Within the past day, Veve, an NFT marketplace with experience as the official launch partner of brands including Marvel and Pixar, announced that it fell victim to an exploit. It appears that the marketplace was flooded with illegitimate gems, a token that the marketplace utilizes to facilitate transactions. In response, Veve temporarily shuttered the marketplace and restricted accounts it had flagged.
“Right now, we’ve been hyper-focused on security surrounding digital exchanges, particularly as war between Russia and Ukraine has crescendoed into cyber warfare. However, this is notable because of the wide appeal for NFTs, and it is important to note that digital assets of all stripes are potential targets for bad actors. That’s why it is so important for marketplaces and exchanges to take their security apparatus with the utmost seriousness. There’s no room for ‘good enough’ in this arena,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
In a series of tweets, Veve noted that, “We have become aware of an exploit of our systems which resulted in a large amount of gems being acquired illegitimately. We appreciate the members of the community that have come to us after noticing unusual activity… As a result of this exploit, we have closed the Market, Gem purchases and transfers while we investigate. We will update you on the expected timing of Market opening as soon as we can… Some users have had their accounts restricted while we investigate. We will be getting in touch with those users directly. We appreciate your understanding.”
“Practically, this affected users and the value of their digital assets. It appears that, after a stark increase in gem supply, the token’s value crashed before the marketplace was shut down. Users then saw the value of their NFTs plunge. This shows that an exploit like this can be as harmful as a hack where assets are taken. There is real risk involved, and the number one thing that investors should consider is the security that their chosen marketplace employs,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“We’ve been building financial exchanges and marketplaces since before Bitcoin was first minted. And, watching the industry like I do, I can tell you that, once digital assets became hot, investors flooded the market, making large investments in marketplace and exchange operators, all hoping to cash in. Unfortunately, many operators used the lion’s share of their investment on marketing to bring in customers, rather than on building the technology stack necessary to protect their customers’ assets. This should be a wake-up call to all marketplaces. Secure your operation before it is successfully targeted by bad actors,” said Gardner.