51-percent hacker of Ethereum Classic network gives refund

  • By Tom Cleveland

  • January 25, 2019
  • 2:59 am BST

In a strange twist of events, Ethereum Classic, which was hacked on January 5th in what is known as a “51 percent attack”, has mysteriously received a $100,000 refund from parts unknown. That is $100,000 down and another $1 million to go before full restitution can be claimed. As the old saying goes, “Something is better than nothing”, but as was reported: “The funds were returned last week but it is not known why the cryptocurrency has been returned, or for what purpose — and efforts to contact the hacker have proved fruitless so far”.

As we recently reported: “Headlines suggest that hackers were ‘able to wrest control of more than 50 percent of Ethereum Classic’s network, and therefore were able to dominate decisions about what did and didn’t belong on the digital coin’s blockchain’. As confusing as that sentence may sound to a layman, the essence is that “control” can allow the crooks to wreak havoc in the network, something that is rare and called a “51 percent attack”. It is not supposed to happen, but it could destroy the public’s confidence in the system.”

The compromise came to light when a major exchange noticed a strange occurrence in the blockchain record for Ethereum Classic, something that we have been led to believe could not happen, but did: “The exchange and wallet firm, Coinbase, said it had detected a so-called “chain reorganization” in which nearly $500,000 worth of Ethereum Classic (ETC) was spent twice — an anomaly that is extremely rare for cryptocurrencies, but represents one of the biggest threats to the technology’s success.”

It is believed that the “reorganization” involved over 100 blocks. According to one insider: “If they [the hackers] manage to wrestle control of over 50 percent of the network, they are given leave to modify and execute transactions, as well as reverse transactions after they have been confirmed. This is known as ‘double spending’.”

The fact that a hacker was willing to forward $100,000 of his proceeds, while still keeping a small fortune, some $1 million, is extremely confusing to the staff at Ethereum Classic. The crypto network publicly admitted that, “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 of the risks in blockchain consensus and hashing power security.”

A common thief, a “Black Hatter”, is willing to share his ill-gotten gains with his victims by wearing a “White Hat”? Something seems terribly wrong with this picture, but if egos are on parade in full view and receiving the attention that is deemed appropriate for the events at hand, then we suspect that this storyline will be one that keeps on giving.

Stay tuned!