Ethereum Classic 51% Attackers Return $100000 to Crypto Exchange Gate.io

Ethereum Classic 51% Attackers Return $100,000 to Crypto Exchange … Those responsible for the recent 51% attack on Ethereum Classic (ETC) … After the attack, the cryptocurrency’s price dropped from about $5 to a $4.3 low.

Those responsible for the recent 51% attack on Ethereum Classic (ETC) have reportedly returned $100,000 worth of stolen funds to an affected cryptocurrency exchange, Gate.io, after the firm tried to contact the attacker.

According to a recently published post Gate.io hadn’t heard back from the attackers until now. Since some of the stolen funds were returned, the exchange now believes the hacker may have been a white hat hacker, and not someone trying to profit off of the move.

We still don’t know the reason. If the attacker didn’t run it for profit, he might be a white hacker who wanted to remind people the risks in blockchain consensus and hashing power security

Gate.io noted, however, that its analysis found ETC’s blockchain is still vulnerable to attacks and, as such, has raised the number of confirmations on its platform to 4,000. It has also launched a “strict 51% detect for enhanced protection.”

It advised other crypto exchanges to adopt similar measures to protect themselves against similar attacks in the future. As CryptoGlobe covered, the exchange revealed earlier that it was affected by the 51% attack on Ethereum Classic, as it had to cover nearly $200,000 worth of losses after 40,000 ETC tokens were taken from its wallets.

While initially the development team behind ETC claimed the 51% appeared to not be an actual attack, it soon recognized it was. A private ETC mining pool has recently been found to be accumulating hashpower since the attack, which could mean it’s planning to do the same thing.

According to https://t.co/VDB3r2cPo6, the attacker of ETC 51% attack has returned ETC worth $100,000. Thanks to the ETC community’s efforts over the past week, this is a perfect ending.@eth_classic@ClassicIsComing

report: https://t.co/CMEdw6hZVspic.twitter.com/nO3bVj5IFJ

— SlowMist (@SlowMist_Team) January 12, 2019

Meanwhile Grayscale Investments, the organization behind the Ethereum Classic Investment Trust (ETCG), informed some of the investors that contacted them about the incident that ETCG’s funds are “not at direct risk.”

This, as according to Vertcoin developer Gert-Jaap Glasergen, 51% attacks can only double spend the attacker’s own coins, not someone else’s. The risk, as such, is for those who accept ETC – or another attacked cryptocurrency – for goods and services, like cryptocurrency exchanges.

At press time, ETC is trading at about $4.55 after falling 2.3% in the last 24-hour period. After the attack, the cryptocurrency’s price dropped from about $5 to a $4.3 low.

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Grayscale Investments Assures Its Investors Ethereum Classic Trust Funds Not At Risk Directly

Earlier this week BitcoinExhangeGuide reported a story about the 18th largest cryptocurrency, Ethereum Classic appeared to have become the latest …
Grayscale Investments Assures Its Investors Ethereum Classic Trust Funds Not At Risk Directly

Earlier this week BitcoinExhangeGuide reported a story about the 18th largest cryptocurrency, Ethereum Classic appeared to have become the latest blockchain network to succumb to a 51 percent attack, wherein a malicious miner accrues a majority of the network hashpower and uses it to rewrite recent blockchain data.

Coinbase announced that it had identified multiple instances where the attacker exploited that majority hashrate to execute double spend attacks, which are generally directed against cryptocurrency exchanges. The engineers of Coinbase later reported that the attackers had successfully executed “repeated deep reorganizations of the Ethereum Classic blockchain, most of which contained double spends.” Altogether, the firm said, “value of the double spends that we have observed thus far is 219,500 ETC.

Funds safe at Grayscale Investment

In the wake of the attack Grayscale Investments who also created the Ethereum Classic Investment Trust (ETCG), sent an email to its investors explaining the details of the attack. The email read:

“The greatest risk this poses is to the integrity of the Ethereum Classic Network, as people may be less inclined to accept ETC given the increased double-spend risk. However, the coins within the ETC Trust are not at direct risk of theft or double-spending.”

At the end of 2018, the trust had confirmed that they have about $25 million under their management. It was launched in 2017 as a private placement. Currently only verified investors can buy its shares from Grayscale and are contractually bound to hold it for at least a year.

The email further explained the attack by saying:

“Double spending can only be done by the original sender of the coins — so an attacker can only double spend his own coins, not someone else’s. So, the main risk of 51 percent attacks and blockchain reorgs is with people [who] accept the blockchain’s asset; and mostly when they do so in large amounts in exchange for virtual goods or services that are non-reversible.”

