In the latest crypto news, we are reporting a case which proved vulnerability in one exchange, and in which were stolen more than $220,000 worth of cryptocurrencies – specifically tokens of the Ethereum Classic (ETC) altcoin.
About 40,000 ETC was stolen from the exchange Gate.io during the ongoing manipulation of the project’s blockchain network. As the exchange confirmed on Tuesday, the Ethereum Classic blockchain was under 51% attack in which a single entity takes control of more than half of the network’s hash power, allowing it to rewrite its transaction history and double-spend coins.
There were three accounts about the attacker(s) which were instantly identified. As Gate.io revealed in an official blog post:
“It happened between 0:40 Jan.7, 2019 and Jan 4:20 Jan.7, 2019 UTC for about 4 hours. All the transactions were confirmed normally on the ETC blockchain and became invalid after the blockchain rollback.”
The ETC/USD rate at the time was fluctuating between $4.90 and $5.25 according to data. As Gate.io further explained:
“Gate.io’s censor successfully blocked attacker’s transactions at the beginning and submitted them to the manual exam. Unfortunately, during the 51% attack, all the transactions looked valid and confirmed well on the blockchain. The examiner passed the transactions. It caused about 40k ETC loss due to this attack. Gate.io will take all the loss for the users.”
Following this attack, almost all of the exchanges discontinued their ETC deposits and withdrawals and none of them – except Gate.io – have reported any losses. The situation now leads to a scenario where the attacker(s) is or are holding the stolen ETC with no options to liquidate them for fiat.
A developer named Donald McIntyre from the Ethereum Classic team also responded, saying that they were looking at a textbook 51% and double spend attack. According to the group at ETC:
“To be clear we are making no attempt to hide or downplay recent events. Facts are facts and as the situation develops we’ll soon get a full picture of what actually took place. Linzhi is testing ASICS. Coinbase reported double spends; both may be true.”
The team also raised its prevention tactics by asking other exchanges to increase their block confirmation times.
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