Cryptocurrency exchange Gate.io confirmed that it had lost about $220,000 worth of Ethereum Classic coins – about 40,000 ETC – during the ongoing manipulation of the project’s blockchain network.
The exchange confirmed Tuesday that the Ethereum Classic blockchain was under 51% attack – in which a single entity takes control of more than half the network’s hash power that allows it to rewrite its transaction history and double-spend coins – and identified three accounts about the attacker(s).
“It happened between 0:40 Jan.7, 2019 and Jan 4:20 Jan.7, 2019 UTC for about 4 hours,” Gate.io revealed in a blog post. “All the transactions were confirmed normally on the ETC blockchain and became invalid after the blockchain rollback.”
At the time of transfers, the ETC/USD rate was fluctuating between $4.90 and $5.25, according to the details available on CoinMarketCap.com.
“Gate.io’s censor successfully blocked attacker’s transactions at the beginning and submitted them to the manual exam,” explained Gate.io. “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.”
$1 Million Theft Reported
Coinbase, the US crypto exchange which first brought the 51% attack before the press, today revealed that the attackers were still exploiting the Ethereum Classic network and had siphoned-off 219,500 ETC coins worth over a million dollars. Blockscout, an Ethereum Classic blockchain explorer, confirmed reorganization attacks between block numbers 7261495 and 7261496. Per their data, a transaction containing 26,000 ETC was first spent during the mining of block number 7261492; the same transaction was again noted on block number 7261497.
Almost all the exchanges have discontinued their ETC deposits and withdrawals but none of them – except Gate.io – have reported any losses. The situation leads to a scenario whereby attackers are holding all the stolen ETC with no options to liquidate them for fiat. Ideally, it should lead to a flat price action before the Ethereum Classic team comes up with a solution to entirely repeal the attack.
Ethereum Price Action is Flat and Rangebound despite 51% Attack | Source: TradingView/BitFinex
Ethereum Classic Responds
Ethereum Classic developer Donald McIntyre admitted they were looking at a textbook 51% and double spend attack – an opinion which was refuted by Cody Burns, another fellow ETC developer, who believed that there was more room for investigation.
“To be clear we are making no attempt to hide or downplay recent events,” the group stated in an official response. “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 subsequently raised its prevention tactics by asking exchanges to increase their block confirmation times.
Featured image from Shutterstock.