A CryptoPunks owner who lost their NFT to a smart contract glitch saw it returned thanks to Yuga Labs stepping in with a quick fix. Such recoveries are rare, especially in the unpredictable world of NFTs.
The incident stemmed from a bug in the Flooring Protocol, a platform that allows NFT fractional ownership. This flaw let attackers mint almost unlimited internal tokens, called fpTokens, which represent pieces of high-value NFTs. Through this, small amounts of wrapped Ether (WETH) were slowly drained from liquidity pools, threatening expensive assets on the platform.
Yuga Labs acted fast. On June 8, they launched a "white-hat" operation mimicking the exploit method to pull 68 NFTs out of harm’s way. Among these were two CryptoPunks, 29 Bored Apes, and four Mutant Apes worth in total more than $500,000. Other NFTs from various collections were also rescued.
All the recovered tokens are now securely held by Yuga Labs. They promised to return them to their rightful owners once the Flooring Protocol fixes the vulnerability. The protocol’s developer, known as 0xFreeLunch, publicly acknowledged the fault behind the breach.
What happened reveals how early and fragile NFT-related DeFi systems can be. Basic errors in token accounting and minting rights, which should be caught by thorough audits, still surface and cause big risks. Yuga Labs’ quick intervention protected the community and preserved trust, especially since they acquired CryptoPunks’ intellectual property from Larva Labs in 2022.
