Reported signs of network attack halts Ethereum Classic movements

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Coinbase Inc., one of the world’s largest cryptocurrency exchanges, said it halted the movement of customer funds on the blockchain that backs Ethereum Classic because of signs that network is under attack.

Coinbase said on its website Monday it detected “deep reorganisations” of the Ethereum Classic blockchain, in which almost US$500,000 in digital coins were spent twice. That can indicate a so-called 51 per cent attack, in which some computers supporting a network falsify transactions.

The team behind Ethereum Classic, the 18th-largest cryptocurrency by total market value, said it’s looking into Coinbase’s assertions and hasn’t drawn conclusions.

“Facts are facts and as the situation develops we’ll soon get a full picture of what actually took place,” the team said in a post on Twitter. It’s possible that some anomalies may be the result of testing new machines, it said.
The incident comes several weeks after the main development team supporting Ethereum Classic disbanded amid a lack of funding.

Ethereum Classic fell 7.7 per cent as of 4:45 p.m. in San Francisco, according to CoinMarketCap.com.

A 51 per cent attack would be “technically a catastrophic failure,” Emin Gun Sirer, co-director of the Initiative for Cryptocurrencies and Smart Contracts at Cornell University, said in a tweet.

If coins were double spent, that blockchain would have failed at its essential task and the currency would have no future, said Kyle Samani, managing partner of crypto hedge fund Multicoin Capital.

“I’m surprised that ETC is not down 50 per cent or more,” he said in an email. “The most probable explanation is that the biggest holders store their assets off exchange,” leaving them unable to transfer them back and sell, he said.

This article originally appeared on Bloomberg

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