2019 Begins with Hacks of a Different Kind
Ethereum Classic’s 51% attack starts off 2019 with a lot of noise — but a different flavor than the exchange hacks of 2018.
2018 was the year of the crypto winter — and hopes were high that the next year would allow the digital asset community and the market to rise again. While we hope that 2018 remains “the year of the hack,” January 2019 has already started with a different kind of attack. Read on for the Ethereum Classic 51% attack and more highlights from the world of cryptocurrency news.
Roughly $200,000 worth of Ethereum Classic (ETC) has been lost in a 51% attack, Coinbase and Gate.io confirmed Tuesday.
For the uninitiated: Ethereum Classic is the result of a catastrophic hack in the summer of 2016 which led to a hard fork — splitting the then-unified Ethereum network into two distinct networks: Ethereum Classic (ETC), which absorbed the $40 million loss to uphold the original blockchain value of immutability, and Ethereum (ETH), the more widely known of the two coins, which restored the lost funds to DAO investors but made waves for intervening.
This week’s 51% attack occurred when one miner controlled more than 50% of the hash rate, giving that entity control over most transactions on the ETC blockchain. Several deep blog reorganizations on the blockchain have led to a double spend attack loss — causing a temporary freeze on ETC assets in several exchanges and a frenzy to correct the problem.
To make matters worse: Scammers have allegedly planned two hard forks (one of ETC, one of ETH) to “correct” the problem — Ethereum Nowa and Ethereum Classic Vision — and both are alleged to be providing faulty wallets to potential customers in the process.
A third fork, Ethereum Constantinople, is legitimate and unrelated to the ETC attack; full details are available here. This fork is due to be implemented between January 14–18, 2019, and will build 7,080,000 blocks to improve ETH’s speed and efficiency.
We’ll be following this case as it develops. In the meantime: If you’re an ETC holder and looking to secure your assets — please only use a trusted wallet provider.
The Nano cryptocurrency faces a second class-action lawsuit over the June 2018 BitGrail hack. The lawsuit, filed against Nano, BitGrail, and four others in a California federal court last Friday, includes charges of fraud and violation of the US Securities Act, saying that all defendants are complicit in tricking clients and investors.
Experts say the outcome will likely depend on Nano’s legal status — it has never been declared a security, and has a dubious standing with the SEC — and that this may not be the final lawsuit: the suit only represents US-based investors.
To complicate matters, the total losses in the June 2018 hack were an estimated $170 million— $30 million more than Nano’s net worth today, and a potential issue in the event the court rules that the parties must return lost funds to its clients.
Cryptocurrency regulation and normalization took a bold step forward last week after a regulated alternative trading system (ATS) conducted a secondary trade of security tokens for the first time, Coindesk reports.
The trade was conducted last Wednesday, ATS market leader SharesPost stated, with BCAP tokens — an ethereum-based coin issued by Blockchain Capital. SharesPost’s Digital Assets Group oversaw the transaction, which was essentially a proof-of-concept (POC) test, officials said.
SharesPost representatives stated that this was the first time, to their knowledge, that a security token trade had been conducted via an ATS and via ATS custody services — and that the development may pave the way for Security Token Offerings (STOs) to be conducted legally in the US and to provide investors with secondary liquidity.
The ETC hack took up most of the news cycle this week, as the crypto world prepares for what we all hope will be a better, and more dynamic, 2019. Stay with us as we follow regulation, blockchain for enterprise, and other crypto-related news every week at Block to Basics.
(Update: Within a few short hours of this post being published, news broke that the hacker has returned about $100,000 worth of ETC to Gate.io. Experts believe the hacker may be white-hat, but no confirmation has been made as to the nature of or motive behind the return.)
