In an unsettling revelation, Jacob Gadikian, a developer within the Cosmos ecosystem, disclosed on X that North Korean programmers might have been involved in the development of Cosmos’ Liquid Staking Module (LSM). Highlighted in an on-chain investigation, these allegations have not only drawn the attention of the crypto community but also the scrutiny of the FBI in 2023. Gadikian clarified that the issue is not about the developers’ origin but their potential ties to known cybercrime activities, describing them as “the world’s most skilled and prolific crypto thieves.”
Reacting to these serious claims, Ethan Buchman, the co-founder of Cosmos, took to X to address the community’s concerns. He acknowledged that the Cosmos team was previously unaware of the LSM’s potentially compromised development lineage. Buchman detailed the immediate steps being taken, including rapid security audits and plans to lessen or eliminate reliance on the LSM to safeguard the ecosystem.
Security Fears Sparked by Alleged Involvement
Melody Chan, the research lead at Redecentralise, voiced concerns over potential hidden vulnerabilities that could stem from this development, such as covert backdoors. The urgency for thorough code audits is a direct response to these risks, amplified by the recent FBI warnings regarding the security of blockchain projects with possible North Korean integrations.
The infamous Lazarus Group, linked to the North Korean government, is well-known for its extensive history of cryptocurrency theft, including the high-profile $600 million Ronin bridge heist. While the association between the LSM developers and the Lazarus Group remains speculative, the potential implications of such a connection are alarming. Anndy Lian, a blockchain intergovernmental expert, emphasized the need for caution, pointing out that confirmed links to North Korean state operations could reveal serious security flaws within the LSM.
Informal Systems, a core Cosmos contributor, has announced a robust response plan, starting with two comprehensive audits by OtterSec and Binary Builders, and another by Zellic. These audits aim to identify and mitigate any security vulnerabilities promptly. Additionally, a strategic move towards a “phased removal” of the LSM is under discussion, proposing a transition to a more secure and efficient framework that better supports the needs of validators and voters within the Cosmos governance structure.
Community Engagement and Governance
The proposed governance changes involve a community vote on the LSM’s fate, suggesting a grace period for stakeholders to adjust before a complete transition. This process underscores the community’s role in shaping Cosmos’ security protocols and governance models, ensuring that the ecosystem remains resilient against threats and maintains its integrity.
As the Cosmos community confronts these allegations, the outcomes of the upcoming audits and governance decisions will critically influence the ecosystem’s future trajectory. The proactive steps taken by Cosmos leaders and contributors demonstrate a commitment to transparency and security, aiming to restore and enhance trust among users and investors in a landscape marked by increasing cybersecurity challenges.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.