Velocore DEX Hacked: $10 Million Lost

Velocore, a decentralized exchange (DEX) on the zkSync and Linea blockchains, has been hacked, losing about $10 million. The hackers transferred over 700 ETH to the Ethereum mainnet, highlighting ongoing security issues in the crypto sector.

The breach was first reported by a threat researcher known as “Officer’s Notes,” who pointed out the security weaknesses in the crypto industry. Velocore disclosed that the hackers targeted its liquidity provider tokens, which are essential for the exchange's operations. Despite passing security audits from Zokyo, Hacken, and Scalebit, Velocore was compromised.

During the hack, the Linea Blockchain halted block production for an hour. The reason for this disruption is unclear, but operations resumed afterward. Velocore’s stable pools remained unaffected, allowing users to withdraw their funds.

Velocore is collaborating with centralized exchanges (CEXs) to freeze the stolen assets and limit further damage. The team has identified the exploit mechanism and is initiating an on-chain negotiation process. A detailed analysis is being prepared, and they are tracking the hacker using available clues. “We’ve identified the exploit mechanism and are setting up an on-chain negotiation process.

A detailed analysis is in the works. Tracking the hacker with clues left behind. More updates soon. Velocore on the Telos mainnet has not been affected, and we are working with the foundation while functionalities are frozen. We will provide guidance on safely withdrawing all funds in the future.”

Community members affected by the hack are demanding refunds, but Velocore has not yet addressed compensation plans.

Despite security audits by reputable firms, the Velocore hack shows that vulnerabilities in the crypto sector are still a major issue. The audits by Zokyo, Hacken, and Scalebit were supposed to ensure the platform's security, but the system was still exploited. The temporary halt in block production on the Linea Blockchain during the hack adds complexity to the incident. The reason for this pause remains unclear, raising questions about the robustness of blockchain security protocols.

This hack is part of a series of security breaches in the crypto industry. Recently, DMM Bitcoin, a Japanese crypto exchange, reported a $305 million loss due to a security breach. These incidents underscore the ongoing security challenges faced by the sector. In 2024, excluding the DMM Bitcoin breach, the crypto industry has lost over $473.22 million to various hacks. In May 2024 alone, there were 21 incidents resulting in over $52 million in losses. These figures highlight the urgent need for improved security measures across all platforms.

Going forward, Velocore and other crypto exchanges must enhance their security frameworks to prevent such breaches. Regular, comprehensive security audits, constant monitoring for unusual activities, and collaboration with top cybersecurity experts are essential steps. For users, staying informed about the security measures of the platforms they use is crucial. Diversifying holdings and using exchanges with strong security protocols can help mitigate risks.

In conclusion, the $10 million hack of Velocore DEX is a stark reminder of the vulnerabilities in the crypto sector. While Velocore is taking steps to address the breach and improve security, this incident highlights the broader need for stronger, more resilient security measures across the industry. As the crypto landscape evolves, so must the strategies for safeguarding digital assets.