Ethereum Protocol Loopring Faces Security Breach, $5 Million Worth of Assets Compromised

According to CryptoPotato, Loopring, an Ethereum zero-knowledge roll-up protocol, reported a significant security vulnerability attack on its smart wallets on Sunday. The attack was linked to the Loopring Official Guardian, and the project is now working with security and law enforcement agencies to investigate the breach and track down the cybercriminals. The attacker targeted a subset of the wallet, exploiting the vulnerabilities of the Official Guardian. As a result, some wallets within Loopring fell victim to this security breach. The malicious actor managed to bypass Loopring’s authorized Guardian services by impersonating wallet owners, initiating unauthorized recoveries on wallets that relied solely on the compromised Guardian without the users' permission. By specifically targeting the Official Guardian and 2FA service, the attacker was able to siphon substantial assets from several wallets. Loopring and blockchain audit firm Cyvers Alert identified and publicly shared the two malicious wallets. Onchain data from Etherscan revealed that one of the hacker’s wallets seized about $5 million worth of assets from the compromised wallets. The wallet has already swapped the crypto for ETH and still holds 1,373 ETH worth $5 million. However, not all wallets were exposed. Wallets employing multiple guardians or alternative third-party guardians were not affected by the recent exploit. Loopring announced that they are working with Mist security experts and law enforcement agencies to determine how their two-factor authentication service was compromised and to track down the malicious actors. To protect users, Loopring has temporarily suspended all Guardian-related and 2FA-related operations, which has since stopped the compromise. The network encourages anyone with additional information about the exploit to come forward and commits to providing updates as the investigation progresses. Loopring’s native token, LRC, experienced a slight reaction when news of the attack emerged. It is currently trading at $0.2199, reflecting a 2.7% decrease in the past 24 hours and an 18% decrease over the past 7 days.