An unfortunate theft of 20 million Optimism tokens occurred because of a faulty address.

Optimism, an Ethereum scaling solution, endured a loss of 20 million OP tokens (roughly $15 million) after Wintermute supplied the team with an incorrect wallet address on or around May 30. The hacker took advantage of this error, gaining access to the funds and promptly transferring 1 million tokens to another account.

How did it happen?

The Optimism Foundation had sought the assistance of Wintermute for liquidity services, and as part of this arrangement, the Foundation's Partner Fund granted 20 million OP tokens to facilitate a smoother user experience when acquiring tokens.

Although Wintermute had shared an address for the tokens and conducted two test transactions prior to the final fund transfer, they encountered some technical glitches. Instead of providing a secure multi-signature wallet, Wintermute mistakenly supplied an Ethereum address that had not yet been deployed to Optimism Layer 2, according to the foundation. statement. In straightforward terms, the hacker managed to deploy the multisig on Layer 2 using different initialization parameters before the recovery operation could be executed, allowing them to take over the 20 million OP tokens.

In essence, the hacker sidestepped Wintermute's recovery attempts, leveraging the vulnerability to keep control over the stolen funds. Since the incident, they've already liquidated 1 million tokens.

What now?

Wintermute has expressed their intention to repurchase the tokens as they are sold off by the hacker.

The company’s CEO Evgeny Gaevoy has admitted Wintermute acknowledges that they made a significant mistake and has reached out to the hacker with a message. They proposed that should the hacker return the funds to Optimism, they would be treated as a 'white hat' rather than a malicious actor.

The communication states, 'Furthermore, the method of the attack was fairly impressive; we might even consider future consulting opportunities or other collaborative efforts. If the remaining 19 million tokens could be returned to the Optimism wallet, that scenario would also be satisfactory.'

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'You have one week to contemplate becoming a white hat. If this doesn't occur, we will fully pursue all avenues to recover the funds, identifying and exposing those responsible for the exploit and taking necessary legal actions.'

There’s still uncertainty about what will happen next. The Optimism Foundation has the option to restore the funds through a hard fork but is leaving the ultimate decision up to community members.

Essentially, a network upgrade could potentially stop the movement of OP tokens that have yet to be sold or transferred, but they’re hesitant to take that leap due to the implications it could have.

We won't implement such measures right now, respecting the permissionless nature of the Optimism network while adhering to its design principles.

— Optimism (✨🔴_🔴✨) (@optimismPBC) June 8, 2022

Optimism's blockchain offers a groundbreaking alternative to Ethereum, promoting lower gas fees and a reduced ecological footprint by combining transactions. However, the OP token’s launch has faced challenges, as its value plummeted by 16.78% today, trading at $0.829.

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