Gala Games, a GameFi initiative, disclosed that it recently sued pNetwork, a cross-chain interoperability bridge that Gala used on the BNB smart chain.
According to the lawsuit, the event was caused by “negligent and tortious interference” by pNetwork.
Gala Games, a leader in web3 entertainment, recently sued pNetwork, a cross-chain bridge supplier, for negligence and unlawful interference with business prospects.
Gala Games was hacked in November of last year after over $2 billion in GALA tokens were created by an illegal wallet address and deposited on PancakeSwap, draining $4.5 million from the liquidity pool and sharply depressing the price of GALA tokens.
The event may have been caused by a plain text private key leak in one of three pNetwork-related smart contracts on Gala, according to a claim made by blockchain analytics platform SlowMist back in November 2022. According to SlowMist, the compromised secret key was accessible to everyone on GitHub.
The GALA coins are also a crucial part of Gala’s operations. Given that the entire purpose of pGALA is dependent on the usefulness of the GALA tokens themselves, pNetwork was conscious of the potential economic benefit in the value of GALA tokens.
Gala claims that pNetwork ignored a flaw in its code that falsely appeared to be a 1B hack, unjustly caused an interruption in the market for Gala’s own native token, GALA, and necessitated a significant outlay on Gala’s part.
According to the lawsuit, pNetwork acknowledged that when deploying this pGALA bridge, it unintentionally exposed a governance key. This key was subsequently used by an attacker to violate the pGALA contract on the BNB chain.
Furthermore, the assets that were the target of the assault were not recovered by the rescue plan that pNetwork outlined and carried out, which resulted in additional damage.
A pNetwork representative told cointelegraph that they have already provided the Swiss authorities with a thorough report that describes the complete incident.
Gala Games claims that the alleged violation resulted in over $25 million in penalties and is suing pNetwork for $27.7 million with “ out-of-pocket costs due to the breach, additional compensation for injuries, punitive damages, and other relief .” The firm states that by issuing pGALA, pNetwork aimed to increase the use of its platform and that pNetwork profited from its affiliation with Gala Games.