Ongoing 51% Attack On Ethereum Classic(ETC) Has Led to a Loss of More Than $1 Million

The ongoing 51 percent attack against Ethereum Classic (ETC)— the original version of Ethereum network rattles the crypto community. Losses stemming from the attack have now exceeded $1 million.

On January 8, cryptocurrency exchange Gate.io confirmed the ETC 51% attack—whereby a malicious player controls more than half of the network’s mining power to alter transaction history and double-spend coins—and said it will absorb the loss of 40,000 ETC, worth roughly $200,000. The exchange also identified three of the attacker’s ETC accounts.

“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,” Gate.io said in a statement.

The China-originated crypto exchange has raised the ETC confirmation number to 500 and launched a new strict 51% detector to better protect customer funds.

Also on Tuesday, major American cryptocurrency exchange Coinbase announced that it has identified a total of 15 reorganizations, 12 of which contained double spends, totaling 219,500 ETC (about $1.1 million) as of Jan. 7, 10:27 pm PT. The exchange first  “detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend” on Jan. 5. It immediately halted withdrawals and deposits of ETC, which have not resumed by press time.

In the wake of the 51% attack, some other exchanges including Coincheck and bitFlyer are also temporarily halting deposits and withdrawals of ETC.

Jeff Liu, Head of Silicon Valley-based R&D Center of blockchain security firm PeckShield, told Chinese media outlet Odaily that they found ETC network is still under the 51% attack at present, and the unknown perpetrator have made a profit of more than $1 million from double spending  220,000 ETC. He added a move against Ethereum Classic’s blockchain would cost around $300,000.

 

ASIC Manufacturer Linzhi To be Blamed?

China-based blockchain security firm Slow Mist first detected transaction rollbacks on several ETC blocks on Jan.6, saying on Twitter that they are “trying to trace the cause and will announce it as soon as we get the results”.

In response, ETC developers stated in a deleted tweet on Monday that the mysterious miner controlling more than 50 percent of the network’s hashrate was “most likely selfish mining”. The official account added in the same tweet the increased hashrate might be attributed to the testing of new Ethereum mining rigs with a 1,400Mh/s hashrate by ASIC manufacturer Linzhi.

However, Wolfgang Spraul, director of operations at Shenzhen-based Linzhi, pushed back, saying in an interview with Coindesk that “We are categorically denying such claims, they are entirely baseless and may be part of the attack itself”. Linzhi’s product is still under development, and is expected to be launched in April.

According Gate.io’s research wing, the reason behind the ETC 51% attack is that the network’s hash power drops dramatically in the prolonged bear market, reducing the attack cost.

As of now, no ‘culprit’ has been spotted for the attack, and the ETC dev team reminds exchanges and mining pools to substantially increase block confirmation times as a way to prevent falling prey to ongoing attacks.

Yu Xian, founder of Slow Mist said in the bear market, all mainnets are relatively fragile, and all public blockchains are susceptible to the 51% attack as long as they are dealing with ‘consensus’ issues.

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