Ethereum-Based Synthetic Asset Platform Misplaces 37M Tokens

Ethereum-Based Synthetic Asset Platform Misplaces 37M Tokens

Synthetix has misplaced around 37M of its native synthetic ETH (sETH) in a supposed bot-led oracle attack. 

Synthetix has been subject to a bot-orchestrated oracle attack that temporarily misplaced tokens, with some assumed to be gone forever. Around 37M synthetic tokens were “missing” but have since been recovered.

Synthetix is a platform that allows users to create and trade synthetic currencies in a peer-to-peer setting on Ethereum. The native token is sETH.  It allows for real-world currencies to be recreated on the Ethereum platform as synthetic tokens.

According to Synthetix CEO Kain Warwick, the issue has been resolved but more details will soon come out on the mishap.

“There has been an incident with the price feed of sKRW, we are currently investigating the root cause, but during the time when the price feed was returning the wrong value we believe an automated arb bot converted into sKRW and then into sETH.”

The attack was done automatically, allegedly, by an arbitrage bot. The Synthetix team will be contacting the bot owner to get the bottom of what happened.

It is unclear whether Synthetix tokens are considered securities since they represent real-world assets that can be traded. Although the market currently suffers from low liquidity, there is a possibility for them needing to be registered as securities in the future. Ethereum, today, remains the most popular platform for security tokens.

Do you believe the Synthetix controversy was due to a mere bug? Let us know your thoughts below in the comments.

Image courtesy of State of the DApps. 

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