Loopring, the zkEVM protocol operating on Ethereum and known for its smart wallet application touted as "Ethereum's most secure wallet," revealed a security breach related to its 'Guardian' two-factor authentication (2FA) service. The protocol announced the incident on Sunday, highlighting that the Guardian service, intended to enlist trusted entities for security operations, was compromised by a hacker.

The breach allowed the hacker to bypass Loopring's Official Guardian service, enabling unauthorized transactions on wallets with a single guardian. However, wallets utilizing multiple guardians or third-party guardians remained safeguarded against the exploit. Loopring disclosed that the hacker drained approximately $5 million worth of tokens from the affected wallets, citing two wallet addresses involved in the security breach.

In response, Loopring has taken immediate action, suspending Guardian-related and 2FA-related operations to prevent further compromise. The protocol is collaborating with security experts from Mist to investigate the breach thoroughly. Additionally, Loopring has initiated cooperation with law enforcement to track down the perpetrator and urged individuals with relevant information to come forward.

While the attack caught Loopring off guard, the protocol's risk disclosure statement acknowledges the potential vulnerability of its Guardian service and advises users to designate at least three guardians for added security. Loopring acknowledges the centralized nature of its Official Guardian service, which could be targeted by hackers.

Following the disclosure of the hack, Loopring's native token experienced a 5% decline in value over the last 24 hours, reflecting investor concerns over the security breach. Loopring assures its users of ongoing efforts to enhance security measures and restore trust in the platform amid the aftermath of the incident.