GMX Plunges After $40M Exploit Rocks Legacy V1 Platform—DeFi’s ’Security Theater’ Strikes Again
Another day, another crypto heist—this time hitting GMX's aging V1 infrastructure. The $40 million digital grab-and-dash sent the token tumbling, proving once again that 'code is law' until it isn't.
When the dust settles, expect the usual cycle: forensic threads, exchange freezes, and a fresh round of 'we're beefing up security' PR spin. Meanwhile, traders left holding the bag get to enjoy that special blend of rage and resignation unique to decentralized finance.
Funny how these exploits always happen on Fridays—almost like hackers read those 'weekend liquidity crunch' research reports too.
GMX declines as hacker drains $40 million from V1 platform
Decentralized exchange GMX was the subject of a hack on Wednesday after revealing that an attacker had compromised its Arbitrum-based V1 platform and looted $40 million. The incident also affected GMX V1's liquidity provider, GLP, but left its native token, the upgraded V2 platform, other associated markets and liquidity pools unscathed.
"The exploit does not affect GMX V2, its markets, liquidity pools, or the GMX token itself. Based on the available information, the vulnerability is limited to GMX V1 and its GLP pool," GMX said in an X post on Wednesday.
The hacker bridged $9.65 million of the stolen funds to the Ethereum network and exchanged them into DAI and ETH, according to Lookonchain data. As a result, the exchange stated that it has disabled trading on GMX V1, along with minting and redeeming of GLP on both Arbitrum and Avalanche networks to prevent further attacks.
"Our primary focus is on recovery and pinpointing the root cause of the issue," GMX added.
Following the development, on-chain security firm SlowMist identified a design flaw in the exchange's architecture as the primary cause of the security breach.
SlowMist stated that the vulnerability centers around how GMX V1 handles short position operations, exposing a weakness that was ultimately exploited to manipulate token pricing and drain funds from the protocol.
"The root cause of this attack stems from GMX V1's design flaw where short position operations immediately update the global short average prices," SlowMist wrote in an X post on Wednesday.
GMX has reportedly issued a white-hat bounty offer of 10% to the exploiter, urging a "swift and ethical resolution." The team stated that if the stolen funds are returned within 48 hours, they will not pursue any further legal action.
GMX joins the list of crypto exchanges that have suffered losses from hackers in 2025. Other exchanges with similar attacks include Bybit, which lost $1.4 billion in February and Cetus DEX on Sui, which was the victim of a $220 million heist in May.
GMX is down 15% over the past 24 hours, changing hands NEAR $12 at the time of publication.