The managing director of Grayscale, Michael Sonnenshein, had earlier said:

“As often occurs following developments in the digital asset ecosystem, Grayscale received inquiries from a few investors about the recent 51 percent attack on the ETC network. We provided investors who contacted us with publicly-available information explaining how these attacks occur. These types of network attacks and their implications are also described in the disclosure documents we provide all investors.”

It appears that Grayscale wants to distance themselves from the incident. Yaz Khoury of the Ethereum Classic Cooperative said: “other than provide financial help and advice to the Cooperative, they’re very hands-off in how we manage to help the ETC community and ecosystem.”

Ethereum Classic Investment Trust Funds Are ‘Not at Direct Risk’ Says Grayscale Investments

Grayscale Investments, the organization behind the Ethereum Classic Investment Trust (ETCG), a financial product that tracks the price of Ethereum …

Grayscale Investments, the organization behind the Ethereum Classic Investment Trust (ETCG), a financial product that tracks the price of Ethereum Classic (ETC), has recently told a “few” investors that the funds in the product aren’t at risk.

Grayscale reportedly responded to client emails that expressed concern over their investments, in light of the recent 51% attack on ETC. According to CoinDesk the firm responded to its investors through an email, that wasn’t sent to all those who put money in the fund.

In the email, product development and research associate at Grayscale Matt Beck reportedly went into how 51% attacks work, and noted that the ETC Trust funds are “not at direct risk of theft or double-spending.” He was quoted as saying:

The greatest risk this poses is to the integrity of the Ethereum Classic Network, as people may be less inclined to accept ETC given the increased double-spend risk. However, the coins within the ETC Trust are not at direct risk of theft or double-spending.

Beck went on to quote Vertcoin developer Gert-Jaap Glasergen, who had in the past noted double spending attacks can only be done with the attacker’s own coins, not with someone else’s, which means the real risk is for those who accept ETC for goods or services, like exchanges.

As CryptoGlobe covered, cryptocurrency exchange Gate.io had to endure an over $200,000 loss because of the attack,  as at the time it occurred the transactions seemed to be legitimate and were confirmed on the cryptocurrency’s blockchain.

Michael Sonnenshein, a managing director at Grayscale, told CoinDesk that the firm did receive inquiries from “a few investors” about the 51% attack on ETC’s network, and that in response it sent investors “publicly-available information explaining how these attacks occur.”

As of December 31, the Ethereum Classic Investment Trust had about $24.9 million under management. Grayscale manages these funds for a fee, allowing institutional investors to gain exposure to the cryptocurrency ecosystem without having to manage the cryptos themselves. ETCG’s price tracks that of ETC.

It’s worth noting that both CoinDesk and Grayscale Investments are owned by the Digital Currency Group (DCG), whose owners’ tweets on ETC have in the past reportedly raised concerns.

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Grayscale to investors: Ethereum Classic Trust funds not at “direct risk” of theft or double-spending

Crypto exchange Gate.io confirmed on Tuesday that Ethereum Classic network suffered 51 percent attack. In a blog post, Gate.io confirmed that there …

Crypto exchange Gate.io confirmed on Tuesday that Ethereum Classicnetwork suffered 51 percent attack. In a blog post, Gate.io confirmed that there has been an attack and it would absorb the loss of roughly $200,000 worth of Ethereum classic – about 40,000 ETC. However, Grayscale Investments, the creator of Ethereum Classic Investment Trust (ETCG) reportedly responded to “a few” client to clear what the attack actually meant.

Reportedly, CoinDesk received a copy of one of the email responses to such an inquiry. The response included mostly a general explanation of how such attacks work. Matt Beck, a product development and research associate at Grayscale also wrote in the mail, “The greatest risk this poses is to the integrity of the Ethereum Classic Network, as people may be less inclined to accept ETC given the increased double-spend risk. However, the coins within the ETC Trust are not at direct risk of theft or double-spending.” However, Grayscale said that all investors in the fund were not sent such notifications.

Beck also explained the reason behind his statement by writing, “Double spending can only be done by the original sender of the coins — so an attacker can only double spend his own coins, not someone else’s,” the Vertcoin developer, Gert-Jaap Glasbergen, said in the article. “So, the main risk of 51 percent attacks and blockchain reorgs is with people [who] accept the blockchain’s asset; and mostly when they do so in large amounts in exchange for virtual goods or services that are non-reversible.”

