Hello, this is Allen Kim, the CEO of the XENT (formerly ENTC) Foundation.
As promised in the statement published on May 3, I am here to personally report on the emergency measures taken over the past 16 days to normalize the project and to discuss the compensation plan with our users and exchange partners.
I will explicitly articulate the progress and outcomes of all related matters in this report.
[Details of Emergency Measures]
(1) Hacking Incident Overview:
From around midnight on April 29, a token theft and contract ownership attack began, resulting in the theft of 84,438,355 ENTC tokens in the first phase and 640,000,000 ENTC tokens in the second phase. Most of the tokens stolen in the first phase flowed into the MEXC and LBank exchanges.
Of the stolen tokens, 7,850,000 ENTC were transferred to LBank, and the rest went to MEXC. There was no direct inflow into Bithumb from the hacker's account.
The tokens stolen in the second phase were moved to the hacker's external wallet as all exchanges suspended deposits and withdrawals. (Please note that the token amounts mentioned are based on the on-chain data, and there may be nominal difference upon verification with investigative authorities.)
While the hacker attempted to sell the stolen tokens on MEXC and LBank, our swift request to freeze deposits and withdrawals, and to freeze the hacker's assets, resulted in the freezing of the stolen tokens and sales proceeds.
At around 5 PM, we received a threatening contact from the hacker stating, "If you pay 1 million US dollars, I will return the ownership and tokens," and "Your token will be eventually delisted if you proceed with the swap." We ignored the threat, staying true to our principle of not negotiating with terrorists, and prepared for emergency measures such as the swap.
The Foundation immediately implemented security measures for the hacked accounts, informed users and exchange partners of the situation, and issued notices to carry out the emergency measures.
(2) Key Actions Taken by the Foundation:
On the day of the hack, the Foundation filed a legal complaint with the police, and the case has been transferred to the National Police Agency for investigation.
On April 29, we collaborated with a third-party security company to plan for contract modification and reissuance, and continuously provided data and requests to MEXC and LBank to prevent the hacker's funds from being withdrawn, resulting in the funds remaining frozen.
On May 2, we completed the issuance of the XENT token contract and expedited the renewal of our website and information pages to prevent misinformation and investor losses, announcing the rebranding and swap on May 5.
We decided to rebrand, changing the token name and symbol to XENT (originally planned for the 2025 mainnet), to avoid investor confusion and phishing by hackers, and completed the swap process.
By May 15, we had preemptively burned tokens, entrusted third-party cold wallets, revoked contract ownership, and completed on-chain swaps (airdrop) excluding the blacklist.
[Details of Token Security Measures]
(1) Cold Wallet Custody by a Third Party:
We significantly improved token management security to ensure that tokens cannot be withdrawn or moved by the hacker under any circumstances during the account, software, and authentication processes. We completed the major token deposits on May 13.
We restructured and completed the deposits focusing on preventing recurrence of such situations, and though it's difficult to outline the withdrawal system for security reasons, we have perfectly implemented a multi-authentication system to make physical theft now impossible.
(2) Revocation of Token Contract Ownership:
While the functionalities provided by ownership can be beneficial in responding to human errors, we identified potential risks of theft, token contract issues, and centralization. Therefore, on May 10, we permanently revoked contract ownership to eliminate the target of potential attacks, enhancing stability.
[Completion of On-Chain Swaps]
From May 13 to May 15, we completed the on-chain data-based swaps (XENT distribution) for a total of 1,005 wallet addresses. We excluded the blacklist from the swap targets. For those who hold ENTC but have not received XENT, legitimate token holders can contact us at cs@sdkbenter.com for review and action.
(Please prepare related documents such as the token acquisition process, KYC, and payment source as they may be requested.)
We will apply the increased compensation to NFT reward holders and on-chain distributions will be conducted.
[Exchange Support for Swaps]
(1) LBank:
Despite receiving fewer hacked tokens compared to MEXC, LBank confirmed the freezing of hacker assets until the investigation concludes, ensuring investor safety measures until the return is completed. The 1:1 swap was conducted, and XENT migration swaps and trading support were completed by 5 PM on May 13, with normal trading now in progress.
(2) MEXC:
Given the overwhelming number of hacked tokens received by MEXC, we requested the freezing of hacker assets on May 3, 7, and 30, and extended the request through collaboration with investigative authorities. We determined that a 1:1 full swap could be extremely risky for investor protection.
