GMX V1 Hack: $42 Million Vanishes in Thin Air, Exchange Goes Dark!

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In what can only be described as a masterclass in financial mischief, decentralized derivatives exchange GMX has announced a spectacular $42 million hack. This exploit, which targeted its GMX V1 GLP pool on Arbitrum, has left the exchange no choice but to temporarily shut down trading, all while offering a white-hat bounty to the very thief who made off with the loot. Quite the twist, wouldn’t you say?

$42 Million Vanished From GMX V1 GLP Pool

Picture this: an attacker, likely with a penchant for the dramatic, drained around $42 million from GMX’s GLP liquidity pool. The heist, which took place early on a rather unassuming Wednesday, prompted GMX to hit the emergency stop button, halting all trading and disabling the minting and redemption of GLP tokens across both the Arbitrum and Avalanche networks. Because why wouldn’t you stop everything in the wake of a small $42 million theft?

The good news? The crime was confined to the GMX V1 GLP pool. Yes, GMX V2, in all its glory, stood unfazed, unaffected, and remarkably unplundered. So, the platform remains on its digital feet—at least, in some corners of the blockchain.

The Exploit: A Symphony of On-Chain Shenanigans

Initial on-chain snooping has revealed a rather well-rehearsed performance from the attacker. Funds were methodically drained from the GLP pool, with USDC being turned into ETH, then into DAI. And that wasn’t all—the attacker, who was probably laughing all the way to the (virtual) bank, also made off with millions worth of FRAX, wrapped Bitcoin (WBTC), wrapped Ether (WETH), and other cryptocurrencies. It was a veritable buffet of digital assets!

PeckShieldAlert, ever the diligent watchdog, even sent a direct message to the thief via an on-chain transaction, offering a 10% bounty for the safe return of the stolen funds. GMX, ever the optimists, made it clear that if the assets were returned within 48 hours, no legal action would be taken. But the hacker hasn’t responded. Oh, the suspense!

Design Flaw: The Culprit Behind the Curtain

So, how did this all happen? Well, the cyber sleuths at SlowMist uncovered a rather embarrassing design flaw in GMX V1. Apparently, GMX’s system was blissfully unaware that allowing immediate updates of global short average prices could create an all-you-can-steal buffet for those with the right kind of know-how. Short position operations, it turns out, were a bit too eager to adjust prices, giving the attacker an all-access pass to manipulate prices and drain liquidity. Oops!

In a post that can only be described as a cyber slap to the face, SlowMist commented:

“The root cause of this attack stems from GMX V1’s design flaw where short position operations immediately update the global short average prices.”

Emergency Measures: Turning the Ship Around

With a sense of urgency typically reserved for shipwrecks, GMX swiftly suspended all GLP-related activities on both Arbitrum and Avalanche. Their advice to users? Disable leverage and halt GLP minting—because nothing says “we’ve got this under control” like a full-on shutdown.

Despite the drama, GMX V2 remains secure and operational, with no vulnerabilities found in its shiny new infrastructure. Yet, despite their best efforts, one can’t help but wonder about the long-term impact on user trust. After all, $42 million doesn’t just disappear without leaving some emotional scars behind.

As of now, the thief has not uttered a word in public. But rest assured, the crypto community is keeping a watchful eye on that wallet. GMX and its partners continue to comb through the mess, making sure they’ve fixed every flaw and maybe rethinking a few design choices for the future.

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2025-07-10 18:14