BNB chain, subsequently withdrawing them from the liquidity pool to profit unfairly by over $10M. However, due to a sharp drop in GALA's price on the BNB chain and pNetwork's deliberate profit concealment, significant losses were incurred by various third parties, including Gala Games and Huobi. pNetwork has pledged to airdrop 12,977 BNB to affected users, although these airdrops have yet to be implemented.
In addition to the compensation plan, Huobi and Gala Games have agreed to pursue legal action against pNetwork.
Huobi has disclosed the truth behind the pGALA incident and will collaborate with Gala Games to sue pNetwork.
At 20:00 (UTC) on November 3, 2022, the multi-chain routing protocol pNetwork created over $1 billion in pGALA on the BNB chain and sold them on PancakeSwap, causing the GALA token's price on the BNB chain to plummet from $0.04 to $0.0000045. Subsequently, the significant price disparity between GALA on the BNB chain and centralized exchanges attracted substantial funds to purchase these tokens on BNB chain and transfer them to centralized exchanges for sale.
Due to pNetwork's concealment, Huobi was unaware of the situation and did not close deposit channels promptly, resulting in GALA's price on their platform dropping sharply from $0.04 to $0.0003. This led to significant losses for Huobi and its users.
Starting from 01:00 (UTC) on November 4, Huobi made every effort to restore user losses by issuing five consecutive progress updates regarding the GALA incident. In contrast, pNetwork did not publish a post-mortem analysis until 2:00 AM on November 6. Despite earning substantial illicit profits, pNetwork failed to fulfill promises to compensate affected users.
Analysis revealed that the pNetwork team identified a misconfiguration in the GALA token's cross-chain bridge at 17:52 (UTC) on November 3. This misconfiguration allowed unauthorized access to the pGALA smart contract deployed on BSC. Although no ownership rights were exploited by attackers at that time, they were later exploited. At 19:11 (UTC), pNetwork contacted Gala Games and decided to temporarily halt cross-chain bridge operations and drain the pGALA/BNB PancakeSwap pool via a white hat action.
At 20:13 (UTC), pNetwork issued 27.814.200.000 uncollateralized pGALA to drain the pool before further increasing it by 27.814.200.000 uncollateralized pGALA.
At 20:28 (UTC) on the same day, Gala Games and pNetwork tweeted about the issue, reminding community members not to purchase GALA tokens on the BNB chain. After failed persuasion attempts, pNetwork continued draining the pool at 20:29 (UTC), declaring to protect user funds. At 22:16 (UTC), Gala Games and pNetwork ceased draining the pool, eventually recovering 12,977 BNB. Huobi only stopped depositing GALA tokens on the BNB chain at 23:03 (UTC).
According to Huobi's statement on the GALA incident at 11:03 (UTC) on November 6, the pNetwork team never intended this attack by minting a large number of tokens. Worse, pNetwork exploited its own smart contract vulnerability and issued 55.6 billion pGALA to carry out the attack 50 minutes after contacting other exchanges.
An investigation revealed that a pNetwork engineer mistakenly embedded a key in the smart contract 67 days prior, leading to this incident. Huobi believes pNetwork's actions were not "white hat" activities but a malicious hack aimed at profit, using the white hat operation as an illegitimate cover to avoid legal consequences.
The entire story of the incident has been pieced together. Ultimately, it resulted from pNetwork's negligence, aggressive intervention, and deliberate concealment, causing significant harm to many victims involved.
Gala Games announced on March 20 that they have filed a lawsuit against pNetwork. Gala stated that the pGALA incident led to over $25M in damages and seeks $27.7M from pNetwork for related damages and compensation. In the event of a successful lawsuit, all damages (minus legal fees) will be converted into $GALA and burned. Additionally, Gala invites other affected third parties to contact their legal team for joint compensation efforts.
Huobi has engaged Gala's legal team and will collaborate with Gala Games to file a lawsuit, remedy losses, and protect user interests. Detailed information will be disclosed in upcoming announcements from Huobi.
Huobi will replace pGALA with ROCK to prioritize user benefits
Huobi is committed to prioritizing user interests and continuously strives to protect user assets and benefits. In addition to issuing timely announcements and implementing related measures to remedy user losses, the platform has actively engaged with pNetwork and Gala Games while seeking legal actions to protect user rights. However, due to pNetwork's inaction, a significant amount of time was lost in pursuing legal responsibilities and compensation, resulting in even greater losses for affected users and impacted platforms.
In response, Huobi recently announced a strategic partnership with Gala Games on March 31 following four months of negotiations. Focused on integrating the Gala Layer-1 public chain, both parties aim to provide investment opportunities and list leading projects within the Gala ecosystem, while jointly contributing to community consensus building and ecosystem development.
During the interim period, they will leverage their ecosystems, resources, and brand influence to develop compensation plans to restore user losses as soon as possible to maintain a positive brand reputation.
Regarding the upcoming reward plan, Huobi plans to support the conversion of pGALA into the new ROCK token (Rock Dao) and launch it for the first time after completing the conversion process. ROCK is a web3 game token initiated by Gala Games in collaboration with Huobi and TRON. The total supply is 6.02 billion, including a non-circulating supply of 1.4 billion reserved for Rock Dao, used solely for governance and voting.
Ownership ratios are equally split between Gala Games and Huobi. Detailed information will be addressed in an upcoming official announcement.
Thus, Huobi and Gala Games have demonstrated responsibility and commitment to protecting user interests by compensating for losses related to pGALA.
