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Hash power broker Nicehash denies that it enables bad actors to use its hash renting platform to launch 51% attacks on blockchain networks. The broker insists that it does not have any way of monitoring or determining which blockchain is benefitting from a particular algorithm hash data. Only buyers of hashrate know this, as well as pools that receive such hashpower.
The comments by Nicehash are in response to pointed allegations from Ethereum Classic (ETC) Labs developers stating that the hash power used to initiate the 51% attacks on their network was purchased from the broker. To further support their allegations, the ETC devs claim an unnamed Nicehash cofounder has already been convicted in Slovenia on similar offenses.
In a statement released September 8, the Nicehash team does admit that “its hash-power might be abused by the attacker’s pool.” Still, the broker says it takes the “necessary steps to prevent or help prevent market disruptions, market manipulations, or misuse of the NiceHash hash-power marketplace.”
In cases where there are complaints against the hashing power coming from its platform, the broker says:
“Upon receiving or identifying sufficient evidence of activities violating our Terms of Service, Nicehash takes all the necessary steps to prevent further abuse or misuse of Nicehash Services.”
Furthermore, the broker’s statement implies a readiness to cooperate with law enforcement to “ensure that further investigations and undertakings are conducted swiftly and lawfully.”
Still, despite the seeming disagreements, both ETC Labs and Nicehash appear to agree that the former’s low hash rate is the primary reason why the 51% attacks are recurring. An earlier statement by the team that ETC hash rate was “~3% of the overall ETH network hash rate” confirms this.
Differences seem to emerge on what is the best way forward.
As part of their recommendations, the ETC Labs team wants hash rental platforms such as Nicehash to be “subjected to robust KYC and anti-money laundering programs.”
The statement by ETC Labs explains the rationale for this:
With little or no KYC, AML, or crypto address screening, customers have the ability to rent hash rate to potentially launder cryptocurrency for freshly minted tokens with no history.
However, for their part, the Nicehash team says in order to keep a proof of work (PoW) based blockchain with a small hash rate safe, “we highly recommend periodically renting of hash-power through NiceHash.”
This makes the PoW blockchain more secure and “furthermore, coins produced in the process can cover almost the entire investment in security.”
Team Nicehash ultimately believes that PoW blockchains can only become immune from attacks if “the price of an attack is higher than the attacker reward.”
Concluding its statement, the hash power broker says “the question of security becomes the question of the community and its creators. We must accept that if we want a true decentralization.”
What are your thoughts about the allegations against Nicehash? Share your thoughts in the comments section below.
The post Hash Power Broker Nicehash Denies It Enables 51% Attacks on ETC Network appeared first on Bitcoin News.
Beleaguered Ethereum Classic (ETC) blockchain suffered yet another 51% attack on August 29. The latest attack caused the reorganization of over 7,000 blocks and this corresponds to approximately two days of mining. At the time of reporting, it was not clear if there had been any double-spending as was the case in the last attack. In that attack, it was reported that the Okex exchange suffered a loss of $5.6 million directly as a result.
A statement revealing the attack adds that “all lost blocks will be removed from the immature balance and we will check all payouts for dropped transactions.”
Meanwhile, in their initial comments on the latest attack, developers working on ETC are attributing ongoing attacks to the network’s known vulnerabilities.
“ETC is ~3% of the overall ETH network hash rate. We are well aware of potential repeated attacks while solutions such as “reorg caps” and the subsequent ECIPs are being tested and evaluated. If you haven’t already please increase (which most have) please raise confs above ~10K,” reads a Twitter statement from the main ETC team.
Furthermore, the statement urges miners, exchanges, and other service providers to keep “confirmation requirements levels well above 7k for now.”
Meanwhile, the timing of the latest attack is certain to raise eyebrows. The latest network attack, which is the third time this has happened in a month, occurred shortly after some community members had announced the addition of two new Ethereum Classic Improvements Proposals (ECIP).
Proposed by Input-OutputHK, the first ECIP introduces a checkpoint system to prevent the possibility of another attack while the second one proposes a decentralized treasury.
However, following the last attack, the ETC community had been split on the way forward and particularly over the second proposal. After heated exchanges, it appears the Charles Hoskinson’s camp, which favors the controversial proposition, has prevailed.
Interestingly, however, news of the latest attack appears to have had a little effect on the ETC price. At the time of writing, the ETC traded at $6.71 marginally down from the $6.74 at around the time the breach was discovered.
Still, there is a real possibility that some exchanges will delist the token following this attack. Okex has already stated that it will “consider delisting ETC, pending the results of the Ethereum Classic community’s work to improve the security of its chain.” The latest attack might now force the exchange to act on the threat.
Do you think the ETC community is doing enough to stop these attacks? Share your thoughts in the comments section.
