At the beginning of the week, the GMX exchange experienced a resurgence in activity following a hack attack. After suffering a dip post-attack, the exchange’s service altcoin saw an upswing. This turnaround was triggered when a hacker, who stole $40 million from GMX’s V1 GLP pool on Arbitrum, accepted a $5 million bounty offered by the project and began returning the funds. The first two refund transactions saw a return of a total of 10.5 million FRAX coins to the GMX developer wallet. PeckShield confirmed the process by tracking notifications within the blockchain. Post-attack, the platform suspended V1 transactions on Arbitrum and Avalanche networks, stating that the V2 side remained unaffected.
Hack Attack on GMX and Its Aftermath
According to a preliminary investigation by the GMX team, the attacker exploited a re-entrancy vulnerability in the OrderBook contract. By manipulating the average price of a Bitcoin 
$76,429 short position, they inflated the price of the GLP liquidity coin. This allowed them to withdraw with a profit, collecting USDC, FRAX, WBTC, and WETH coins, ultimately amassing over $40 million in cryptocurrencies. During the incident, trading on GMX V1 and GLP coin minting was halted, with similar actions taken on the Avalanche side as a precaution.
In response to the attack, the project released a message within the blockchain offering the attacker a 10% bounty, amounting to $5 million, promising not to pursue legal action if the remaining funds were returned within 48 hours. The attacker responded the next day, stating, “Okay, the money will be returned later.” This marked the first official signal that the refund process would commence. Simultaneously, the GMX team coordinated with partner exchanges and analysis firms to monitor the flow of funds and verify movements.
Return of Funds Sparks GMX Coin’s Resurgence
On Friday morning, the two FRAX transactions totaling $10.5 million exemplified the seriousness of the bounty agreement. GMX announced that GLP minting and burning transactions on Arbitrum would remain closed until the remaining assets were returned, with existing liquidity allocated for compensating affected users. During this period, users can close their open positions. GMX V1 forks utilizing a similar structure were advised to take additional precautions.
The market reacted swiftly. The exchange’s service coin GMX hit a low of $10.45 post-attack, but strong buying followed the refund news, causing the altcoin’s price to increase by 17% within minutes, according to CoinMarketCap’s data. Since its launch on Arbitrum One in 2021, the project has hosted a total trading volume of $306 billion and an open position of $265 million. The platform’s effort to preserve its reputation renewed investor confidence and reignited security discussions within the decentralized exchange ecosystem.