Beck also referenced a CoinDesk column by Michael J. Casey about the Vertcoin incident, which noted that 51 percent attacks are a risk faced by most proof-of-work blockchains and that some are more vulnerable than others depending on the amount of hashing power that secures the network.

Managing director of Grayscale, Michael Sonnenshein, told CoinDesk through a spokesman that they provided the explanation to the investors who contacted them. “These types of network attacks and their implications are also described in the disclosure documents we provide all investors,” he added.

Image via Shutterstock

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Grayscale Assures Investors: Ethereum Classic Trust Funds Not at ‘Direct Risk’

In the wake of a 51 percent attack on ethereum classic (ETC), the manager of an … “The greatest risk this poses is to the integrity of the Ethereum Classic … one exchange lost $200,000 as a result – ethereum classic’s price has held …

In the wake of a 51 percent attack on ethereum classic (ETC), the manager of an investment vehicle that holds the cryptocurrency has been fielding inquiries from investors looking to understand if the underlying assets in the fund are safe, CoinDesk has learned.

On Monday, the day after the reorganization of transactions on the ethereum classic blockchain came to light, Grayscale Investments, the creator of the Ethereum Classic Investment Trust (ETCG), says it sent emails in response to “a few” clients asking for clarity on what the attack meant. A copy of an email response to such an inquiry was obtained by CoinDesk.

Grayscale said it had not sent a notification to all investors in the fund.

While mostly providing a general explanation of how such attacks work, Matt Beck, a product development and research associate at Grayscale, wrote in the email:

“The greatest risk this poses is to the integrity of the Ethereum Classic Network, as people may be less inclined to accept ETC given the increased double-spend risk. However, the coins within the ETC Trust are not at direct risk of theft or double-spending.”

In explaining why, Beck cited a quote in Breakermag last year from a developer of another cryptocurrency project, Vertcoin, which suffered a similar attack.

“Double spending can only be done by the original sender of the coins — so an attacker can only double spend his own coins, not someone else’s,” the Vertcoin developer, Gert-Jaap Glasbergen, said in the article. “So, the main risk of 51 percent attacks and blockchain reorgs is with people [who] accept the blockchain’s asset; and mostly when they do so in large amounts in exchange for virtual goods or services that are non-reversible.”

Beck also referenced a CoinDesk column by Michael J. Casey about the Vertcoin incident, which noted that 51 percent attacks are a risk faced by most proof-of-work blockchains and that some are more vulnerable than others depending on the amount of hashing power that secures the network.

Michael Sonnenshein, managing director of Grayscale, told CoinDesk through a spokesman:

“As often occurs following developments in the digital asset ecosystem, Grayscale received inquiries from a few investors about the recent 51 percent attack on the ETC network. We provided investors who contacted us with publicly-available information explaining how these attacks occur. These types of network attacks and their implications are also described in the disclosure documents we provide all investors.”

As of Dec. 31, the trust had $24.9 million of assets under management. Like CoinDesk, Grayscale is owned by Digital Currency Group (DCG).

‘Hands off’

Stepping back, it’s important to note that despite the severity of the 51 percent attack – one exchange lost $200,000 as a result – ethereum classic’s price has held fairly steady, at least by crypto’s volatile standards.

According to CoinMarketCap, it dropped from $5.49 on Sunday, shortly before the reorg became public knowledge, to a 7-day low of $4.28 on Thursday, a 21 percent decline. On Friday afternoon it was back up to $4.54.

The value of shares in ETCG has tracked the currency’s decline over this period, falling from $9 at midday Monday to $6.78 Thursday before rebounding to $7.30 Friday afternoon.

That relative market calm may help explain why Grayscale sent its explainer only to the few investors who asked rather than a doing broader shareholder communication.

The trust was launched in 2017 as a private placement. As such, only accredited investors can buy shares directly from Grayscale, and they must hold them for at least a year before redeeming. In that sense, they are locked in for a time. Since May of last year, ETCG shares have been available for purchase or sale on OTCQX, an over-the-counter (OTC) market.

Grayscale appears to have stayed out of the developer community’s discussions of the attack. Yaz Khoury of the Ethereum Classic Cooperative, which supports the development of the protocol, said that although Grayscale provides a fair amount of funding to his organization through the trust, “other than provide financial help and advice to the Cooperative, they’re very hands-off in how we manage to help the ETC community and ecosystem.”

Similarly, developer Cody Burns said of Grayscale: “They tend not to meddle in projects development. They are focused on finance.”

Christine Kim contributed reporting.

Michael Sonnenshein at Consensus: Invest 2018 image via CoinDesk archives.

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