On Sunday, Loopring, a decentralized protocol utilizing Ethereum's zero-knowledge roll-up technology, disclosed a significant security vulnerability affecting its smart wallets connected to the Loopring Official Guardian. The incident led to the compromise of a subset of wallets, with the attacker exploiting the vulnerabilities of the Official Guardian. This breach allowed the malicious actor to impersonate wallet owners, initiating unauthorized recoveries on wallets solely reliant on the compromised Guardian. The attacker targeted the Official Guardian and 2FA service, resulting in the theft of substantial assets from several wallets.

Loopring, in collaboration with the blockchain audit firm Cyvers Alert, identified and publicly disclosed the two malicious wallets involved. Onchain data from Etherscan revealed that one of the hacker's wallets seized approximately $5 million worth of assets from the compromised wallets. The stolen assets have since been swapped for ETH, with the wallet still holding 1,373 ETH valued at $5 million. It's crucial to note that not all wallets were exposed, as those employing multiple guardians or alternative third-party guardians remained unaffected.

In response to the incident, Loopring has temporarily suspended all Guardian-related and 2FA-related operations, effectively halting the compromise. The network is working closely with Mist security experts and law enforcement agencies to investigate the breach of their two-factor authentication service and track down the malicious actors. Loopring encourages anyone with additional information about the exploit to come forward and has committed to providing updates as the investigation progresses. Demonstrating its dedication to protecting users, Loopring remains steadfast in its commitment to safeguarding their interests.

Following the news of the attack, Loopring's native token, LRC, experienced a slight reaction. According to data from Coingecko, LRC is currently trading at $0.2199, reflecting a 2.7% decrease in the past 24 hours and an 18% decrease over the past 7 days. Despite this, Loopring's efforts to address the security breach and ensure the security of its users' assets are ongoing.

The incident serves as a reminder of the importance of robust security measures in the decentralized finance (DeFi) space. As DeFi protocols like Loopring continue to grow and evolve, it's essential for users to remain vigilant and take necessary precautions to protect their assets. Loopring's swift response to the security breach and commitment to user safety demonstrate its dedication to maintaining a secure and trustworthy platform for its users. As the investigation unfolds, Loopring will likely implement additional measures to prevent similar incidents in the future, further enhancing the security of its ecosystem.