Memecoins Under Siege: Shibarium Hack Shakes Confidence
In the ever-volatile world of cryptocurrency, even the quirkiest meme tokens aren’t immune to the winds of change. The recent hack of Shiba Inu’s layer-2 network, Shibarium, has sent shockwaves through the memecoin market, putting both SHIB and Dogecoin under significant pressure. On Sunday, Shibarium fell prey to a flash loan attack, losing around $2.4 million in ether and SHIB. The incident has cast a shadow over investor confidence in these so-called “joke” cryptocurrencies, underscoring the persistent security challenges facing blockchain technology.
The Anatomy of the Attack
The attack began when the perpetrator borrowed 4.6 million BONE, the governance token for the Shiba Inu ecosystem, through a flash loan. Flash loans allow borrowers to access substantial sums without upfront collateral, provided they’re repaid within the same blockchain transaction. With this borrowed BONE, the attacker seized control of the majority of validator keys within Shibarium. These keys function as the network’s gatekeepers, responsible for confirming transactions and maintaining security. By commandeering them, the hacker orchestrated unauthorized transactions, siphoning off a significant amount of crypto assets from the bridge connecting Shibarium with the Ethereum blockchain.
Thankfully, the Shiba Inu team managed to avert a larger crisis. The BONE tokens that the attacker used were reportedly linked to validator 1 and remained locked by staking rules, preventing an even more extensive breach. Still, the market’s reaction was swift and unforgiving, reflecting the inherent vulnerability of blockchain systems.
Market Reaction: SHIB and BONE Feel the Heat
Following the breach, SHIB experienced its most significant decline in three weeks, slipping 4% to $0.00001369 on Sunday. The token continued its downward trajectory, recently trading at $0.00001359. Throughout the 23-hour trading window ending September 15 at 02:00 UTC, SHIB’s price oscillated within a 4% range, highlighting the volatility that has come to characterize the token.
The trading session started shakily, with SHIB dipping from $0.000014156 to a critical low of $0.000013547 by 14:00 UTC. During this period, trading volume surged to 1.064 trillion tokens, surpassing the 24-hour average and indicating intense selling pressure. However, technical analysis suggests a potential recovery, as SHIB established higher lows and showed signs of consolidation between $0.000013600 and $0.000013780. The presence of ascending channels suggests a possible continuation toward the $0.000014000 resistance, although caution remains paramount.
Similarly, BONE, which had initially doubled to over 36 cents, has since declined by over 2%, trading around 20 cents. The broader market’s cautious sentiment is palpable, with the CoinDesk Memecoin Index dropping 6.6% in the past 24 hours, compared to a 2.3% dip in the broader CoinDesk 20 Index.
Dogecoin’s Decline: A Ripple Effect
The turbulence in the memecoin sector hasn’t spared Dogecoin either. DOGE fell 4% to 27.80 cents on Sunday and has since slid further to 27.36 cents. To add to the bearish sentiment, a massive Dogecoin transfer to a centralized exchange has rung alarm bells. Whale Alert reported that crypto exchange OKX received 119,306,143 DOGE, valued at over $34 million, from an unknown wallet. Such large transfers often signal an intention to liquidate holdings, adding to market unease.
Balancing Optimism with Caution
While the recent events have undeniably shaken investor confidence, it’s important to remember that the cryptocurrency landscape is nothing if not resilient. The swift action by the Shiba Inu team to contain the breach demonstrates a capacity for crisis management that could reassure some stakeholders. Moreover, the technical indicators hint at a potential recovery for SHIB, suggesting that this setback might not spell long-term doom for the token.
That said, the incident serves as a stark reminder of the security challenges that continue to plague blockchain technology. Investors and developers alike must remain vigilant, prioritizing robust security measures to prevent similar breaches in the future. As the memecoin market navigates this rough patch, maintaining a balanced perspective will be crucial. While the potential for profit remains alluring, the risks cannot be ignored.
In the coming days, all eyes will be on the memecoin market, watching for signs of recovery or further decline. Whether SHIB and Dogecoin can regain their footing remains to be seen, but one thing’s for certain: in the world of cryptocurrency, the only constant is change.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
