FX to PUNDIAI Token Migration Attack: How Coinbase Patched the Vulnerability
Coinbase just faced a sophisticated attack during a major token migration—and their response reveals how top exchanges handle crisis.
The FX to PUNDIAI migration wasn't just another routine upgrade. It became a live-fire test of Coinbase's security protocols when attackers spotted a vulnerability in the migration process. The exploit attempted to manipulate token conversion rates, potentially draining value from legitimate holders.
Coinbase's security team detected anomalous transaction patterns within minutes. Their automated monitoring systems flagged irregular conversion requests that didn't match typical user behavior patterns. The exchange's response followed a well-rehearsed incident protocol: isolate, analyze, patch.
The technical fix involved implementing additional validation layers for migration transactions. Coinbase engineers deployed smart contract updates that required multi-signature verification for bulk conversions. They also introduced time-delayed execution for large migration requests, creating a window for manual review of suspicious activity.
What makes this incident noteworthy isn't the attack itself—crypto attracts exploit attempts like Wall Street attracts subpoenas—but the transparency of the response. Unlike traditional finance's tendency to bury technical failures in legalese, Coinbase published a detailed post-mortem within 48 hours.
The exchange's quick containment prevented any customer fund losses, though the attack did cause temporary migration delays. Coinbase compensated affected users with fee waivers on subsequent transactions—a gesture that costs them little but builds considerable goodwill.
This incident demonstrates how mature crypto platforms now operate: expect attacks, detect early, respond transparently. The alternative—hiding technical vulnerabilities until they become existential threats—is how traditional finance created the 2008 crisis. At least in crypto, the skeletons come out of the closet while they're still manageable.
What Happened?
The migration of the Function X (FX) tokens to the new, rebranded PundiAI (PUNDIAI) token was interrupted unexpectedly.
The project group noticed a vulnerability attack on the Ethereum smart contract that was applied to the migration.
To avoid the additional harm, the developers paused the Ethereum contract, temporarily halting Function X withdrawals on exchanges, including Coinbase.
This made Function X holders anxious, particularly because Coinbase had already delisted FX trading previously and did not allow automatic token swaps. The pause left users without access to or the ability to move their funds.
On December 23, 2025, Coinbase Markets publicly announced the problem and described measures that had been implemented to revive withdrawals and guarantee user funds were not lost.
Source: CoinbaseMarkets X
What Issues Occurred and Why?
The main problem was a vulnerability exploit in the process of migration. The use of smart contracts is crucial in token migrations, and any vulnerability can be used by attackers. The warning signal raised in this instance, and the project team stopped the Ethereum contract to take security measures.
As the Ethereum contract was frozen, users who had FX in Coinbase were unable to withdraw their tokens. This was further aggravated by the fact that Coinbase had turned off automatic swaps earlier in 2025 and had already stopped trading in August.
Consequently, migration was left to be manual and was inaccessible in the short term. User uncertainty was also enhanced by the previous reports of swap bugs during the migration.
How Coinbase Fixed the Problem?
Coinbase collaborated with the project team to introduce a different solution to address the withdrawal problem without affecting the safety of its users, as:
The Coinbase exchange puts the same number of Function X tokens on the Base network, instead of the paused Ethereum contract.
This enabled users to withdraw their tokens instantly without having to wait until the Ethereum contract is restored.
Critically, made it clear that it would not automatically exchange FX to PUNDIAI.
The power is in the hands of the users: now they can withdraw Function X tokens on Base to a self-custodial wallet and choose to move it via the official Pundi AI swap portal.
This strategy reinstated access to funds as well as security.
Source: X
Basics of the FX Token Migration to PUNDIAI
The Function X token is redenominating and rebranding to PUNDIAI, which has been voted through governance. The exchange rate is 100 FX = 1 PUNDIAI, and this means that there is a drastic reduction in supply.
The migration will begin on February 25, 2025, and last three years, until February 25, 2028. The tokens on Pundi AIFX upgrade automatically on the Omnilayer, whereas the tokens on Ethereum and Base have to be migrated manually.
PUNDIAI will be used as the indigenous currency of the Pundi AI ecosystem, which will be used to support AI data platforms, marketplaces, and staking programs.
Source: X
Impact on Crypto Market and Investors
The accident points to the continued vulnerabilities of token migrations and smart contract security. Although the Crypto market was not much affected, it solidified the need to self-custody, verify manually, and take part in large-scale token swaps carefully.
Conclusion
A security vulnerability slowed down temporarily, but the Base network solution at the exchange allowed withdrawals, providing flexibility to the user and securing the money in the process of the migration.
Disclosure: The article is informational in nature and does not represent financial, investment, or trading advice. Investments in cryptocurrencies are market risky and volatile. It is recommended that the readers perform their own research (DYOR) prior to making any investment decisions. CoinGabbar is not liable for any financial loss.