We requested a partial swap excluding the frozen ENTC in the hacker's account, but it was not feasible. Therefore, we decided to remove the MEXC trading pair and directly swap verified tokens, excluding the hacker's assets.
We will soon provide a dedicated swap channel to ensure legitimate holders who acquired tokens through regular trading can complete the swap accurately.
Despite the removal of the trading pair and the verified swap, the return of frozen hacker assets will be actively supported by investigative authorities to prevent the outflow of stolen funds, with all recovered assets used for buyback and token burn.
(3) Bithumb:
With no direct inflow of hacked tokens and a significant number of users, we are in the process of requesting a 1:1 swap. We will strive to demonstrate the Foundation's and project's sincerity through swift actions, compensation plans, and post-recovery plans.
[Recovery of Hacked Assets and Post-Recovery Plans]
Currently, Korean police investigators are actively taking measures to prevent the outflow of stolen funds. We are very confident in recovering the frozen hacker sale funds and are deeply grateful for the assistance in ensuring the assets were not leaked to the hacker.
All recovered hacker sale funds will be used for token buybacks and burns, and we are fully committed to ensuring the hacker and accomplices face justice by actively cooperating with the investigation.
[Additional Measures and Compensation Plan]
(Preemptive Token Burn)
Total of 155,000,000 XENT burned.
Scheduled early burn of 5,000,000 XENT originally planned for June. (Txid: https://etherscan.io/tx/0xb3864acb704f8150633720065b8f37e17d3122e068b7932687368ab5a3bbdfeb)
Early burn of 100,000,000 XENT from the reserve. (Txid: https://etherscan.io/tx/0xe6b53734c9005add412896e27a87d58a93d6cda5097a02208649f204f92bcade)
Additional burn of 20,000,000 XENT from blacklist and reward & burn wallets. (Txid: https://etherscan.io/tx/0x6d4408639eb7141521cb2c47b636a0d83e40ad972918454fd59f2d9613f7ff5b)
Full burn of 30,000,000 XENT allocated to Foundation management. (Txid: https://etherscan.io/tx/0x7532badedd8d20d22e15973c70f2ee823f0e1684ad73602d86f2d50182770965)
We deeply apologize to our users and exchange partners for causing such concern and believe it would be wrong for foundation to receive any form of compensation. Therefore, we voluntarily conducted a large-scale burn, including all personally allocated tokens, and committed to ensuring all benefits return to the users who have supported the project thus far.
(Increased User Rewards)
We apologize again to users waiting for rewards through NFT returns and theLIVE event. Recognizing the significant value difference between previous and future rewards, we fully agree with the need for fairness and will adjust the reward amount based on average trading prices over periods, ensuring reasonable increases.
Details on the adjusted reward amounts and schedule will be provided in additional Foundation notices.
(Foundation CEO’s Full Salary for Token Purchases Over Two Years)
From May 13, 2024, I will use my full personal salary for the next two years to purchase XENT tokens. This includes retroactively applying the full salary from January onwards to purchase XENT.
This pledge is to show our commitment to user-centered operations beyond words, and I, as a project leader and user, look forward to growing the project together into a global top-tier project.
Once the deposit and withdrawal suspension is lifted, I will share the external wallet address for the purchased tokens, allowing verification of the quantity on-chain by monthly basis.
I will show my sincerity through actions, staking everything on this project with my team and users.
(15,000,000 XENT Compensation for Bithumb ENTC Holders)
We plan to compensate Bithumb ENTC holders with 15,000,000 XENT. Initially scheduled for July 1, we will prioritize this compensation considering fairness with the increased NFT rewards.
This compensation is separate from the 1:1 swap distribution of ENTC: XENT within the exchange. Compensation will be given to users holding tokens on the payment date. But first and foremost, the support for swap and investment precaution of our tokens must be resolved first. As these decisions are not solely up to the Foundation. we are committed to doing our utmost from the outset of the clarification process.
We are confident that our exchange partners will recognize the Foundation's sincerity and conduct a thorough and fair review. Therefore, we will ensure a meticulous, sincere, and transparent process throughout.
Thank you.
Sincerely,
Allen Kim, CEO of the XENT Foundation.