The post Ethereum Classic Suffers 51% Attack Again: Delisting Risk Amplified appeared first on Bitcoin News.
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Cryptocurrency exchange Okex reveals it suffered the $5.6 million loss as a result of the double-spend carried out by the attacker(s) in Ethereum Classic 51% attack. Okex says it fully absorbed the loss as per its user-protection policy while insisting that the attack did not cause any loss to the platform’s users.
Also as part of its immediate responses to the attack, the OKEx team said the “exchange had suspended deposits and withdrawals of ETC to prevent further losses.”
A total of five accounts on the exchange had been used in the attack and now the Okex team says it has “suspended the five accounts to prevent further incidents.”
Immediately following the attack, ETC developers initially downplayed the event by characterising it as an “accident.” At the time, the developers doubted if any major double-spend attacks had occurred.
However, an investigation by a blockchain analysis firm later revealed the “accident” was, in fact, a 51% attack, and that $5.6 million had been stolen. At the same time, reports linking Okex wallets to the incident also surfaced.
The blog report suggests that “the attacker(s) likely calculated that they would be able to relatively easily and promptly trade large amounts of ETC on OKEx.”
Regarding more steps it will take, the Okex team said:
“Additionally — given OKEx’s responsibility to protect users from similar incidents that threaten the security of their funds — the exchange will consider delisting ETC, pending the results of the Ethereum Classic community’s work to improve the security of its chain.”
However, the blog post does not give a specific time frame when the ETC community is expected to improve this.
Meanwhile, in his comments on the attack, Tim Ismilyaev, CEO and Founder at Mana Security, says such incidents are “common for less popular blockchains, ETC can’t fix it without significant amendments into their architecture.”
Ismilyaev also offers his view on why Okex still suffered the loss even after the ETC team had advised exchanges to halt deposits and withdrawals soon after the attack. Ismilyaev explains:
ETC’s advice was released after the attack occurred, so Okex couldn’t stop the withdrawal of stolen funds. Noteworthy, the attacker most likely knew how Okex risk management systems work. It allowed him to withdraw stolen funds without being detected. That’s why he deliberately traded assets only on OKEX rather than splitting funds across multiple exchanges to hedge the risks.
Can the ETC team solve the security challenges in time before another delisting? Share your thoughts in the comments section below.
The post Ethereum Classic 51% Attack: Okex Crypto Exchange Suffers $5.6 Million Loss, Contemplates Delisting ETC appeared first on Bitcoin News.
The digital currency asset manager Grayscale told investors on Thursday that the firm has publicly filed a Registration Statement on Form 10 with the Securities and Exchange Commission (SEC) for the company’s Ethereum Trust.
The recent filing is voluntary and if the SEC approves the registration, the Ethereum Trust will be the second crypto asset investment vehicle to obtain the status of a reporting company by the SEC.
Established in 2013 by Digital Currency Group, Grayscale Investments has been around for quite some time now. The firm manages a number of investment vehicles that allow investors to gain exposure to crypto assets like bitcoin, bitcoin cash, ether, horizen, XRP, zcash, ethereum classic, litecoin, and stellar.
In September 2013, Grayscale introduced the Bitcoin Investment Trust which originally was only available to accredited investors. Then the trust got the Financial Industry Regulatory Authority’s (FINRA) approval and Grayscale was allowed to offer shares publicly.
Then on January 21, 2020, the Bitcoin Trust had its shares registered with the SEC and it was the first crypto-based trust to obtain a reporting status from the SEC. On Thursday, Grayscale told investors that it was attempting to get the Ethereum Trust established with the Commission as well.
“If the Registration Statement becomes effective, it would designate Grayscale Ethereum Trust as the second digital currency investment vehicle to attain the status of a reporting company by the SEC, following Grayscale Bitcoin Trust as the first,” Grayscale noted in an investor’s email. Grayscale added:
Furthermore, if the Registration Statement becomes effective, accredited investors who purchased shares in Grayscale Ethereum Trust’s private placement would have an earlier liquidity opportunity, as the statutory holding period would be reduced from twelve months to six months under Rule 144 of the Securities Act of 1933.
In an announcement post on Medium, Grayscale said that Q2 2020 statistics show that investment into the Grayscale Ethereum Trust hit $10.4 million. “In fact, demand for Grayscale Ethereum Trust accounted for almost 15% of total inflows into Grayscale products during our biggest quarter yet,” the company said. Grayscale’s filing announcement continued:
Today, it’s clearer than ever that there is strong demand for an Ethereum access product.
Both the Medium blog post announcement and the email to investors says that the firm must stress that the filing is completely voluntary.
However, Grayscale does not want the recent Ethereum Trust filing to be confused as an “effort to classify the Trust as an exchange-traded fund (ETF).”
