A highly viral application called Stars Arena, which was launched just under a week ago, rapidly gained a devoted following. However, it fell victim to a significant security breach that resulted in attackers exploiting a smart contract designed to safeguard tokens on the social application.

Millions in AVAX Tokens Drained

The attack resulted in the drainage of approximately $3 million worth of Avalanche’s AVAX tokens. As a result of the attack, Stars Arena was left with less than $1 in funds.

The incident was first brought to public attention by the Twitter user @0xLawliette, who seemed to issue a warning about the exploit during the early hours in Asia on Saturday. Subsequently, another user, @0xlilitch, raised concerns about potential security issues.

Confirmation by Stars Arena Developers

Stars Arena faces major hack.

Stars Arena developers officially confirmed the attack via a tweet on Saturday morning. Some users had earned substantial sums, up to 1,000 AVAX, in trading fees from the platform. Additionally, the application had contributed to a 6% increase in AVAX token prices during the week.

Similarities to Friend.Tech and the Purchase of User Shares

Stars Arena bore strong resemblances to Friend.Tech, a social application based on Ethereum that attracted 100,000 users within weeks of its August release. Both apps allowed users to purchase “keys” or “shares” of popular X users in exchange for access to exclusive chatrooms with various privileges.

The values of these shares were highly volatile, leading some users to treat them as tokens and profit from price fluctuations.

Ava Labs Employee Involvement and Initial Downplaying of Concerns

Notably, some Ava Labs employees, including founder Emin Gün Sirer, had expressed support for Stars Arena through various posts on X. This may have contributed to user trust in the application. However, Sirer appeared to downplay concerns about the potential security exploit when @0xlilitch initially raised the issue on Friday, suggesting that someone had already fixed a breach.

Persistent Security Challenges in Crypto Markets

This incident underscores the ongoing security challenges in cryptocurrency markets. Crypto markets continue to be susceptible to poor security practices and criminal activity with estimated losses due to exploits and hacks reaching approximately $1.3 billion in 2023 alone.

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Tanishi is an established writer in the realm of cryptocurrency and blockchain, renowned for her expertise and insightful analysis. With a deep-rooted passion for the dynamic world of digital finance, Tanishi delivers compelling news and articles that captivate a wide-ranging audience.