Secret Network lost 4.67 million dollars due to a cross-chain vulnerability, and the attack went undetected for seven days

The blockchain research organization Common Prefix disclosed that on June 10, hackers exploited a vulnerability in the Secret Network and Axelar cross-chain bridge contract to forge deposits and mint uncollateralized tokens, subsequently cashing out approximately $4.67 million.

The attack went undetected for seven days until a normal cross-chain transfer failed due to insufficient funds in the escrow account on June 17, revealing the anomaly. The root of the vulnerability lies in the fact that when the contract changed from an escrow model to a minting model, it deleted two key functions responsible for verifying the source of transfers, and it had never undergone an external audit since its deployment in early 2023. Secret Network pointed out that the Axelar bridging infrastructure failed to trigger any effective anomaly monitoring or emergency pause mechanism before the assets were stolen on a large scale.

The stolen funds were routed through Osmosis to Ethereum and exchanged for ETH on CoW Protocol, then dispersed into exchanges such as KuCoin, ChangeNow, and HitBTC. Currently, approximately $672,000 remains in the attackers' Axelar wallet. Secret Network has requested Axelar to freeze that address, but the request was denied. Axelar emphasized that its core protocol was never affected, and the exploited contract was not developed or maintained by Axelar. Currently, Axelar has disabled the related cross-chain connections and stated that it is coordinating follow-up actions with exchanges and law enforcement agencies.