Gala Games, a pioneer in Web3 entertainment, has filed a lawsuit against pNetwork, a cross-chain bridge provider, for negligence and tortious interference with business expectancy.
The lawsuit alleges that pNetwork failed to address a misconfiguration in its code, which caused a false appearance of a $1 billion hack, leading to a disruption in the market for Gala’s native token, GALA. Gala claims that the incident required a substantial expenditure of over $25 million to address the aftermath of the breach and caused reputational harm due to the market disruption.
The lawsuit states that pNetwork admitted to mistakenly leaking a governance key when deploying the pGALA bridge, which was later used by an attacker to breach the pGALA contract on the Binance Smart Chain (BSC). The recovery plan presented and executed by pNetwork failed to recover the assets that were the subject of the attack, causing further harm. Gala alleges that pNetwork sought to increase the utilization of its platform by issuing pGALA and that pNetwork benefited from its association with Gala Games. Therefore, pNetwork owed Gala a duty of care to avoid causing harm to the company or tokens.
The GALA tokens are an essential component of Gala’s business, and pNetwork was aware of the prospective economic advantage in the value of GALA tokens as the entire function of pGALA is tied to the utility of GALA tokens itself. When pNetwork negligently and recklessly caused a security breach and intentionally carried out a failed recovery plan that caused further harm, it negatively impacted the market’s perception of Gala and the GALA tokens, damaged Gala’s reputation, and caused harm to its relationships with exchanges.
Gala is seeking $27,671,934.80 for the out-of-pocket costs due to the breach, additional compensation for injuries, punitive damages, and other relief the court would deem just and equitable.
The breach occurred on November 3, 2022, when pNetwork informed Gala that the contract on the Binance Smart Chain had been breached due to pNetwork engineers mistakenly leaving a key in the public GitHub repository. pNetwork proposed a plan to deactivate the bridge and then emergency whitehat exploit their own contract. Gala and pNetwork contacted exchanges to alert them to the breach and immediately suspended deposits and withdrawals of the BEP-20 all pGALA. Following this, pNetwork initiated their whitehat attack, which was supposed to last for 2-3 minutes.
Gala Games is a Web3 games company that uses decentralization, player ownership, and reward economies to create a revolutionary new way of gaming. The company has dozens of games on the horizon and several already in various stages of presale or beta play. Gala Games is quickly becoming the world leaders in own-your-experience gaming.
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This article was republished from azcoinnews.com
