Philippines central bank warns vs play-to-earn games after $625M Axie Infinity heist

The Philippines central bank has issued a warning against play-to-earn blockchain games and NFTs at the back of the $600+ million heist of Axie Infinity, a game that has gained wide popularity in the country.

In a virtual briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno reminded Filipino investors that NFTs are still a risky field full of scams and other risks that the central bank may not be able to protect them from.

“We wish to emphasize that there are risks associated with non-fungible tokens (NFTs) such as price volatility, which may resort to significant financial losses and also other types of risk relating to cyber fraud and scams,” Diokno said, according to Business World report.

Bridget Rose M. Mesina-Romero also urged the public to be aware of the risks that play-to-earn games come with. The deputy director at the BSP’s Payment System Oversight Department shot the warning at the back of a mega heist in which attackers stole over $625 million in ETH and USDC from Axie Infinity, a P2E game where users play to earn tradable tokens, such as the Smooth Love Potion (SLP).

As CoinGeek reported, the attackers targeted Ronin bridge, an Ethereum sidechain that Sky Mavis, the company behind Axie, deployed to allow players to move funds to and from the virtual world. The sidechain was necessary as Axie is built on Ethereum, a blockchain network whose sky-high fees are prohibitive for players. Games like CryptoFights built on the BSV blockchain don’t suffer from this vulnerability as the blockchain network can scale unbounded to accommodate all transactions on-chain.

The attackers gained control of five validator nodes on Ronin and were able to ship out 25.5 million USDC tokens and 173,600 ETH.

“They should only place funds that they are willing to lose because of the risk. Since this is a digital field, it creates borderless area where fraudsters can really enter and perform illicit activity so the public should practice cyber hygiene in order to protect your personal data,” Bridget warned.

According to Diokno, the BSP continuously monitors NFT activities used in online games. The bank is also consulting with other regulators on the best way to regulate Axie Infinity and other P2E games.

The Philippines has become a global leader in P2E gaming. According to Sky Mavis, the country made up about 40% of the Axie Infinity users, which the Vietnamese startup says is over 8 million players, with about 2.5 million being daily active users.

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