Cryptocurrency exchange Coinbase has announced that it has decided to stop facilitating Ethereum Classic trading for now due to an account being compromised over the weekend.
On 1/5/2019, Coinbase detected a deep chain reorganization of the Ethereum Classic blockchain that included a double spend. In order to protect customer funds, we immediately paused movements of these funds on the ETC blockchain. Read more here: https://t.co/vCx89dz44m
— Coinbase (@coinbase) January 7, 2019
Reportedly, a user on the site was able to double spend via a 51 percent attack, in which attackers take control of more than half of the processing power that computes and secures the Ethereum Classic blockchain. A double spend is achieved by creating alternative transactions.
The double spend amounted to USD 46,000 according to Coinbase security engineer Mark Nesbitt. At the time, he hadn’t suspected a 51 percent attack, although had detected a double spend so didn’t inform the relevant company personnel.
The Coinbase Ethereum Classic compromise highlights the fact that attempted hacks remain a risk for exchanges, although they also remain a very rare occurrence. The pulling of Ethereum Classic will disappoint many users who would probably have preferred a company as large as Coinbase to have provided a quick solution keeping their ETC tokens online rather than withdraw a trading facility as important as Ethereum Classic.
However, Coinbase has suggested that the currency withdrawal is a suspension, indicating that ETC could well come back online. Clearly, there is work to do for the technicians at Coinbase, with its latest blog update reporting that they have detected “12 additional reorganizations that included double spends, totaling ETC 219,500 (~USD 1.1M)”.
Ethereum Classic developers have neither confirmed nor denied that the 51 percent attacks have happened, but have expressed knowledge of the situation and cautioned extra vigilance for exchanges and pool operators, recommending block confirmation times above 400.
As the situation develops we want to remind exchanges and pool operations to substantially increase block confirmation times (+400)
We will keep you updated as more news (with @SlowMist_Team) come to light; also with discussion regarding potential solutions to improve on PoW. https://t.co/vkImPmBwu5
— Ethereum Classic (@eth_classic) January 8, 2019
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