Key Takeaways About $675,000 appears to have left reserves. Shutdown isolated fabricated SAND across affected networks. Delegate authority remains the central unanswered question. LP compensa
That valuation came from multiplying the market price of legitimate SAND by balances created without backing. Blockchain trackers could display $49 billion because they had a token price and an enormous token balance. They did not have $49 billion in collateral, buyers or redeemable assets behind those balances.
The money trail is much smaller and far more important. Independent on-chain tracking indicates that roughly 14.75 million SAND, valued near $675,000 at the time, left legitimate bridge reserves before the response. Around 79.74 ETH was also converted during the attack. That is the part of the event with an actual economic cost, not the inflated number attached to an unbacked supply.
Blockaid said the attacker hijacked LayerZero delegate permissions tied to the SAND Omnichain Fungible Token (OFT) on Base through an approveAndCall route. From there, the attacker could mint SAND without the normal backing on Ethereum.
🚨 Blockaid detected an ongoing exploit on @TheSandboxGame SAND OFT on Base. Attackers hijacked LayerZero delegate permissions via approveAndCall and minted unbacked SAND. ~$49B face-value SAND minted so far across ~400+ txs. Attack still ongoing. More details in 🧵
— Blockaid (@blockaid_) August 22, 2026
A cross-chain token is supposed to preserve one simple relationship: a token created on one network must correspond to an equivalent token locked, burned or otherwise accounted for on another. That is what stops a bridge from turning one asset into several competing claims on the same collateral.
The attack severed that relationship. New SAND appeared on the affected networks without a matching reduction or reserve arrangement on Ethereum. Explorers then treated the balances as ordinary SAND and applied the prevailing market price. The calculation was mechanically correct. Economically, it was nonsense.
A wallet can show a billion-dollar token balance and still be unable to turn it into meaningful money. The attacker did not control a pool with $49 billion waiting to buy SAND. Nor could that volume have been sold at the quoted price without overwhelming every available market. The inflated balances were a threat because they could be exchanged against limited pools of genuine assets—not because the headline valuation was ever available to withdraw.
Minting the unbacked tokens was only the first step. The useful part of the attack was the period before the bridge and related liquidity could be shut down, when those balances could still be swapped for assets with real backing.
That is where the estimate of roughly $675,000 comes from. On-chain reporting indicates that around 14.75 million SAND left the Ethereum OFT adapter, with part of the proceeds converted into ETH. Those assets came from legitimate reserves. Unlike the artificial Base-side balances, they had an established market and could be moved outside the compromised route.
The gap between the two numbers is the clearest way to read the exploit. The $49 billion face-value figure was more than 70,000 times larger than the estimated reserve drain. One measures the size of the false claim created on-chain. The other measures the value that appears to have escaped the system.
That also explains why liquidity providers are at the centre of the recovery. An unbacked token becomes someone else’s loss only when it reaches a pool containing genuine SAND, ETH, stablecoins or other assets. The fake balance is the weapon; the liquidity pool is where it can do financial damage.
The Sandbox said it had contained the vulnerability affecting its cross-chain bridge on Base and BNB Chain. It disabled cross-chain functionality for SAND on both networks, leaving the affected balances isolated and unable to move or be redeemed through the bridge.
The team said SAND on Ethereum and Polygon was not affected, no user wallets had been compromised and holders on those networks did not need to take action. It also warned users not to buy, sell or trade SAND on Base or BNB Chain while liquidity there remains compromised.
That response is why the project can describe the impact as less than 0.01% of the legitimate SAND supply while researchers tracked an enormous quantity of unbacked tokens. The statement is not saying that only a tiny amount of false SAND was minted. It is saying that the impact on recognised supply and backed reserves was limited once the bridge routes were cut.
Containment, however, is not the same as a final loss report. It tells holders that the known path has been closed. It does not yet establish the full reserve drain, identify every affected pool or show how the project will restore the liquidity damaged during the attack.
READ MORE:
Coldcard Releases Security Update, but Affected Seeds Need ReplacingThe available evidence points to delegate permissions associated with The Sandbox’s OFT deployment being abused. That is not the same as proving a protocol-wide vulnerability in LayerZero itself.
The root cause still matters because several different failures could produce the same outcome: an exposed delegate key, overly broad permissions, an unsafe call path or another configuration weakness in the application’s own cross-chain setup. Blockaid identified the use of approveAndCall and the resulting delegate takeover, but The Sandbox has not yet published its promised technical report.
For that reason, the precise wording matters. “LayerZero was hacked” reaches further than the evidence currently allows. The confirmed point is narrower and more useful: an attacker obtained the authority needed to mint unbacked SAND within The Sandbox’s cross-chain system.
The next meaningful update is not another estimate of how many trillions of tokens appeared in attacker wallets. The incident report needs to settle the questions that determine the final cost.
The Sandbox says it has secured a pre-incident snapshot and is preparing compensation measures for eligible LPs. That is the right starting point, but it is not yet a completed remedy. Until the methodology is public, affected providers do not know how losses will be measured or when they will be made whole.
The exploit was serious because a bridge-permission failure opened a route from fabricated SAND into real liquidity. It was not a $49 billion theft, despite the number attached to the minted balances.
The figure worth following is the amount of backed value that left before the bridge was isolated, followed by the amount The Sandbox ultimately returns to affected LPs. The $49 billion headline describes what an attacker could make a price tracker display. The reserve drain and recovery plan will show what the exploit actually cost.
Sources: The Sandbox’s official security update; Blockaid’s initial exploit alert; and independent on-chain reporting on the estimated reserve drain. The Sandbox has said a full incident report and technical analysis will follow.
The post Sandbox Exploit Created $49B in SAND Nobody Could Cash Out appeared first on Coindoo.
