Safemoon liquidity pool exploited—public burn bug to blame?

On March 28, SafeMoon, a DeFi project, announced on Twitter that the liquidity pool (LP) associated with it had been compromised.

Safemoon Liquidity pool hacked

SafeMoon has yet to disclose the cause of the incident, but security firm PeckShield believes it may be attributed to a contract upgrade that introduced a public burn bug. This would potentially allow anyone to destroy tokens, with the possibility of an admin key leak by the deployer contract. However, the implications of this incident are still uncertain and it is unclear how much cryptocurrency, if any, has been stolen or recovered.

This news comes at an inopportune time for SafeMoon which recently touted its security product, Orbital Shield. The hack does not appear to be directly related to the said product but casts doubt on the project’s wider security efforts nonetheless. As a result, the SFM token value decreased by 4.86% yesterday. SafeMoon CEO John Karony (aka Captain Hodl) shared an initial statement on his personal Twitter account and promised that steps are being taken to resolve the issue.

Safemoon surrounded by controversy

Since its launch in 2021, the DeFi-focused project SafeMoon has been embroiled in controversy and legal troubles. In 2022, YouTube host Coffeezilla alleged that the project’s former CEO, Kyle, had committed fraud and that the current CEO John Karony had stolen funds from the project. The project also faced several class action lawsuits which accused it of running a pump-and-dump scheme and violating securities laws. In November 2022, one of those lawsuits was dropped, causing the SFM token to surge briefly; however, its value soon fell drastically and remained largely unchanged since reaching its all-time high in March 2022. Despite the project’s efforts to redeem itself through redistribution, LP acquisition, and token burns, SafeMoon has failed to gain back the trust of investors.