GALA Incident Triggers Huobi Crisis

Recently, a controversial incident involving pNetwork and Huobi has drawn widespread attention in the cryptocurrency community. The incident originated from pNetwork's controversial actions to recover about $400,000 in liquidity, ultimately leading Huobi into a trust crisis of at least $250 million.

The incident originated from issues with the cross-chain bridge of the pNetwork project. In order to salvage liquidity, pNetwork issued 55.6 billion pGALA and implemented what is known as a "white hat attack." However, this operation was not communicated in advance with Huobi, resulting in a large amount of GALA being deposited into Huobi and sold. Some investors took the opportunity to arbitrage, while others, who genuinely aimed to buy the dip, were forced to accept pGALA at a lower value.

pNetwork's approach is considered to lack a fundamental understanding of the security of decentralized finance. They injected overissued tokens into the ecosystem without fully assessing the potential risks, an act seen as hasty and irresponsible. Afterwards, pNetwork also failed to provide a reasonable explanation for the increase in the engine and the potential insider trading, instead shifting responsibility between Huobi and GALA.

In the face of this crisis, Huobi's handling has also been heavily questioned. They failed to promptly suspend deposit and withdrawal activities, and rumors of possible improper operations within the company circulated. Subsequently, Huobi regarded all users who bottomed out GALA as arbitrage attackers and froze the related assets. Ultimately, Huobi pointed the finger at pNetwork, and the two sides fell into a public dispute.

This incident has also exposed some issues faced by cryptocurrency investors. Many blindly follow trends without a fundamental understanding of the industry, underestimating the risks involved. In this unregulated field, investors need to rely more on their own judgment.

It is worth noting that the security companies that usually actively participate in similar events were collectively absent this time. This is because the current crisis was not caused by smart contract vulnerabilities, but rather stemmed from the short-sightedness of industry participants, which goes beyond the scope of conventional security audits.

The loss caused by this incident is not just the $250 million on paper, but more importantly, the potential damage to Huobi's reputation. Although the memories of cryptocurrency investors may be short-lived, this incident will undoubtedly leave a mark in the history of the industry and may also evoke reflections on the original intentions of cryptocurrency.

As a blockchain security practitioner, although I have not participated directly, I hope to share these observations and insights with an objective and professional attitude through in-depth analysis of on-chain data, contributing to the healthy development of the cryptocurrency industry.