Cryptocurrency Exchange Gate.io Loses $200k to Blockchain Attacks

Cryptocurrency exchange Gate.io announced on Tuesday that it has incurred a loss of roughly $200,000 worth of Ethereum Classic (ETC) due to a recent string of cyber attacks against the company.

Roughly 40,000 ETC was lost in the 51 per cent attack. In this type of attack, the person or group committing the hack gains control of enough computing power of the victim to alter the network’s transaction history and “double spend” coins. In this case, the company said in its blog post that it has identified three IP addresses that are tied to the attacker(s).

A part of the statement read,

“Gate.io’s censor successfully blocked attacker’s transactions at the beginning and submitted them to the manual exam. Unfortunately, during the 51% attack, all the transactions looked valid and confirmed well on the blockchain. The examiner passed the transactions. It caused about 40k ETC loss due to this attack. Gate.io will take all the loss for the users.”

The current price of Ethereum Classic at the time this article was published stood at US$ 4.95.

Popular cryptocurrency trading platform Coinbase reported similar “double spending” trends on its website on Monday. However, Coinbase reported it happening as a result of deep block reorganizations (reorgs) on the Ethereum Classic blockchain.

Blockscout’s Project Lead Andrew Cravenho stated that he was “100 per cent” sure that this was a result of a double spend attack. He pointed to a reorganization between block number 7261495 and 7261496 on the Ethereum Classic Blockchain, where he noted that 26,000 ETC was spent once before the reorg occurred on block number 7261492 and again thereafter on block number 7261497. Cravenho said that this double spend transaction was “effectively stolen.”

Fellow developers in the Ethereum Classic community seemed to agree with Blockscout’s analysis on the matter, confirming that this was a “textbook” 51% double spend attack.

However, Ethereum Classic developer Cody Burns couldn’t provide a clear answer as to why the string of attacks against the coin kept happening but assured that the team was moving forward “with caution.”

He said,

“We have been discussing options [to] mitigate the current threat, but no one wants to make a hasty decision that would expose greater security threats.”

However, observers have noted that there needs to be better communication and cooperation between the ETC developers, which is currently being impeded by governments across the world still trying to figure out how to regulate the infant cryptocurrency industry.