In a dramatic turn of events, the blockchain-based asset tokenization platform Holograph was compromised due to a security loophole on June 13. A disgruntled ex-contractor manipulated the Holograph protocol, leading to the unauthorized creation of 1 billion Holograph (HLG) tokens, valued at approximately $14.4 million.
The market reacted swiftly to the breach, with HLG token prices tumbling nearly 80%, from $0.014 to a mere $0.0029 in a matter of hours. Although there was a brief attempt at recovery, with prices inching up to $0.0049, they eventually settled at $0.002887.
**The Culprit Behind the Curtain**
An exhaustive internal probe, conducted in collaboration with blockchain cybersecurity experts Halborn, culminated in a detailed report on July 2. The findings pointed to a former contractor who had retained administrative rights over the Holograph Protocol v1 contracts.
Armed with a proxy wallet, the individual in question proceeded to mint and then unload the HLG tokens on the public market, precipitating a steep decline in their value. This orchestrated assault took advantage of the ex-contractor’s elevated system access.
**A Breach Foretold**
The post-mortem analysis revealed that the ex-contractor had, months prior, embedded harmful tasks within the HolographOperator V2 contract. On the fateful day, these tasks were triggered, facilitating the mass minting of HLG tokens.
The newly minted tokens were rapidly moved across several blockchain networks, including Ethereum, Binance Smart Chain, and Polygon. Their quick sale across various exchanges was the catalyst for the token’s severe depreciation.
**Holograph’s Road to Recovery**
In response to the incident, Holograph is considering legal action and has already bolstered its operational risk management to avert similar insider threats in the future. The team has committed to burning only the tokens in circulation to realign with the original issuance timeline.
Operations at Holograph have been restored, with the v2 protocol’s bridging functions reactivated. Key exchanges such as Bybit, Gate, KuCoin, Bitget, and Backpack have been notified that it is now secure to resume HLG transactions.
Holograph is poised to release further details on the progress of asset recovery efforts and the ongoing legal investigation.
**Parallel Breach at Bittensor**
In a separate but related security breach, the Bittensor network was brought to a standstill on June 3 following a sequence of wallet compromises, resulting in the theft of digital assets worth at least $8 million. Bittensor’s co-founder, Ala Shaabana, has since confirmed that the attack has been contained and the network has transitioned to a secure mode of operation.
