Ethereum Classic (ETC) Hit by Double-Spend Attack Worth $1.1 Million

Popular cryptocurrency exchange Coinbase has suspended all
transactions of Ethereum Classic (ETC)—the original unforked
version of the Ethereum network—on their trading platforms, other
products and services after detecting a potential attack on the
cryptocurrency network that let someone spend the same digital
coins twice.

Why is this attack concerning? The heist resulted in the loss of
$1.1 million worth of the Ethereum Classic digital currency. The
digital currency immediately fell in price after the news came
out.

Coinbase revealed Monday that it identified “a deep chain
reorganization” of the Ethereum Classic blockchain (or 51 percent
attack of the network), which means that someone controlling the
majority of miners on the network (over 50%) had modified the
transaction history.

After reorganizing the Ethereum blockchain, the attackers were able
to what’s called “double spend” about 219,500 ETC by recovering
previously spent coins from the rightful recipients and
transferring them to new entities chosen by attackers (typically a
wallet in their control).

Coinbase identified the deep chain reorganization of the Ethereum
Classic blockchain on January 5, at which point the firm halted
on-chain ETC payments in order to safeguard its customer funds and
the cryptocurrency exchange itself.

It’s worth noting that this incident was not a one-time event, as
the attacks are apparently ongoing.

Initially, Coinbase identified nine reorganizations containing
double spends, amounted to 88,500 ETC (about $460,000), but the
latest update on its blog post suggests that at least 12 additional
reorganizations included double spends, totaling 219,500 ETC
(nearly $1.1Million).

At the time, it is not clear whom the attackers targeted, but
Coinbase reassured its customers that the cryptocurrency exchange
itself had not been the target of these attacks and that no
customer funds were lost.

Initially, Ethereum Classic denied the
Coinbase claims, saying that the ETC network appeared to be
“operating normally,” but hours later it confirmed the
“successful 51% attack” on the Ethereum Classic network with
“multiple” block reorganizations.

However, Ethereum Classic said^[5] that Coinbase did not
contact ETC personnel regarding the attack and added that the
investigation is an “ongoing process.”

Since it is incredibly difficult or perhaps virtually impossible
to mount such attacks against heavily-mined cryptocurrency networks
like Bitcoin and Ethereum, attackers chose to target small-cap
cryptocurrencies like Ethereum Classic, Litecoin Cash, Bitcoin
Gold, ZenCash (now Horizen), and Verge.

Created in June 2016, Ethereum Classic is the 18th-largest
cryptocurrency with a market cap^[6] of over half a billion
dollars (around $539 million), which makes it an attractive target
for attackers.

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