219,500 Ethereum Classic (ETC) Worth $1.1 Million Double Spent During 51 Percent Attack; Coinbase May Delist

January 8, 2019 / by Zachary Mashiach

Ethereum Classic (ETC) has been under siege due to a 51 percent attack, as detailed in a CryptoIQ article yesterday. There was initially incorrect information that this 51 percent attack, that it was due to the testing of new 1.4 GH/s ETHash ASICs and did not have any associated double spends.

This caused a public outcry to ban ASICs on the Ethereum Classic (ETC) and Ethereum (ETH) networks. However, an analysis by Coinbase reveals that 219,500 ETC worth $1.1 million has been stolen in double spends, leaving no doubt that this attack was done for profit and not due to ASIC testing.

Further, Coinbase’s analysis reveals that the 51 percent attack has been occurring on and off from Jan. 5 to Jan. 8, making this a prolonged attack, not a one-time incident. The longest 51 percent attack was 123 blocks deep, which is about 30 minutes.

There were a total of 15 of these attacks so far, most of which were associated with double spends. Merchants and exchanges have been told to wait at least 400 confirmations before accepting an Ethereum Classic (ETC) transaction to be safe, although if someone has 51 percent of the hash power then technically no amount of transaction confirmations are safe.

The security and immutability of Ethereum Classic (ETC) is now in serious doubt. Double spends are very dangerous for users of the network since transactions can be reversed by an attacker at will. It is clear that someone has the ability to 51 percent attack Ethereum Classic at will, and they could possibly do it again.

Due to this lack of security Coinbase has frozen all Ethereum Classic (ETC) deposits and withdrawals. It is not yet known whether Coinbase will delist Ethereum Classic, but it seems like a possibility if the security problems cannot be rectified.

Surprisingly, OKEx remains open for Ethereum Classic deposits and withdrawals, with only 100 confirmations required for a deposit. This seems like a major security risk since the attacker has already demonstrated that they can 51 percent attack for more than 100 blocks in a row.

Roughly $60 million (10 percent) has been slashed from the Ethereum Classic (ETC) market cap since this double spend incident began. If Coinbase delists ETC — and we don’t know if it will — it could lead to a far greater crash.