A recent internal investigation has determined that a former contractor with a grudge was responsible for hacking the blockchain tokenization platform Holograph.
On June 13, a hacker exploited the Holograph protocol to create 1 billion native Holograph (HLG) tokens valued at $14.4 million. This resulted in an 80% drop in the value of HGL tokens within nine hours of the exploit, falling from $0.014 to a low of $0.0029.
According to CoinGecko data, HGL attempted to recover to $0.0049 before stabilizing at $0.002887 at the time of writing.
Holograph initiated an internal investigation with blockchain investigation firm Halborn and released details of the incident on July 2, revealing the involvement of a “disgruntled former contractor.” The former contractor created $14 million of HLG tokens using a proxy wallet and then sold them to crypto investors, causing the price to plummet.
The former contractor, now turned hacker, had meticulously planned the heist months in advance, aware that they had admin access to Holograph Protocol v1 contracts, which was later used as a backdoor.
Holograph plans to involve law enforcement in the investigation, and after identifying the cause, resumed operations on the v2 protocol and advised all crypto exchanges to allow HLG deposits and withdrawals.
The protocol will implement a plan to reduce the maximum supply of the HLG tokens to 10 billion. In response to community concerns about the inflated circulating supply, Holograph has not yet shared plans for recovering the lost funds and law enforcement proceedings in an upcoming update.
Holograph has implemented comprehensive measures to prevent insider attacks and other operational risks. The Bittensor protocol was also forced to halt its network activity on June 3 following a series of wallet drains that saw at least $8 million worth of digital assets stolen. The network outage was announced by Bittensor co-founder Ala Shaabana.