Ethereum Classic 51% Attack: Coinbase Freezes ETC Trading

About $460,000 worth of Ethereum Classic has been stolen following a 51% attack on its blockchain platform. As a result, Coinbase and some other exchanges have completely stopped ETC transactions.

January 8, 2019 | AtoZ Markets – Ethereum Classic (ETC) has recently came under a dreaded 51% attack as unknown assailants reorganized the blockchain platform. Coinbase security engineer, Mark Nesbitt has explained on Monday that the hackers carried out a rollback attack, thus enabling them to rewrite its blockchain platform.

From there, the attackers were able to “double spend” about 88,500 ETC. In other words, they recovered coins that have been spent previously and then transferred them to a new entity chosen by the attackers. Furthermore, the coins were successfully transferred from the rightful recipients to new entities. In his own words, Nesbitt wrote:

 “We observed repeated deep reorganizations of the ETC blockchain, most of which contained double spends. The total value of the double spends that we have observed thus far is 88,500 Ethereum Classic ($460,000).”

Coinbase & Others Freeze Ethereum Classic Trading 

As a result, the leading crypto exchange, Coinbase has temporarily halted the deposit and withdrawal of ETC while it plans to resume trading once exchange officials believe it is safe to do so. This was an effort to protect customers and avoid a repeated attack during trades process.

In addition, Crypto exchange, Kraken has also announced that it has halted transactions taking place on the ETC blockchain till the issue is resolved. Meanwhile, officials of Ethereum Classic have also confirmed to AtoZMarkets that their blockchain has been compromised. However, they are yet come up with a definite solution to this attack at the time of writing.

A 51% attack also known as rollback attack allows the attackers to gain control of the computer processing power (CPU) used in verifying transactions. When this is done, the attackers can generate a new fork of the blockchain so that they can recover their already spent coins. This arrangement violates the core requirement of any blockchain-based currency.

Rollback Attack on Ethereum Classic Impacts Price

A loss close to $500,000 is a significant one as it is bound to have an impact on the functioning of the Ethereum Classic blockchain network. The currency (ETC) started the day at $5.26 and the declined to the day’s low of $4.93: a drop 6.27%. Nevertheless, it closed the day at a price of $4.97. The market capitalization of Ethereum Classic was also impacted as it fell from $56.5 million dollars to $52.9 million USD.

This reverses the trend for ETC. For the past 24 hours, it has been obvious that the crypto markets at large are in the green and most cryptocurrencies are on a bullish momentum. It will be interesting to see how this hack affects the growth of Ethereum Classic in the long run.

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