Decentralized exchange LeetSwap, which runs on Coinbase’s Base network, has declared a temporary halt on trading activities due to concerns over a possible exploit.
The exchange made this announcement via a tweet on August 1st, after discovering potential compromises in some of its liquidity pools.
As a precautionary measure, LeetSwap suspended trading to conduct a thorough investigation into the matter.
To aid in resolving the issue, the exchange has enlisted the assistance of on-chain security experts in an attempt to recover the locked liquidity.
Although LeetSwap did not divulge detailed information about the incident, a number of blockchain experts have offered their insights into how the exploit might have occurred.
According to Igor Igamberdiev, the head of research at algorithmic market maker Wintermute, the attacker may have taken advantage of an exposed smart contract function.
By leveraging this vulnerability, the attacker would have been able to artificially increase the price of a token, thereby draining wrapped Ether (ETH) worth $1,828 from LeetSwap’s liquidity pools.
Igamberdiev estimated that the attacker gained approximately 342.5 ETH, equivalent to over $630,000.
Several blockchain security firms, including PeckShield, Beosin, BlockSec, and CertiK, have corroborated Igamberdiev’s theory about the exploit and the amount that was siphoned.
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LeetSwap subsequently provided an update approximately an hour and a half after the trading halt, stating that they are actively collaborating with security experts to explore options for recovering the locked liquidity on their platform.
This incident marks the second controversy related to the Base network on the same day. Earlier, a developer of a memecoin called BALD, which was inspired by Coinbase CEO Brian Armstrong, removed liquidity for the token, causing its price to plummet.
The move sparked accusations of an exit scam, which the project developer vehemently denied.
In response to the exploit, LeetSwap has taken swift action and has engaged with industry experts to ensure the safety and integrity of its platform.
Users and the broader cryptocurrency community are keenly monitoring the situation as the investigation unfolds, awaiting further updates from the exchange and security teams involved.
As the decentralized exchange space continues to evolve, the incident serves as a stark reminder of the importance of robust security measures to protect user funds and assets.
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