š§µ 1/10 $K Hack Recap & Recovery Plan
The last 72 h were brutal. A sophisticated proxy exploit let an attacker mint unlimited $K on Arbitrum, drain our Uniswap pool + Morpho vault, and nuked the price with millions of fake tokens.
Hereās the recap & path forward š§µ
2/10 What happened
ā¢ Hidden āhacker-proxyā inside the ERC-1967 proxy š©
ā¢ Attacker flipped the pointer, seized owner() + minted at will
ā¢ Drained $1.55 M liquidity & USDC in minutes
ā¢ Price collapsed >95 % š„
3/10 What didnāt happen
ā
Kinto L2 contracts, bridge, wallet SDK, AA infra ā©ļø
ā
User deposits/withdrawals on Kinto
The bug was quite complex and relied in the 10-year-old ERC-20 proxy & Block Explorers slot mishap that we didnāt write.
4/10 Timeline (UTC)
ā¢ Jul 9 20:17 ā Exploit disclosed
ā¢ Jul 10 08:40 ā Attacker mints & drains liquidity
ā¢ Jul 10 09:50 ā First Announcement by Kinto team
ā¢ Jul 10 16:18 ā Venn disclosure recognizing Kinto was not notified
ā¢ Jul 10 21:44 ā Full thread recapping the situation
ā¢ Jul 11 ā ZeroShadow engagement signed & contacted authorities
ā¢ Jul 12 ā Deep technical dive by @pcaversaccio
so I found out that it's even fancier. I observed that the frontrunning tx (by the attackers) calls `initialize` and protocols also call _successfully_ `initialize` after (thus they think everything is normal). But wait, how is this even possible? I had to look very deep into the storage slot changes and guess what I found: they _reset_ the `_initialized` storage slot value at the end of the frontrunning tx (after they swapped to the malicious implementation contract). This means that the proxy storage looks now as it was never initialised.
The relevant storage slot to look at is `keccak256(abi.encode(uint256(keccak256(" - 1)) & ~bytes32(uint256(0xff))` = `0xf0c57e16840df040f15088dc2f81fe391c3923bec73e23a9662efc9c229c6a00`
This is next-level evil.
5/10 Impact
ā¢ Direct loss: $1.55 M
ā¢ Market cap: ā$10 M
ā¢ Morpho suppliers owed $3.2 M; borrowers hold $2.4 M (liq ā„ $3)
6/10 The comeback plan
1ļøā£ Deploy proxy-less $K v2 on Arbitrum
2ļøā£ Snapshot & restore ALL balances (on-chain + CEX) Block:
356170028
3ļøā£ Seed new Uniswap pool & reopen CEXs at pre-hack price
4ļøā£ Borrowers get 90 d to repay ā suppliers recoup 85 %+
5ļøā£ āDip buyersā before our first alert receive v2 $K pro-rata
7/10 Where we are now
ā¢ Trading frozen on Gate, MEXC, BingX
ā¢ Remaining liquidity removed to protect users from trading
ā¢ Working with investigators & exchanges
ā¢ Working on the migration plan
8/10 Weāre raising a recovery fund
Bootstrapping fresh liquidity isnāt free. If you believe in Kintoās missionāsafer, compliant DeFiāconsider helping. Every wei goes to liquidity & restitution.
Please reach out š
9/10 Our promise
This wasnāt a bug in Kinto code, but responsibility is ours. Weāll:
ā¢ Migrate the token as fast as we can š”ļø
ā¢ Keep comms 100 % transparent
ā¢ Make every affected user whole as quickly as humanly possible
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