Game developer to investigate $650 million crypto theft

A Vietnamese cryptocurrency platform that hosts a popular online game announced last week that it was investigating a security breach in its network that resulted in the theft of more than US$600 million in crypto.

Ronin Network, a program used by players of the non-fungible token (NFT) based game Axie Infinity, was infiltrated by hackers who took 170,360 ether (a cryptocurrency much like bitcoin) from worth over $600 million as well as $25.5 million. Coin, a cryptocurrency pegged to the US dollar. (Photo: Marco Verch, Flickr, License)The incident is one of the largest recorded hacks in the video game industry.

Ronin Network, a program used by players of the non-fungible token (NFT) based game Axie Infinity, was infiltrated by hackers who took 170,360 ether (a cryptocurrency much like bitcoin) from worth over $600 million as well as $25.5 million. Coin, a cryptocurrency pegged to the US dollar.

An NFT is a digital file, such as a photo or video, that can be exchanged. Its sales history is recorded and stored on what is called a blockchain. Each NFT is attached to a unique token, which allows an individual to prove that they are the current owner of the file.

Axie Infinity has an in-game economy that runs on NFTs that take the form of digital pets known as Axies, which basically look like colorful quadrupedal blob monsters. Just like the popular Pokemon game, players can breed and battle their pets with each other.

Ether is used as the currency to buy and sell Axies with other players, with Vietnam-based game developer Sky Mavis taking a commission from each transaction.

In its press release, Ronin said hackers gained access to its players’ ether stores by acquiring five of the nine validation signatures needed for the network to recognize a withdrawal request filing.

Now with the means to trick the network into complying with their withdrawal demands, the hackers took off with over $600 million in cryptocurrencies that had been stored by the game’s player base.

As a precaution, Ronin said it has temporarily shut down the “Ronin Bridge” to “ensure that no other attack vectors remain open” while security vulnerabilities in the system are addressed.

As Axie Infinity is based on a “play-to-earn” (P2E) model, in which players must make an initial financial investment to progress and potentially earn rewards, the game appears as a form of gambling. If a player does not fails to breed his blob monster properly or if he invests in a monster that other players don’t want, he ultimately suffers a financial loss.

Additionally, since the in-game savings in P2E games largely depend on attracting new players and maintaining their long-term financial interest, they drew comparisons to Ponzi schemes.

Although on the other hand, with a thorough understanding of game mechanics and wise investment planning, gamers can actually enjoy P2E games to the point that they can support themselves in real life.

At the moment, however, with Axie Infinity players currently unable to make withdrawals from the Ronin Network, the game’s economy will certainly take a serious hit.

In addition to addressing its security vulnerabilities, Ronin announced that it is working alongside “various government agencies to ensure criminals are brought to justice.”

And as for players whose ether was stolen from them, Sky Mavis said it is “committed to ensuring that any funds drained are recovered or refunded.”