On January 3, 2023, the cryptocurrency market underwent a substantial price plummet, leading to a rapid liquidation exceeding $600 million within a single hour. This unexpected event sent shockwaves through the crypto community, leaving investors and enthusiasts grappling with the aftermath of this significant downturn.
Gamma’s security incident
Amid a crisis, Gamma, a protocol focused on active liquidity management and market-making, addressed a security incident transparently on X (formerly Twitter). The team acknowledged the issue, assured users of active monitoring, emphasized user security, and urged the community to take immediate precautions to safeguard assets.
An hour after Gamma’s initial post, the protocol made another announcement on X, advising all users to withdraw their approvals to prevent potential fund losses. They stated, “We recommend all users to review approvals immediately while we investigate.”
During this incident, Gamma, as a market maker handling a substantial amount of funds to provide liquidity in crypto exchanges, faced the risk of significant losses. Subsequently, a security firm named PeckShieldAlert posted on X, stating that they were closely following the ongoing security incident and had identified a security issue related to Gamma’s strategies.
$2.2 million Crypto theft uncovered
After hours of research and analysis, PeckShieldAlert reported that Gamma Strategies had been exploited, resulting in exploiter-labeled addresses transferring a net of 1,000 Ethereum (ETH) worth around $2.2 million to Tornado Cash. However, Gamma Strategies had not confirmed this loss of 1,000 ETH at that point.
The exploiter utilized Tornado Cash to legitimize their source of funds by removing any links between the exploited wallet and Gamma Strategies. Tornado Cash removes all connections linked to deposits and withdrawals, making it challenging to trace the origin of the funds.
Additionally, looking at the amount of crypto lost in the last month, from December 4, 2023, to January 4, 2024, data shows a total loss of over $45 million. However, despite this recent incident, 2023 saw a relatively better year in terms of crypto losses compared to the previous two years, with a total loss of around $1.85 billion. The outlook for 2024 in terms of crypto losses remains uncertain.
