The Coinbase exchange (NASDAQ: COIN) detected double spends on the Ethereum Classic (ETC) network over a three-day period worth a total of 88,500 ETC, or about $460,000, for which trading of the cryptocurrency was suspended.
In a Medium post, Coinbase Security Engineer Mark Nesbitt said that his team had observed “repeated deep reorganizations” on the ETC chain, not all of which involved double spends, or the using of the same unit of cryptocurrency more than once, made possible by taking control of more than half a blockchain’s hash power.
“The Coinbase team is currently evaluating the safety of re-enabling sends and receives of Ethereum Classic and will communicate to our customers what to expect regarding support for ETC,” Nesbitt wrote.
CoinNess.com reported that British Virgin Islands-based BKEX and Japan-based Coincheck have also halted trading of ETC on account of the recent mining activity. According to the site, Chinese blockchain security firm SlowMist has issued an alert that ETC appeared to have been hit by a 51% attack.
A CoinNess.com analyst had observed through Gas Tracker data an upsurge in hash rate at around 11:00 UTC on January 6, of 3,263 gigahashes per second, up from the weekly average rate of about 300 GH/s. As of the time of its report, “the sole contribution of the dark horse mining pool is 5,870.98 GH/s, an equivalent to 5.87 TH/s, or in other words, 63% of the entire hash rate sustaining the blockchain. That is to say, the mining pool controls an absolute majority of the ETC hash rate, a prerequisite to a 51% attack.”
Developers of ETC, through its official Twitter account, maintained that what happened was not a 51% attack, but rather “most likely selfish mining,” where a group of miners mine their own blocks in the hopes of later making these part of the dominant chain. Furthermore, it said that what was detected were not double spends but rather “miner dumped bocks [sic].”
The developers explained what happened as possibly “ASIC manufacturer Linzhi” testing their “new 1,400 Mh ethash machines.” Many commenters on the tweet used the occurrence as a reason to go with a new proof-of-work algorithm that takes away the advantages of ASIC chips for mining, when the ETH chain undergoes a hard fork this month.
A later tweet from the ETC developers acknowledged Coinbase’s findings. “[W]e’ll soon get a full picture of what actually took place. Linzhi is testing ASICS. Coinbase reported double spends; both may be true. In time we will see,” the tweet read.
nChain Chief Scientist Dr. Craig Wright has spoken of the safety of transactions on the Bitcoin SV chain, even stating he is willing to shoulder “any loss that occurs on a REAL double-spend fraud. Oh… I do not expect to even have to spend a cent. I will also help ensure that the person who does it ends spending a long time in a small cell.”
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