K9 Finance Offers Bounty for Return of Funds After Shibarium Exploit

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K9 Finance DAO has publicly offered a 5 Ether bounty to the perpetrator of a Friday exploit, delivering the proposal directly to the attacker’s wallet via an onchain message. The offer was made only after the project first froze approximately $700,000 in stolen $KNINE tokens, a strategic move that renders the assets untradeable and presents the bounty as the only way for the attacker to profit.

Key Points

• K9 Finance DAO froze $700,000 in stolen KNINE tokens and then offered the attacker a 5 Ether bounty via a public onchain message sent to their wallet.
• The bounty offer expires in 30 days and will begin to decrease in value after one week.
• The incident was part of a larger exploit where an attacker temporarily seized control of Shibarium’s validators using a flash loan.

The move followed a broader attack on Friday where a significant amount of digital assets were drained from the Shibarium bridge. According to Shiba Inu lead developer Kaal Dhairya, the event was a “sophisticated (probably planned for months) attack” carried out with a flash loan that allowed the attacker to gain majority control of the bridge’s validators and authorize a malicious transfer.

A Tactical Response

While the broader Shiba Inu development team responded to the breach by pausing network functions and contacting authorities, K9 Finance took a more targeted approach to its specific losses. The project’s developers first used an emergency function to blacklist the attacker’s wallet, immobilizing the stolen KNINE.

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Only after securing the assets did the team extend the bounty offer on the blockchain. Buzz, the K9 Finance DAO’s pseudonymous lead developer, confirmed the strategy in a public statement. “They will never be able to sell or move these tokens,” he wrote. “Their only way of getting value is accepting the bounty.”

The offer was deployed via a trustless smart contract that remains active for 30 days and will see its reward decrease after one week.

Related: Utility Tokens Explained: What They Are and How They Actually Work

Details of the Exploit and Response

The attacker initiated the exploit by using a flash loan to acquire 4.6 million BONE tokens. This temporarily gave them enough delegated power to achieve a majority among the bridge’s validators, allowing them to sign and approve a malicious transaction that transferred assets to their own wallet.

In a statement on X, Dhairya confirmed the technical details of the attack and the team’s immediate response, which included moving funds to a secure hardware wallet. While pursuing a formal investigation, he also signaled an openness to negotiate.

“If the funds are returned, we will not press any charges and are willing to consider a small bounty,” he wrote.

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YONA GUSHIKEN

Yona brings a decade of experience covering gaming, tech, and blockchain news. As one of the few women in crypto journalism, her mission is to demystify complex technical subjects for a wider audience. Her work blends professional insight with engaging narratives, aiming to educate and entertain.

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Yona has no crypto positions and holds no crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is the official publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.