Within the space of a few hours, a scandal has emerged surrounding Oyster Protocol Token Contract which was hacked and a loophole was used to transfer tokens.
An alarm of the supposed scam broke through social media telling users to cease all trading of Oyster (PRL). It now appears the founder of the project, an anonymous developer known as Bruno Block, has exit scammed.
The team behind blockchain cloud-storage advertising solution Oyster Pearl (PRL) has apparently confirmed that founder Bruno Block exploited a bug in PRL’s smart contract to grant himself as many as 4 million tokens. These tokens were then immediately sold on KuCoin. The estimated value was roughly $1 million.
It appears to be an internal member of the team, who called up the transfer directory function about 6 hours ago and granted himself administrator rights. This function can only be performed with the private key of the person who created the smart contract.
According to reports, a transfer director function was used by the hacker who re-opened the ICO for PRL tokens and re-issued new tokens (1 ETH = 5000 PRL / .04 per PRL). According to Oyster, an upward of 3 million tokens were sent to KuCoin and sold at market price.
The platform has currently shutdown deposits and withdrawals on Kucoin to contain the situation.
This is surprising given the relative prominence of Oyster Protocol, which enjoyed a market cap of over $200 million near its peak and has consistently tended to rise above $100 million throughout the year.
The backstory seems to be that Bruno created the project with the intention of giving it a red hot go, the backdoors used for the exit were built in right from the start, written by Bruno. Security audits uncovered them, but Bruno used their trusted position to insist that they were necessary and should remain.
The exit took place now, with KuCoin planning to implement KYC procedures on 1 November. The introduction of KYC procedures at KuCoin may have forced their hand and created a now or never moment. That Bruno opted for the “now” option over a potential $300,000 might suggest a lack of faith in the project.