OKEx Explains How The Ethereum Classic Hackers Stole $5.6M

OKEx explains how the Ethereum classic hackers managed to steal $5.6 million from the platform in the recent 51% attack on the network as we reported in the ethereum classic news previously.

OKEx explains how the 51% attack ended up in the hackers stealing $5.6 million by switching from ETC mainnet to a “shadow chain” and the alternative transaction history was modified to redirect over 800,000 ETC from the platform to the hackers’ addresses. The crypto exchange published a new report with details on how the hackers stole the assets during the 51% attack.

The Ethereum Classic blockchain was hit with two 51% attacks one after another and by gaining control over 51% of the network’s hash power, the hackers managed to drain $5.6 million worth of cryptocurrencies in the first strike and here’s how it went down. According to Okex, the hackers started preparing for the attacks in June and even created five fake accounts on the platform. All of them passed the second and third levels of the KYC procedures and managed to get their withdrawal limits increased.

The accounts then, a month later, deposited about 68,230 ZEC coins on the exchange and the hacker was also building a “shadow chain” of the ETC blockchain which was an alternative record of transaction history that was hidden from the miners. The accounts traded all of their ZEC for ETC and got about 807,260 coins that were worth about $5.6 million. ETC was then transferred to the hacker’s external addresses. Later in the day, the hacker launched a 51% attack on the network and both the legit and fake transaction histories contained the records that the ETC coins were transferred from OKEx to the hacker’s external address.

During the attack, the hacker sent all of his previous coins back to OKEx and traded them for 78,900 ZEC. The hacker was able to mine the new blocks faster and made the shadow chain longer than the original ETC history. This confused the community and made the nodes start mining the malicious shadow chain. The attacker manipulated the version of the transaction history which became the main one at this time. the recorded ETC coins were not sent to OKEx but to other address of the hacker which made it so that the coins could never be sent back to the exchange.