The Sandbox has contained a vulnerability in its cross-chain SAND bridge after an attacker created unbacked tokens on Base and BNB Smart Chain. The project said no user wallets were compromised and estimated its direct financial exposure at less than 0.01% of SAND’s fixed maximum supply of three billion tokens.
In a statement issued on 22 August, The Sandbox said it had disabled transfers to and from both networks, isolating the affected token deployments and stopping the unbacked SAND from being exchanged through the official bridge.
The attacker was able to mint SAND on Base and BNB Smart Chain without first locking equivalent tokens on Ethereum. That broke the normal relationship between the original asset and its representations on other blockchains.
“All bridged SAND funds are backed by SAND locked on Ethereum, which remains entirely secure,” The Sandbox said.
The project advised users not to buy, sell or provide liquidity for SAND on Base or BNB Smart Chain while the affected contracts remain isolated. It is also taking a snapshot from before the attack and said eligible liquidity providers would be compensated, although no timetable for payments has been announced.
Initial on-chain monitoring suggested that more than 500 million SAND had been minted on Base. That total increased quickly as the attacker continued to interact with the vulnerable contract.
Blockchain security firm PeckShield later reported that around 14.9 billion SAND had been created across two addresses. Other researchers identified hundreds of further transactions, leading to significantly larger estimates for the total volume of tokens generated before the bridge was shut down.
However, the number of tokens minted on the two affected networks does not represent the project’s direct loss. SAND created on Base or BNB Smart Chain could not increase the fixed maximum supply of three billion tokens on Ethereum unless the attacker was able to use the bridge to release genuine SAND held in the Ethereum adapter.
Blockchain forensics account BlockWatchdog said the attacker withdrew approximately 14.75 million SAND from that Ethereum adapter in less than a minute. The resulting sales generated about 80 ETH, worth roughly $675,000 at the time.
That figure helps explain The Sandbox’s estimate that the direct impact was below 0.01% of the total SAND supply, despite the much larger number of tokens apparently minted on Base and BNB Smart Chain. The project has not yet released a full technical report explaining how its loss estimate compares with the different totals recorded by on-chain researchers.
Investigation into the bridge
Blockaid said the incident followed the takeover of LayerZero delegate permissions through an `approveAndCall` function. The security company said that access allowed the attacker to mint tokens through the affected cross-chain contracts.
The Sandbox has not confirmed that explanation in a detailed post-mortem.
LayerZero’s Omnichain Fungible Token standard uses connected contracts to transfer assets between blockchains. Under the adapter model, the original token is locked on its home network and an equivalent amount is minted on the destination chain.
For SAND, the Ethereum adapter holds the original tokens supporting cross-chain balances. In a legitimate transfer to Base, SAND should first be locked on Ethereum before the corresponding amount is created on Base, maintaining a single backed supply across the linked networks.
The unauthorised minting disrupted that backing mechanism on the affected chains. It did not alter the Ethereum SAND contract or increase its maximum supply. CoinGecko continued to list a maximum supply of three billion SAND, with approximately 2.9 billion tokens in circulation.
The Sandbox removed LayerZero peer settings for Base and BNB Smart Chain to prevent the affected contracts from communicating with other deployments. That removed the official route through which unbacked tokens could potentially have been used to claim assets held in the Ethereum adapter.
The distinction between a bridge exploit and an attack on the underlying blockchain was also seen during July’s Wanchain bridge incident. About 515 million NIGHT was removed from Wanchain’s Cardano-side treasury, but the Midnight Foundation said its core network, validators and consensus system were not affected.
In another July incident, an attacker used the Verus bridge’s import path to trigger unbacked asset payouts worth about $7.54m. Blockaid linked that attack to the same bridge contract and an apparent bug class involved in an earlier breach in May.
South Korean exchange suspensions
Upbit issued a warning after detecting signs of a possible security issue involving SAND. It said the incident could lead to sharp price movements. Bithumb separately suspended SAND deposits and withdrawals while it investigated.
Reports based on the exchanges’ notices said Bithumb’s suspension began at 11:11 local time in South Korea on 22 August, with Upbit taking similar action about a minute later. Trading limits and transfer suspensions can vary, so users were advised to check each exchange’s latest notice before placing an order or moving SAND.
Such measures are consistent with South Korean exchange procedures for assets affected by suspected network faults, abnormal token issuance or security incidents. Restricting deposits can reduce the risk of tokens created through a compromised network reaching an exchange and being sold against unaffected balances.
SAND traded at about $0.05 after the disclosure. CoinGecko reported more than $66m in 24-hour trading volume, a market capitalisation of approximately $136m and a seven-day increase of about 18%, although prices differed between trading venues.
The incident is particularly relevant to users of Base, the Ethereum layer-2 network developed by U.S.-listed exchange Coinbase. Available project and security disclosures indicate that the vulnerability affected The Sandbox’s cross-chain contracts deployed on Base, rather than Base’s underlying network itself.
The warning applies to anyone holding or trading the isolated Base version of SAND, including US users accessing decentralised exchanges through self-custody wallets. SAND held in Base liquidity pools may not have the same backing as Ethereum-native SAND while the official bridge remains disabled.
The incident follows an April attack involving another LayerZero-powered asset. According to crypto.news, a KelpDAO incident report said attackers stole about 116,500 rsETH, worth $292m, after compromising infrastructure used by a single-verifier cross-chain configuration.
After that attack, LayerZero said its verification network would stop signing messages for applications using a one-of-one verifier arrangement. It encouraged projects to adopt multiple independent verifiers.
The Sandbox has not said whether its SAND configuration used the same model or whether the latest vulnerability involved LayerZero’s verification network.
The Sandbox, an Animoca Brands subsidiary that raised $93m in 2021, said it would provide further information as its investigation continues. Its latest statement did not give a date for restoring Base and BNB Smart Chain transfers, nor did it say when eligible liquidity providers would be able to submit compensation claims.
