Supply Chain Attacks Compromise NPM Packages and Exploit AI Hallucinations

Security researchers discovered that the @injectivelabs/sdk-ts npm package was compromised through a hijacked GitHub account, inserting malicious code that captures crypto wallet private keys and seed phrases. The package, used by roughly 50,000 developers each week for the Injective blockchain, has been deprecated and its affected versions are no longer available. No funds on the network were reported stolen, but any keys processed by the compromised versions are considered compromised.

In a separate but related development, researchers identified a new attack class called “HalluSquatting,” in which AI coding assistants hallucinate nonexistent package or domain names. Attackers quickly register these fabricated names and distribute malware when developers follow AI‑generated suggestions. The technique expands the software supply‑chain threat surface, allowing malicious code to enter production environments through trusted‑looking AI output. Experts advise verifying all AI‑suggested package names and URLs before use.