An unauthorized transfer of 18 million Audius’ in-house AUDIO tokens was approved by community voting.
It has been reported that proposals in crypto help communities make consensus-based decisions. For decentralized music platform Audius, the passing of a malicious governance proposal resulted in the transfer of tokens worth $6.1 million, with the hacker making away with $1 million.
However, first pointed out on Crypto Twitter by @spreekaway, the attacker created the malicious proposal wherein they were “able to call initialize and set himself as the sole guardian of the governance contract.”
Roneil Rumburg, the co-founder and CEO of Audius, said:
“This was an exploit - not a proposal proposed or passed through any legitimate means - it just happened to use the governance system as the entry point for the attack.”
The report said that further investigation from Auduis confirmed the unauthorized transfer of AUDIO tokens from the company’s treasury. Following the revelation, Auduis proactively halted all Audius smart contracts and AUDIO tokens on the Ethereum blockchain to avoid further losses.
Likewise, blockchain investigator Peckshield narrowed down the fault to Audius’ storage layout inconsistencies. While the hacker’s governance proposal drained out 18 million tokens worth nearly $6 million from the treasury, it was soon dumped and sold for $1.08 million. While the dumping resulted in maximum slippage, investors recommended an immediate buyback to prevent existing investors from dumping and further lowering the token’s floor price.
Thus, in June, Gordon Goner, pseudonymous co-founder of Yuga Labs, issued the first warning of a possible incoming attack on its Twitter social media accounts. Soon after the warning, Twitter officials actively monitored the accounts and fortified their existing security.
Source: Cointelegraph