$SAND, the native token of Sandbox, a metaverse platform backed by Animoca Brands, has come under pressure due to suspicious minting activity. The incident involves nearly 14.9 billion tokens across two addresses. This news has been revealed by blockchain security firm PeckShield. The reported activity has raised concerns over a potential exploit affecting the token’s supply mechanism. Security researchers and analysts are continuing to investigate and determine the full extent of the incident.

$SAND Minting Activity Raises Security Concerns

Earlier, on-chain reports had identified unusual activity involving the $SAND token contract deployed on Base, an Ethereum Layer-2 network developed by Coinbase. The reports suggested that more than 500 million SAND tokens had been newly created. However, PeckShield’s latest figure indicates that the scale of the issuance is considerably larger. Security researchers have described the activity as resembling an ‘infinite mint’ exploit. In ‘infinite mint’ the attacker obtains access to minting privileges and creates tokens beyond the protocol’s intended supply limits.

$SAND has a maximum supply of 3 billion tokens. The reported creation of 14.9 billion additional tokens therefore represents several times the token’s intended maximum supply. If the newly minted tokens are transferable and enter circulation, existing SAND holders could face significant dilution. This could cause the price of SAND to fall significantly.

Reacting to the news, South Korean cryptocurrency exchanges Bithumb and Upbit temporarily suspended SAND deposits and withdrawals. The Sandbox team has not officially confirmed the suspected exploit till now. It also remained unclear whether the newly minted tokens had been sold or deposited into exchanges.

Abnormally Minted SAND Carries High Notional Value

SAND was trading around $0.052 when the reports emerged. At an estimated price of $0.05, the 14.9 billion newly minted tokens have a notional value of roughly $745 million. The price reacted to the news and fell about 10% to $0.46. Luckily, SAND recorded relative strength in the session preceding the incident showing gains and elevated trading activity. However, the sudden uncertainty surrounding the token’s supply can increase selling pressure.

Market participants are now monitoring the movement of the newly minted tokens. They want to know whether these tokens are transferred to crypto exchanges or decentralized liquidity pools.