Grayscale’s Registration Statement attempt follows the recent approval by FINRA for the company’s investment vehicles, the Litecoin Trust and the Bitcoin Cash Trust. After the Ethereum Trust registration announcement, Digital Currency Group founder Barry Silbert tweeted that the attempt is a “milestone.”
What do you think about Grayscale’s Ethereum Trust registering with the SEC? Let us know what you think about this subject in the comments section below.
The post Grayscale Investments’ Ethereum Trust Filed With the SEC to Obtain Reporting Status appeared first on Bitcoin News.
The Ethereum Classic (ETC) blockchain network lost $5.6 million to one miner following a 51% attack initially thought to be a chain split.
According to Bitquery, the attacker “mined 4280 blocks for four days.” It adds that “he did only a little mining before and stopped mining after the attack.”
In result, the miner “sent all the mining reward money (13K ETC ) to address 0x401810b54720faad2394fbe817dcdeae014066a1, where it resides at the time of writing.”
Bitquery’s report provides a timeline of how the sophisticated attack unfolded as well as the identity of the crypto exchange used by the miner to facilitate the attack.
Meanwhile, the ETC team now acknowledges the event is in fact an attack. In a statement issued late on 5 August the team said:
Today another large 51% attack occurred on ETC which caused a reorganization of over 4000 blocks. Until further notice ETC pool payouts are disabled and we encourage all our miners to switch to our ETH pool in the meantime.
Members of the ETC team also said, “in light of recent network attacks, it is recommended that all exchanges, mining pools, and other ETC service providers significantly raise confirmation times on all deposits and incoming transactions.”
Meanwhile, ETC Cooperatives says its director of developer relations, Yaz Khoury will be working Bitquery to learn out “more about the recent attack, including the attacker’s addresses, origin of hashpower, the flow of funds, and more important details.”
In 2019, ETC suffered a similar attack prompting some exchanges like Coinbase to immediately cease interactions with the blockchain.
What do you think about the latest attack on ETC? Share your thoughts in the comments section below
The post $5.6 Million Double Spent: ETC Team Finally Acknowledges the 51% Attack on Network appeared first on Bitcoin News.
Members of the Ethereum Classic team reported that the network suffered a reorganization (reorg) today.
The blockchain network is asking service providers to halt deposits while it carries out maintenance of the chain.
The latest event follows a similar attack in January 2019, which led to some exchanges taking pre-emptive action.
Both Ethereum Classic (ETC) and one of the founders have since put out a statement acknowledging this event which they term a chain split. ETC suffered a reorganization (reorg) of approximately 3,693 ETC blocks which occurred at block 10,904,146.
According to a report by Ethereum Classic team members, “there was about 3000 block-insertion by a miner who was mining (either offline or there total difficulty could have exceeded current network difficulty while they were honestly mining) for about 12 hours on Core-Geth.”
In a short prognosis of the chain split, Ethereum Classic developers say it has identified the offending miner. The network maintainers added they doubt any major double-spend attacks occurred. Even though the miner was identified, it is uncertain whether or not it was a malicious 51% attack that caused the reorg. Developer James Wo claims it was “not a 51% attack” and stressed “a miner went offline and was using old client software.”
In the diagnosis, Ethereum Classic developers said:
It could be that the offending miner has lost access to internet access for a while when mining, which led to a 12 hour mining period and about 3,000 blocks inserted. On the first 2,000 blocks, there was 1 miner and a total of 5 transactions. It also seems that the offending miner has uncled their own blocks by how fast they were mining.
The offending miner used the address 0x75d1e5477f1fdaad6e0e3d433ab69b08c482f14e. Ethereum Classic team members also provided a timeline of the events.
Commenting on the possible impact of the chain split, Ethereum Classic members say “any transactions during that time are possibly not mined in the order they were intended to have been mined in.”
The ETC devs add, “the about 3,000 blocks had a mean of 0 transactions mined, and any transactions that aren’t mined will be re-submitted to the mempool during a re-org.”
Ethereum Classic team members are advising miners to “continue mining the chain as-is (chain is currently following the heaviest work which includes the about 3,000 blocks inserted). This is the recommended option as the chain is following proof-of-work (PoW) with the longest chain as intended.”
In 2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain, which included a double spend. The exchange immediately ceased interactions with the blockchain.
This time around, the Ethereum Classic team members have taken the pre-emptive step of advising exchanges to halt deposits and withdrawals until investigations are complete.
A 51% attack is a potential attack on a blockchain network, where a single entity or organization is able to control the majority of the hash rate, potentially causing network disruption.
In such a scenario, the attacker would have enough mining power to intentionally exclude or modify the ordering of transactions.
What do you think of the latest attack on Ethereum Classic? Share your thoughts in the comments section.
The post Single Miner Reorgs Ethereum Classic – Devs Report a Chain Split appeared first on Bitcoin News.