NFTX Asset Validation Error
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NFTX is a NFT trading platform. During a contract upgrade, a transaction involving two NFTs was frontrun and the NFTs were taken. The tokens needed to be repurchased for 6 ETH. It's unclear if this affected any users of the platform.
This is a global/international case not involving a specific country.
About NFTX
"Buy, sell, and swap NFTs instantly. Stake and earn yield on the most liquid decentralized NFT marketplace." "NFTX is a platform for creating liquid markets for illiquid Non-Fungible Tokens (NFTs)."
"Users deposit their NFT into an NFTX vault and mint a fungible ERC20 token (vToken) that represents a claim on a random asset from within the vault. vTokens can also be used to redeem a specific NFT from a vault."
"On June 29, 2021 NFTX asset validation error was exploited which resulted in the theft of 2 CryptoPunk NFTs. Stolen NFTs were eventually bought back for 6 ETH ($12K)."
"With our new NFTX v2 launch, we have decided to perform a gradual migration of the DAO treasury liquidity provided to PUNK/NFTX. In order to practice caution, we announced that the migration will be gradual and over time, starting with ~10% of the liquidity provided by the DAO."
"To begin the migration, custody of the liquidity was handed off to Alex for a simpler migration. Alex approved 2 CryptoPunks for transfer to the vault contract, and immediately after sent the mint transaction to the vault to receive his PUNK tokens. However, this transaction was frontrun and ended up failing, with his 2 PUNK vault tokens going to the frontrunners address. Shortly after noticing something was off, the team's guardian permissions were used to pause all vault functions in order to give us time to investigate."
"After the attacker noticed our pause, they quickly sold the 2 PUNK tokens on the (illiquid) Sushiswap PUNK/NFTX pool, and made off with ~6 ETH. Soon after they were sold, we purchased back the 2 PUNK tokens for ~6 ETH, returning the tokens back to our custody. We have also staged an upgrade to solve the attack vector (detailed below), and will unpause the contracts after the upgrade is deployed."
"We did have a very successful audit with Code 423n4, however, the unique logic to handle these NFTs was added after the audit was complete, since we made the decision to handle bare CryptoPunks rather than Wrapped Punks later after the audit. We did go through an independent audit after our changes from Code 423n4, but it appears this flaw was missed due to the CryptoPunks contract not being within scope of the audit."
"We purchased back 2 PUNK (6 ETH worth at the time) of PUNK, retrieving back custody of the original stolen assets."
This is a global/international case not involving a specific country.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| June 29th, 2021 12:00:00 AM | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Total Amount Lost
The total amount lost has been estimated at $13,000 USD.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
Prevention Policies
Which policies could have prevented this event from happening?
References
https://www.blockthreat.io/p/blockthreat-week-26-2021 (Feb 8)
Buy, Sell, and Swap NFTs Instantly - NFTX App (Feb 16)
Introduction to NFTX - NFTX (Feb 17)
NFTX v2 PUNK Incident Post Mortem (Feb 17)
https://coinmarketcap.com/currencies/ethereum/historical-data/ (Dec 20)
NFTX v2 PUNK Incident Post Mortem (Feb 19)