Parity Ethereum wallet fallout: $280 million client funds frozen

Parity is alerting users that Ethereum funds have been frozen after deletion of a library code needed to use multi-signature wallets. As a result, $280 million client funds frozen in Parity Ethereum wallet fallout

8 November, AtoZForex A security vulnerability in a popular wallet used to store the Ethereum cryptocurrency has been triggered. It is freezing more than $280 million worth of Ethereum in the process with no fix currently in sight.

Parity Ethereum wallet fallout

However, the triggered vulnerability involves code in wallets from Parity, a digital wallet company. Introduced in July, intended to patch a previous coding issue. In which, hackers had stolen the equivalent of $31 million in Ethereum from wallets earlier the same month.

The new code introduced a new issue that made it possible to turn the Parity wallet library contract into a regular multi-signature wallet. It requires more than one key to authorize a transaction. And also become an owner of it by calling the “initWallet” function.

Parity security alert

According to a Parity security alert, a user claimed to have “suicided the library-turned-into-wallet.” As a result, it has wiped out all the library code. Also, it renders unusable all multi-signature contracts that employed the code.

To put that in more simple terms, the code library was a type of smart contract that facilitated transactions and balance holdings for users. Now after deletion, wallets that rely on them can’t function and stuck in Ethereum purgatory. Particularly, Parity has issued a new version of its code to fix future wallets. But the fix isn’t retrospective. However, it doesn’t appear clear when or even if those affected will regain access to their Ethereum holdings.

Parity Ethereum Issue Impact

The implications of the frozen Ethereum go further than simple Ethereum traders. The Parity issue affected dozens of ICO companies. One such company is Pokadot, a private-public blockchain startup that raised $140 million in a token sale. The company said the parity issue affected the TechCrunch that 60 percent of the funds raised in its ICO.

Although the vulnerability isn’t the fault of the underlying Ethereum smart-contracts-based blockchain. It’s not a good look for a cryptocurrency that has long been touting as an alternative to bitcoin. It still remains the second-largest by market cap.

At a time where Bitcoin is hitting new record highs, the price of Ethereum is dropping slightly in trading.

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