Metaverse Token GALA Is Recovering from Its Fake Hack

Rumors of a rug pull or hack in progress tanked metaverse crypto Gala Games' GALA token yesterday.

Metaverse Token GALA Is Recovering from Its Fake Hack
Not a rug pull or a hack, just a metaverse project during a crypto winter...

Rumors of a rug pull or hack in progress tanked metaverse crypto Gala Games' GALA token yesterday.

Remember GALA?

You may remember GALA from the metaverse craze of 2021, when the GALA token's market cap exploded to $6B from $600M in just three weeks. Today it's worth $250M and has the poor user traffic you'd expect for a metaverse crypto project in 2022.

The Gala Games Hack

The rumors of a hack or rug pull started yesterday when blockchain security firm PeckShield noticed strange activity for the GALA token on PancakeSwap, the main DEX on Binance Smart Chain.

Someone minted $2B in GALA tokens on Binance Smart Chain using the pNetwork bridge. The supposed attacker then dumped 10.7B GALA tokens on PancakeSwap, completely draining the token's liquidity on the DEX.

This tanked the price of GALA tokens on PancakeSwap, but other exchanges hadn't caught up yet. Traders bought the cheap GALA tokens on PancakeSwap and sold them on Huobi and other exchanges for a quick profit, which brought the price of GALA down everywhere.

In about an hour, the global price of GALA dropped to $.29 from $.39, a decrease of 25%. The GALA token has since recovered to $.36. No harm, no foul… right?

Gala Games' Response to the Hack Rumors

After a couple hours of rumors and rapidly tanking GALA price, Gala Games claimed they were not pulling the rug or being hacked, but were instead fixing a vulnerability in blockchain routing provider pNetwork's implementation of the pGALA token on Binance Smart Chain.

"Update for everyone - there is a LOT of FUD out there surrounding $GALA...lots of people tossing around words like "hack" and "rug". Neither of these is the case." - Gala Games

According to Gala Games, a misconfigured pNetwork bridge caused all the existing pGALA tokens to be redeployed. Binance suspended deposits and withdrawals of GALA tokens on Binance Smart Chain, while Huobi simply ceased support for the GALA token. According to Gala Games, this was pNetwork's fault, and Gala Games is working with pNetwork now to ensure this doesn't happen again.

Wouldn't it be nice to operate a blockchain services firm that could accidentally crash the price of a customer's token–violently tanking its price in the local economy where you broke it, such as a specific DEX–with a high probability that the price would bounce back within hours?

It's mildly suspicious that pNetwork and Gala waited so long to inform us of the "maintenance" they were doing. Internet commenters suspected foul play, with some claiming it wasn't a hack, but rather a quick cash grab by the Gala Games or pNetwork teams.

But maybe Gala Games thought if they said nothing, there would be less damage to clean up from arbitrage traders crashing the GALA token.