FinTech News

Ethereum Classic Chain Reorg Results in $1.1 Million in Double Spend

The cryptocurrency market is no stranger to hacks and other attacks that have resulted in the theft of thousands of dollars in digital currency. Now it seems the latest asset to be hit is Ethereum Classic with chain reorganizations being detected. As CNBC reports it is possible that the reorgs — which have resulted in currency being doubly spent — are part of a “51% attack” that’s feasible when rogue miners gain more than half of the mining power of a single asset.

In a blog post, Coinbase originally said it had detected double spends totaling 88,500 ETC or around $460,000. However the exchange later said they’d found a dozen other reorgs, bringing the total double spend incidents to 219,500 ETC, which amounts to around $1.1 million. Needless to say Coinbase has halted interactions with Ethereum Classic and their status page shows ETC as being “Under Maintainance.”

Adding to the drama surrounding the situation, the Ethereum Classic camp were apparently upset that they were not contacted by Coinbase when the exchange began noticing discrepancies. On Monday a tweet on ETC’s Twitter read, “Regarding @coinbase account of recent events: they allegedly detected double spends but unfortunately did not connect with ETC personnel regarding the attack. This is still very much an ongoing process.” That tweet was later followed by another that said, “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. In time we will see.”

If these block reorgs were the result of a 51% attack it would only be the latest example we’ve seen on such takeovers. Last spring, Bitcoin Gold was impacted by such an attack, resulting in nearly $18 million in fraudulent transactions. Given the nature of such attacks, it was once believed they might only affect smaller assets. However, while it may not be on par with the likes of Bitcoin or Ethereum (ETH), ETC is currently the 18th largest cryptocurrency with a market cap of over $533 million.

There’s no question that these types of attacks and events aren’t doing the cryptocurrency revolution any favors when it comes to public perception or calls for regulation. It especially doesn’t help when the assets being targetted include the words “Bitcoin” or “Ethererum” in their name as most laymen are unlikely aware of the differences between Bitcoin Gold and Bitcoin or Ethereum Classic and Ether. Still these incidents are exceedingly rare in the grand scheme of things, making this more of a PR problem than a security risk (though there are certainly enhancements to be made). Therefore it will be interesting to see what if any effect this latest attack has on the further development of digital currencies and blockchain technologies.