Coinbase suspends PlayDapp token trading in response to smart contract security breach

Coinbase recently halted trading of the cryptocurrency PlayDapp (PLA) following a major exploit of its smart contract.

This decision impacts several of Coinbase’s platforms, including Coinbase.com, Coinbase Prime, Advanced Trade, and Coinbase Exchange. This move was a direct response to actions taken by the Web3 gaming platform PlayDapp, which paused its smart contract’s functionality due to security concerns.

The suspension was implemented on Feb. 14, shortly after PlayDapp detected a security breach on Feb. 9. This breach involved unauthorized access to the platform’s private keys, leading to the minting of 200 million PLA tokens, with an estimated value of $31 million at the time. Blockchain security firms PeckShield and Cyvers Alerts provided insights into the breach, noting a compromise in the deployer’s address, which allowed the attacker to add their address as a minter.

In a bid to address the situation, PlayDapp initiated direct communication with the hacker, proposing a $1 million reward for the return of the stolen assets. This offer was coupled with a warning of potential legal action, including involvement from the FBI if the assets were not returned.

Despite these efforts, PlayDapp’s customer service experienced downtime from Feb. 9 to 12, complicating the response efforts.

Elliptic, another blockchain security firm, detailed the escalation of the situation with an additional minting of 1.59 billion PLA tokens, valued at $253.9 million, on Feb. 12. This vast increase in supply, compared to the pre-hack total supply of 577 million PLA tokens, significantly challenges the hacker’s ability to liquidate the assets without detection.

In response to the ongoing challenges, PlayDapp announced the temporary suspension of its smart contract on Feb. 13 as part of a migration strategy to secure the platform’s operations. Following the breach, the PLA token experienced a notable drop in value, from $0.1823 to $0.1482, despite an increase in trading volume from $2.83 million to $60.17 million.

Prior to this incident, PlayDapp had made headlines for its innovative gaming solutions, such as the Along with the Gods play-to-earn game on the Polygon blockchain, despite facing sustainability challenges leading to the game service’s discontinuation in May 2023.

Meanwhile, PLA is not the only token recently suspended by Coinbase. In its ongoing efforts to maintain a secure and compliant trading environment, the platform had previously halted trading for several tokens. This list includes BarnBridge (BOND), DerivaDAO (DDX), Jupiter (JUP), Multichain (MULTI), Ooki (OOKI), and Voyager (VGX), reflecting Coinbase’s routine assessment process.