Some analysts have provided possible ways the exchange was exploited and pinned potential initial losses at over $600,000.
Decentralized exchange LeetSwap, which operates on Coinbase’s Base network has announced a pause on trading, citing concerns of a potential exploit.
LeetSwap tweeted on Aug. 1 that it noticed some of its liquidity pools may have been compromised and temporarily stopped trading to investigate. In a subsequent update, the exchange said it is working with on-chain security experts to try to recover locked liquidity.
While the exchange did not share many details, a number of blockchain sleuths have since provided some commentary about how the exploit is likely to have taken place.
Algorithmic market maker Wintermute’s research head Igor Igamberdiev believes the attacker used an exposed smart contract function, allowing them to increase the price of a token which would then allow them to drain wrapped Ether
$1,826 from LeetSwap’s liquidity pools.
Igamberdiev added the potential exploit has seemingly netted the attacker 342.5 ETH worth over $630,000.
Multiple blockchain security firms including PeckShield, Beosin, BlockSec and CertiK confirmed Igamberdiev’s theory and the amount exploited in separate tweets.
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In an update by Leet Swap roughly an hour and a half after it notified of the trading halt, it said it’s working with security experts to find a way to recover liquidity locked on the platform.
Allegations flew that the project was an exit scam which the project developer denied.