$271 000 USD
DESCRIPTION OF EVENTS
"Buy, Sell and Trade 1000 Cryptocurrencies including Bitcoin, Ethereum, Litecoin, Dogecoin, and more!" "Gate.io is operated by Gate Technology. We are dedicated to security and your experience, offering you not only a secure, simple and fair Bitcoin exchange but also promising to safeguard your asset and trading information." "We have: Super secured SSL Link, Offline Bitcoin Wallet Technology, Instant deposit and withdrawal for Cryptocurrencies, Two factor authentication, Low Fee. No fee for deposit. Low trading fee. Low withdrawal fee with optional withdrawal service."
"Ethereum Classic is a decentralized computing platform that executes smart contracts. Applications are ran exactly as programmed without the possibility of censorship, downtime, or third-party interference. Ethereum Classic is a distributed network consisting of a blockchain ledger, native cryptocurrency (ETC) and robust ecosystem of on-chain applications and services." "Ethereum Classic is the product of a hard fork after the Ethereum network split in different ways following an infamous hack in 2016."
"“[Grayscale] holds a sizable percentage of the circulating supply in Ethereum Classic, which is locked up in the trust that will never be liquidated,” [Meltem Demirors, the chief strategy officer at CoinShares] said. “So I think some of those natural factors, which can drain the supply of Ethereum Classic on the market, have a dampening impact on the price.”" "Grayscale started its ETC Trust in April 2017."
“It would be very difficult for us to comment or point to our operating a vehicle around a particular protocol as being influential to the prices,” Michael Sonneshein, managing director of Grayscale, said in a phone interview with CoinDesk, pointing out his company also has large positions in bitcoin and ether. Grayscale, like CoinDesk, is a unit of Digital Currency Group.
"The “honest[y]” of more than half of miners is a core requirement for the security of Bitcoin and any proof-of-work cryptocurrencies based on Bitcoin. Honest action, in this context, means following the behavior described in the Bitcoin white paper. This is sometimes described as a “security risk” or “attack vector,” but is more accurately described as a known limitation to the proof-of-work model."
"Failure to meet this requirement breaks several core guarantees of the Bitcoin protocol, including the irreversibility of transactions. Many other cryptocurrencies, such as Ethereum Classic, have also adopted proof-of-work mining."
"For the Ethereum Classic blockchain, 51% attacks have been a threat for a long time. Unlike Ethereum, from which it was hard forked, the Ethereum Classic network is committed to the Proof-of-Work (PoW) consensus algorithm, which is also used by [bi]tcoin. But for large networks like Bitcoin, a 51% attack is prohibitively expensive to do given the enormous amount of computational power required by PoW to successfully do it. Ethereum Classic’s hashrate is much smaller, making it far more vulnerable to 51% attacks."
"Researchers from crypto exchange Gate.io report they have confirmed that a 51 percent attack successfully occurred on the Ethereum Classic (ETC) blockchain." "Gate.io reports that the incident occurred over a period of 4 hours between 0:40 and 4:20 Jan.7, 2019 UTC, during which the transactions were normally confirmed on the blockchain and then subsequently invalidated after the malign network rollback." "The company published an analysis of their findings Jan. 8."
"Gate.io's censor successfully blocked [the] attacker's transactions at the beginning and submitted them to [a] manual exam. Unfortunately, during the 51% attack, all the transactions looked valid and confirmed well on the blockchain..."
Ethereum Classic reported to be "working with Slow Mist and many others in the crypto community. [They] recommend[ed] exchanges and pools significantly increase confirmation times (400-4000+)"
"Gate.io has raised the ETC confirmation number to 500 and launched a new strict 51% detect for enhanced protection. However, we suggest the ETC dev team and the community build a new consensus mechanism (PoS for example) to better protect ETC network from 51% attack."
"Gate.io states it will compensate its users’ losses, stating “Gate.io will take all the loss for the users.” The exchange also advises other crypto trading platforms to block transactions stemming from the identified suspect addresses. The exchange also states it has raised its ETC transaction confirmation number to 500 and launched a more robust 51 percent detection security mechanism."
The Ethereum Classic blockchain is vulnerable to 51% attacks due to the low hash power. Unknown victims (which may include some exchange platforms) fell victim to the attack and lost $5m.
In the 51% attack, a single group or individual purchases or repurposes a massive amount of hashing power. This enables them to produce a blockchain history in which they didn't make an accepted payment, and feed that back to the network. As a result, they keep their funds, and whatever they received for their payment.
The 51% attack was successful since what happened was not realized, and the network made the decision to adopt the longest chain, as produced by the hacker. This resulted in a loss to any platforms or other victims, and it's unknown who was attacked or what the resolution was to any affected customers.
According to CoinBase, a total of $1.1m was double-spent on the Ethereum Classic network in the same attack as above, targeting multiple exchanges.
HOW COULD THIS HAVE BEEN PREVENTED?
The solution to mitigate 51% attacks is to increase block confirmation times and institute checkpoints, where all miners agree that transactions up to that point are valid. If a large reorganization occurs, it will be rejected by miners, and the attacker will simply lose the funds spent on the attack.
Attacks are relatively easy to spot because they result in massive chain reorganizations, which miners can easily decide to reject.
Platforms can protect themselves against 51% attacks by ensuring that they only deal with coins which use checkpoints, and have sufficient block confirmation requirements on deposits.
Ethereum Classic (ETC) Attacks Affect Gate.IO with Double-Spending - Cryptovest (Feb 6)
Deep Chain Reorganization Detected on Ethereum Classic (ETC) (Feb 6)
100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents (Jan 24)
Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 4)
Crypto Investors Have Ignored Three Straight 51% Attacks on ETC (Sep 10)
CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data (Sep 10)
@etherchain_org Twitter (Sep 10)
2019-01-08 04:00:33 UTC Reorg to #7261516 7cdf…dd47 (436f…f5fa a6c6…e657 1068…07 - Pastebin.com (Sep 10)
@eth_classic Twitter (Sep 10)
@eth_classic Twitter (Sep 10)
No Title? (Sep 10)
Ethereum Classic Suffers 51% Attack Again: Delisting Risk Amplified – Security Bitcoin News (Sep 10)
Gate.io | Official Website of Gate.io | Bitcoin Exchange | Bitcoin Price | Crypto Exchange | Cryptocurrency Exchange (Aug 8)
Contact us-Gate.io (Aug 8)
Crypto Exchange Gate.io Confirms 51% Attack on Ethereum Classic, Promises Refunds (Sep 28)
Gate.io Research: Confirmed the ETC 51% attack and attacker's accounts-Announcements-Gate.io (Sep 28)