Gala Games Files $28 Million Lawsuit Against pNetwork Over Code Misconfiguration

The lawsuit claims that pNetwork's "negligence and tortious interference" in the pGALA incident had negatively impacted the market's perception of $GALA tokens and harmed the company's reputation.

Mar 21, 2023
by Akira Ming
Gala Games Files $28 Million Lawsuit Against pNetwork Over Code Misconfiguration

PNetwork is sued by Gala on the grounds of negligence

Gala Games, a leading blockchain gaming firm, has launched a $28 million lawsuit against pNetwork, a cross-chain bridge provider. 

According to Gala, pNetwork previously failed to address a code misconfiguration in an event tied to the unusual activity of pGALA tokens in November 2022. The incident, according to the firm, gave the false appearance of a $1 billion hack and caused a disturbance in the market for Gala's native token, $GALA, and necessitated a significant expenditure by Gala as a result of this disruption.

$GALA is a native ERC-20 token on the Ethereum blockchain that has been bridged to BNB Smart Chain (BSC) via a bridge dApp built and managed by pNetwork. Users could deposit their $GALA tokens into the contract and obtain the resulting pAsset – pGALA. 

Last November, $GALA fell 27% on rumors of a billion-dollar crypto hack after people saw a single blockchain address minting over $1 billion in $GALA from nowhere. To avoid confusion, pNetwork quickly clarified that the company was behind the unusual mint to help drain a faulty PancakeSwap pool containing pGALA tokens. 

The lawsuit alleges that the incident was caused by pNetwork's "negligence and tortious interference." According to Gala, pNetwork revealed that while deploying the pGALA bridge, its engineers mistakenly left a key in the public GitHub repository, which an attacker later used to breach the pGALA contract on BNB. Unfortunately, pNetwork's subsequent actions failed to recover the targeted assets, resulting in further damage. 

"When pNetwork negligently and recklessly caused a security breach and intentionally carried out a failed recovery plan that caused further harm, it negatively impacted the market's perception of Gala and the GALA tokens, damaged Gala's reputation, and caused harm to its relationships with exchanges," wrote Gala in a statement. 

"Gala is seeking $27,671,934.80 for the out-of-pocket costs due to the breach, additional compensation for injuries, punitive damages, and other relief the court would deem just and equitable."

Commenting on the lawsuit, a representative for pNetwork said: "We would like to express our genuine surprise & concern upon hearing the recent announcement by GALA Games to sue pNetwork. We would like to clarify that, three months ago, we had already submitted a comprehensive report to the Swiss authorities detailing the entire incident." 

PNetwork added that the report includes full conversations and relevant documentation, as well as evidence of then-deleted messages from the GALA Games team, which demonstrated their role in planning, supporting, and communicating the white hat intervention. 

As of now, none of the allegations have been substantiated in a court of law. PNetwork stated that it "will continue to work closely with the Swiss authorities and provide any further information as needed in order to resolve this issue in the best interests of all parties involved."

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