Ethereum Classic [ETC] 51% Attack: Hacker Returns $100K

Crypto Destroyer

Last week, Smartereum reported
that the Ethereum Classic [ETC] witnessed some block reorganization, a major
indication of a 51% percent attack.

Cryptocurrency exchange, Gate.io has now said that the
attacker has returned $100,000 worth of Ethereum Classic [ETC] tokens to it
after the attack.

In the statement released on Saturday Jan 12. Gate.io
explained that it noticed the refund on Thursday Jan. 10 but the attacker
refused to respond to efforts they made to contact.

What was behind the
51% ETC Attack?

It is still unclear what the reason behind last week’s attack
was. However the return of the $100,000 worth of ETC money raises the suggestion
that it could have been a white hat operation probably to raise awareness of
the risks and vulnerability of cryptocurrency.

U.S.-based cryptocurrency exchange Coinbase, in a statement
on its website stated that it noticed double spends of 219,500 ETC tokens (amounting
to about $1.1M in value). Going by this estimation, the tokens returned by the
attacker(s) represents only a fraction of the entire tokens lost.

Similarly, Gate.io had written to its customers at the
time of the attack to confirm losses due to the attack. According to the statement,
it detected 7 rollback transactions worth 54,200 ETC (about $200,000) connected
to four addresses which believed to be used by the attackers.

“We still don’t know the reason,” Gate.io explained in its
latest statement:

“If the attacker didn’t run it for profit, he might be a
white hacker who wanted to remind people of the risks in blockchain consensus
and hashing power security.”

Precautions Against
51% Attacks

The decentralization of a blockchain is the basic precaution
against a single entity taking over a blockchain to reorganize its data as is
the case with 51 percent attacks. But when the hash rate is weak, it becomes
easier for a malicious actor to rent enough hash power and overtake the
network. This explains why most successful 51 percent attacks have been on
smaller altcoins with relatively small hash powers.

Exchanges can suspend activity on a token if it notices the
attack to prevent its users from losing funds just like Coinbase and other
exchanges did. Gate.io explained that it was keeping an eye out for a repeat of
the attack.

“Based on our analysis, the hashing power of ETC network is
still not strong enough and it’s still possible to rent enough hashing power to
launch another 51% attack,” the exchange explained noting that it raised the confirmation
number for ETC to 4000. The team said it has also launched a strict 51% detect to
better protect its customers.

What Next After the
Attack

SlowMist, the blockchain security firm which first identified
the attack and are working with the Ethereum Classic team, released its
analysis of the attack. It identified several addresses connected with the
doublespend addresses that were connected with the attack while it promised to
work towards uncovering the attacker(s).

 The authors wrote:

“We have the first time to add these malicious wallet
address and malicious associated address to BTI and made available to partners
to prevent an attacker from further attack other exchanges. And provide
intelligence to partners to prevent attackers from further attacking other
exchanges.”

While advising crypto operators to block the flagged
addresses, they advised them to “strengthen the risk control, maintain a high
degree of attention, and be alert to double spend attacks that may erupt at any
time.”

Ethereum Classic
(ETC) Price Watch

The price of Ethereum Classic [ETC] went down with the rest
of the crypto market today. It is currently trading at $4.28 which is about 5
percent down from the last 24 hours. The trade volume in the last 24 hours is
just over $120,000 where it has been since the event.

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