Ethereum’s Scandal Explained: Exchange Held To Ransom By Hackers

Ethereum’s scandal explained, exchange held to random by hackers. In the last few days, three ETH transactions took place: a customer paid $2.6 million to send $134 worth of ether. Few hours later, the same individual transferred $86,000 of ETH for the same fee. A third transaction by a different user paid $500,000 in fees, but it’s unrelated to the blackmail attack.

The hackers may have gained access to an unnamed crypto exchange’s funds but failed to transfer the money into their own wallets. This is because of a security setting that demands multiple passwords to process a transaction.

They then blackmailed the exchange into paying a ransom, according to Ethereum (ETH) co-founder Vitalik Buterin.

The multi-signature security setting on the platform prevented the thieves from making transfers to their own wallets. However, there was a loophole that allowed them to transact to addresses that require single authorisation.

So, the hackers weaponised their stolen authority, sending very small amounts at ridiculously high transaction fees, to force payment. According to the report, the hackers still have access to 21,000 ETH ($5 million) that “if the exchange does not give a certain ransom through other means, the hackers will further spend the money.” 

Chinese crypto analytics firm Peckshield concludes that the extraordinary ethereum transfer ‘blunders’ are the result of “gas price ransomware attacks.”  

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