On 21st May, Gala Games’ smart contract was exploited with the unauthorized minting of 5 billion GALA tokens, worth $240 million. The attacker then managed to exchange $21 million worth of tokens to ETH via Uniswap before the remaining tokens were frozen and burned.
Within hours of the hack, Gala CEO Eric Schiermeyer, aka Benefactor, acknowledged the incident, admitting, “We identified the compromise and within 45 minutes we secured and removed unauthorized access to the GALA contract. We messed up our internal controls… This shouldn’t have happened.”
In an unexpected turn of events, on 22nd May, the attacker returned the ETH. The company announced it would likely convert the returned ETH back to GALA tokens. Schiermeyer later confirmed on Gala’s Discord server that “We will probably buy and burn on galaswap.”
This wouldn’t be the first time GALA tokens are unexpectedly burned. In 2023, Gala was surrounded by controversy after announcing it would fork its GALA token and reissue it as GALA v2, followed by burning 42% of these new tokens. The company claimed this was to mitigate the “fundamental risk to the overall tokenomics of the project.” While the explanation seemed somewhat plausible, the token burn still raised questions at the time.
It was later revealed that Gala’s two co-founders, Eric Schiermeyer and Wright Thurston, had filed lawsuits against each other involving hundreds of millions of dollars. Schiermeyer accused Thurston of stealing and selling at least $130 million worth of GALA tokens, prompting the GALA token fork and burn to render the allegedly stolen tokens worthless.
In Thurston’s counter-suit, he alleged that Schiermeyer enriched himself at the expense of Gala Games as a company and Thurston as a co-owner, referring to Schiermeyer’s control over various assets.
In response to the recent hack, web3 investor DWF Labs demonstrated its support for Gala Games by purchasing 28 million GALA tokens to “alleviate market selling pressures“.
It’s worth noting that DWF Labs was recently in the news with Binance’s surveillance team claiming it had manipulated the price of YGG tokens and at least six other tokens, processing over $300 million in wash trades during 2023.
Despite its immediate plunge following the exploit, due to the return of funds and DWF Labs’ investment, GALA has since recovered and its price has increased by 19% in the last 7 days.
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