Cryptocurrency intelligence company Messari has claimed that Stellar (XLM) suffered an inflation bug in April 2017 that was exploited to create 2.25 billion XLM (worth about $10 million at the time), which were later burned. The news was revealed in a Messari report published on March 27.
Per the report, the illicitly created XLM — which was equivalent to nearly a quarter of the circulating supply — was moved to exchanges and likely sold during the first half of 2017. An equivalent quantity of XLM was purportedly burned to preserve the intended supply and avoid the dilution of the value of the tokens.
The research also notes that the addresses involved and related records are no longer accessible on Stellar Expert or other block explorers but can be found using the Horizon Application Programming Interface. Also, the company claims that seemingly no media reported on the bug, its exploitation and the consequent burn before Messari.
Stellar, currently the eighth largest cryptocurrency by market cap with a total market value of over two billion, noted that the company has not concealed the issue. More precisely, a Stellar representative is cited in the report stating that the aforementioned bug and its exploitation were mentioned twice in the protocol’s release notes. The statement also acknowledges the importance of proper disclosure:
“We recognize that Stellar has since become significant financial software, and our disclosure standards have grown to reflect that reality. There’s been no notable bug since, and if there were we would disclose it in full detail as soon as it was patched.”
Lastly, the company noted that in its roadmap for 2019 released last month, Stellar committed to a full accounting of all Stellar Development Foundation XLM by the end of the current year, which includes more details around this bug.
As Cointelegraph recently reported, payments giant Western Union (WU) is partnering with Thunes — which previously collaborated with Stellar — to enable WU clients to transfer funds directly to mobile wallets globally.
In September last year, an inflation bug was discovered and patched in Bitcoin (BTC) as well.