CertiK to launch compensation plan for $2M Merlin DEX exploit
Blockchain security firm CertiK is launching a compensation plan to cover the $2 million lost during a public sale of decentralized exchange Merlin’s MAGE token.
In a statement to Cointelegraph on April 26, CertiK reiterated it is investigating the exit scam and has also enlisted the remaining Merlin team to initiate the compensation plan. It said:
The blockchain security company is urging the rogue developer to return 80% of the stolen funds, conceding 20% as a white hat bounty.
The firm also pointed out that private key privileges are “committed to assisting impacted users” despite them being outside the scope of a smart contract audit.
Merlin lost about $850,000 worth of USD Coin (USDC) and some more relatively illiquid tokens on April 26 during its three-day MAGE token public sale without any hard cap. Blockchain data suggests that an exploiter with control over the liquidity pool was able to easily siphon the funds.
We did some research on Merlin smart contracts and we identified the malicious code responsible for the draining of funds.These two lines of code in the initialize function are essentially granting approval for the feeTo address to transfer an unlimited (type(uint256).max)… pic.twitter.com/mIksh4HkhB
CertiK, which audited Merlin’s code, responded with its initial findings pointing to a “potential private key management issue.”
We’re actively investigating the @TheMerlinDEX incident. Initial findings point to a potential private key management issue rather than an exploit as the root-cause.While audits cannot prevent private key issues, we always highlight best practices to projects.Should any foul…
Crypto Twitter questioned the CertiK audit, implying that there might be a rug pull.
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