Levyathan Private Key Leak

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Levyathan

Levyathan provided a simple investment platform where users could invest in a basket of different assets they selected. The only catch was that the token was managed in a smart contract hot wallet, with unlimited minting available to a single operator.

The private key for that operator was breached due to them publishing it online on Github, causing the rapid collapse of the token price. The team made some effort to compensate and then abandoned the project.

This is a global/international case not involving a specific country.

About Levyathan

"With Levyathan, enjoy a new experience of Decentralized Finance by taking advantage of the power of Financial Indexes while safely evolving in the Binance ecosystem." "Protect your investments through diversification and rest assured to not miss any opportunity on the different sectors in full expansion."

"The goal of the project is simple: to combine the strength of DeFi assets with the security provided by diversity in the form of Indexes composed of a carefully selected range of assets."

"Besides being effective and easy to access, the product may well foreshadow part of the future of Decentralized Finance. A future where it will no longer be necessary to make a radical choice between high yield and security"

"A Smart Contract flaw has seen Levyathan mint limitless tokens and endure a cataclysmic price drop." "Levyathan.finance sank last week, along with its TVL of $1.5M." "Leviathan’s (LEV) token price fell from $0.15 to an unthinkable $0.00000147 at the time of writing according to CoinGecko data."

"Upon checking wallet activity it has become clear that there has been a considerable breach that has seen the loss of over $100,000k for investors. With the current total supply standing at an alarming 100,000,000,000,000,000,016,620,942.467, there is ample cause for concern."

"The Levyathan developers left the private keys to a wallet with minting capability available on Github." "As it was explained in a previous article, the private key that enabled interaction with the timelock was publicly available on the Levyathan project Github in the governance repository, due to a serious oversight of the developer."

"This availability led to the unfortunate events of July 30, 2021. Indeed, the oversight of the developer allowed a malicious hacker to gain control of the LEV contract and mint an infinite number of tokens before dumping them on the market."

"However, the emergencyWithdraw() logic contained a bug which referenced rewardDebt (a variable related to reward calculation) instead of user.amount as the quantity of tokens to be withdrawn."

"Some users who were quick to withdraw in this way noticed that they were receiving more tokens than expected, and continued to withdraw more and more LEV, depleting the contract and leaving nothing for those who came later."

"In their post mortem Levyathan provided an address to which users could return funds ”in an anonymous manner", which has received 3 billion dog tokens and one PLUGANAL."

"The team later on provided a second address which has so far received ~150,000 BUSD (coming from the first address provided by the Levyathan team)."

“First of all, please accept my sincere apology. After internal investigation, it appears that you are absolutely correct. We failed to address the actual issues in our report, together with the incorrect suggestion of the fixes, ultimately lead to tremendous loss of your asset. Needless to say, we have a lot of reflections that need to be done on our own part. It was a human error, as much as we don’t want to see it happen, we are trying to address it systematically. We have updated our database and automation tools to prevent similar mistakes being made again. […]”

"A multisig has been set up with the help of other community members to ensure the integrity of the process. We thank them for their availability and their will to serve the community in tough times. The address of the multisig is: 0xf3381970372fcA75270C0d67956Fd8D6304377D7."

"As you can see, 265,185 BUSD have already been returned and will be distributed to community members who were victims of the technical flaw in the emergency withdraw function."

"All funds returned by members who benefited from the bug in the emergency withdraw function will be deposited at the above address before being distributed."

"Due to the numerous threats and aggressiveness of some members of the community, the new developers who were to contribute to the project no longer feel comfortable working in this climate and have withdrawn from the project."

"Furthermore, the funds allocated to the development of Levyathan were siphoned off during the hack of the platform and all recovered funds are destined to be distributed to the community : therefore, the project is no longer able to self-finance."

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.

Key Event Timeline - Levyathan Private Key Leak

Date	Event	Description
July 30th, 2021	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $1,500,000 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?

General Prevention Policies

One of the easiest ways to protect against this would have been to set up a multi-signature requirement on the minting contract. Such training for operators would likely have helped.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.